WASHINGTON — Anxious to jolt the economy back to life, President-elect Barack Obama appears to be zeroing in on a stimulus package of about $850 billion, dwarfing last spring’s tax rebates and rivaling drastic government actions to fight the Great Depression.
Obama has not settled on a grand total, but after consulting with outside economists of all political stripes, his advisers have begun telling Congress the stimulus should be bigger than the $600 billion initially envisioned, congressional officials said Wednesday.
Obama is promoting a recovery plan that would feature spending on roads and other infrastructure projects, energy-efficient government buildings, new and renovated schools and environmentally friendly technologies.
There would also be some form of tax relief, according to the Obama team, which is well aware of the political difficulty of pushing such a large package through Congress, even in a time of recession. Any tax cuts would be aimed at middle- and lower-income taxpayers, and aides have said there would be no tax increases for wealthy Americans.
While some economists consulted by Obama’s team recommended spending of up to $1 trillion over two years, a more likely figure seems to be $850 billion. There is concern that a package that looks too large could worry financial markets, and the incoming economic team also wants to signal fiscal restraint.
In addition to spending on roads, bridges and similar construction projects, Obama is expected to seek additional funds for numerous programs that experience increased demand when joblessness rises, one Democratic official said.
Among those programs are food stamps and other nutrition programs, health insurance, unemployment insurance and job training programs.
Obama advisers, including Christina Romer and Lawrence Summers, have been contacting economists from across the political spectrum in search of advice as they assemble a spending plan that would meet Obama’s goal of preserving or creating 2.5 million jobs over two years.
Among those whose opinions Obama sought were Lawrence Lindsey, a top economic adviser to President George W. Bush during his first term, and Harvard professor Martin Feldstein, an informal adviser of Sen. John McCain and the chairman of the Council of Economic Advisers under President Ronald Reagan.
Feldstein recommended a $400 billion investment in one year, Obama aides said, and Lindsey said the package should be in the range of $800 billion to $1 trillion. The aides revealed the discussions on condition of anonymity because no decisions had been reached.
“I do recommend $400 billion in year one and expect a similar amount in year two,” Feldstein said. “The right amount depends on how it is used.”
Obama aides also pointed to recommendations by Mark Zandi, the lead economist at Moody’s Economy.com and an informal McCain adviser who has been proposing a $600 billion plan.
“I would err on the side of making it larger than making it smaller,” Zandi said. “The size of the plan depends on the forecast — the economic outlook — and that is darkening by the day.”
“Even a trillion is not inconceivable,” he said.
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