Yes, a new US stimulus package will be very expensive. Yes, the federal budget is already burdened with record debt. But only Washington has the resources to do what needs to be done, and the risks of inaction, or too little action, are far greater than those of spending too much.
In sum, that’s President-elect Obama’s message to the nation, as he tries to prepare the ground for quick congressional action on his proposal for a massive new economic stimulus program.
In many ways, Mr. Obama’s push is unprecedented. He hasn’t yet made a single phone call from the Oval Office. But he’s hard at work trying to build voters’ trust, not just in his administration but in the capabilities of government itself.
“On the one hand, they broadly support the new administration and want it to succeed. On the other hand, there is deep skepticism about the ability of government to do the right thing and to do it effectively.”
Obama on Thursday capped a week-long push for his economic approach with a speech that made his most detailed case yet for the forthcoming financial rescue package.
He warned that the economy could further deteriorate, plunging the nation into dire times, absent quick action by Washington on a huge stimulus package.
“Only government can break the vicious cycles that are crippling our economy – where a lack of spending leads to lost jobs, which leads to even less spending,” said Obama.
His stimulus package is still evolving but is expected to total $800 billion or more. It will be a conglomeration of tax breaks, infrastructure projects, aid to state and local governments, and other initiatives, according to transition officials and legislators.
Energy will be front and center
Among the specific goals it will attempt to encourage, Obama said Thursday, are a doubling of domestic alternative-energy production over the next three years, an improvement in energy efficiency for 2 million American homes, the computerization of US medical records within five years, and the expansion of broadband Internet access across the nation.
“Yes, we’ll put people to work repairing crumbling roads, bridges, and schools by eliminating the backlog of well-planned, worthy, and needed infrastructure projects. But we’ll also do more to retrofit America for a global economy,” he said.
Transition officials had hoped Congress could have a bill ready for Obama to sign upon his accession to the presidency on Jan. 20, but that timeline has slipped to mid-February at the earliest.
Many economists support the idea of a new US government stimulus effort to pull the economy out of the current slump. Even Harvard economist Martin Feldstein, a Republican who advised President Ronald Reagan, said as much during an appearance on Capitol Hill Jan. 7.
“We’re going to need a fiscal stimulus in the form of tax cuts and increased government spending,” Mr. Feldstein told a congressional panel. “It pains me to say that because I’m a fiscal conservative who dislikes budget deficits and dislikes increases in government spending.”
But US funds already committed to the rescue of mortgage giants Fannie Mae and Freddie Mac and other financial institutions have helped drive the federal deficit so high that many on Capitol Hill are gulping at the idea of almost $1 trillion in new government spending.
On Jan. 7, the Congressional Budget Office estimated the 2009 deficit at a record $1.2 trillion. A new stimulus package could send that to $2 trillion, notes Chris Edwards, tax director of the Cato Institute.
“Even the biggest critics of Washington’s spendthrift ways never thought they would see a number like that,” says Mr. Edwards, who opposes the stimulus package.
Wary reaction from GOP lawmakers
Republicans on Capitol Hill remain wary of the bill’s price tag, though many acknowledge that the economy needs help.
Obama’s concerted efforts to push for his package appear designed to counter such hesitance.
That may not be too surprising, given the current climate of economic malaise. Still, the amount of action involved is unprecedented for a president-elect, says Julian Zelizer, a history professor at Princeton University in New Jersey.
Obama has been careful to note that the United States has only one president at a time, particularly when he’s been asked about delicate foreign-policy questions. But on the economy, he may already have become the defacto chief executive.
“There is something good here: the idea that a president-elect is getting his act together early on,” says Dr. Zelizer.
Obama is getting a certain comfort level with presidential responsibility already – and with getting feedback on his ideas. At the same time, the more he lays out his plan, the more he provides targets to his opponents, says Zelizer.
They “can start to put together a plan to take him on,” says the Princeton professor.
- Staff writer Gail Russell Chaddock in Washington contributed to this report.