[Marxism] NYT: "Obama bolsers recovery plans as economic outlook dims"

["Fred Feldman" <ffeldman@xxxxxxxxxxxxxxxx>]

http://www.nytimes.com/2008/12/21/us/21stimulus.html
December 21, 2008
Obama Bolsters Recovery Plans as Economic Outlook Dims 
By JACKIE CALMES
WASHINGTON - Faced with worsening forecasts for the economy, President-elect
Barack Obama is expanding his economic recovery plan and will seek to create
3 million jobs in the next two years, up from a goal of 2.5 million jobs set
just last month, several advisers to Mr. Obama said Saturday.

Even Mr. Obama's more ambitious goal would not fully offset as many as 4
million jobs that some economists are projecting might be lost in the coming
year, according to the information he received from advisers in the past
week. That job loss would be double this year's total and could push the
nation's unemployment rate past 9 percent if nothing is done.

The new job target was set after a meeting last Tuesday in which Christina
D. Romer, Mr. Obama's choice to lead his Council of Economic Advisers,
presented information about previous recessions to establish that the
current downturn is likely to be "more severe than anything we've
experienced in the past half-century," according to an Obama official
familiar with the meeting. Officials said they are working to craft a plan
that is big enough to stimulate the economy but not so big that it would
provoke major opposition in Congress. Mr. Obama's advisers had been
projecting that the multifaceted economic plan would cost between $675
billion and $775 billion. It would be the largest stimulus package in memory
and would most likely grow as it makes its way through Congress, although
Mr. Obama has secured Democratic leaders' agreement to ban spending on
pork-barrel projects.

Mr. Obama's message was that "there was not going to be any spending money
for the sake of spending money," said Lawrence H. Summers, who will be the
senior economic adviser in the White House. 

Mark Zandi, chief economist of Moody's Economy.com and an adviser to Senator
John McCain's presidential campaign, said, "My advice is, err on the side of
too big a package rather than too little." In an interview, Mr. Zandi, who
lately has advised Democratic leaders in Congress, also said he would
probably soon raise his own recommendation of a $600 billion stimulus.

Besides new spending, the Obama plan would provide tax relief for low-wage
and middle-income workers of roughly $150 billion, Democrats familiar with
the proposal said. The government would probably reduce the withholding of
income or payroll taxes so that most workers get larger paychecks as soon as
possible in 2009, an Obama adviser said.

The sorts of jobs Mr. Obama would propose to create involve construction
work on roads, mass transit projects, weatherization of government
buildings, and installation of information technology in medical facilities,
among others. 

The outlines for Mr. Obama's emerging plan, which he is developing in
consultation with Congress, including some Republicans, were mostly settled
last Tuesday when he met for four hours with economic and policy advisers.
Mr. Obama and his family left on Saturday for a two-week holiday in Hawaii,
his native state, but the advisers will take his guidance - including
instructions to be "bolder," according to one - and complete a draft in time
for his return on Jan. 2.

The new Congress convenes on Jan. 6. The House and Senate, with larger
Democratic majorities, will work to pass a bill for Mr. Obama to sign
shortly after his inauguration on Jan. 20.

The Obama blueprint covers five main areas of spending and tax breaks:
health, education, infrastructure, energy, and support for the poor and the
unemployed. 

Mr. Summers said the president-elect set short- and long-term themes in
choosing the plan's components: "Creating jobs for people who need them, and
doing things that need to be done to lay the foundation for an economy that
works for middle-class families."

At Tuesday's meeting, Ms. Romer also laid out recommendations from private
sector analysts and liberal to conservative economists for a government
stimulus that ranged from $800 billion to $1.3 trillion over two years.
Those consulted included Martin Feldstein, a conservative economist and
longtime Republican presidential adviser, who is at the low end, and
Lawrence B. Lindsey, a Federal Reserve governor and Bush administration
economist, who has recommended up to $1 trillion. 

Even before the election, Mr. Feldstein was publicly arguing that whoever
was elected should immediately begin working with Congress on a big spending
package. Since then, Mr. Feldstein has also been revising his assessment
upward as the economy has weakened further. 

"Without action, the economy will continue to decline rapidly," he wrote in
an e-mail exchange. 

Many decisions about the details have not been made, or are tentative
pending consultations with Congress. Several hundred billion dollars could
go to states and cities to finance public works and subsidize their health
and education programs so that local governments do not have to raise taxes
and cut essential programs, steps that would be counterproductive
economically.

The Obama team has a list of $136 billion in infrastructure projects from
the National Governors Association that consists mostly of transit
construction but also includes port expansions and renewable energy
programs. For education, besides money to build and renovate schools, he
will call for money to train more teachers, expand early childhood
education, and provide more college tuition aid.

For those "most vulnerable" because of the recession, as the Obama team
describes the needy and jobless population, the president-elect will propose
expanding the length of unemployment compensation, as well as food aid and
additional support.

With millions more Americans losing their health care coverage, either
through job losses or because they can no longer afford to pay for
insurance, Mr. Obama will propose major new spending to subsidize states'
share of Medicaid and their children's health programs, and to expand health
care coverage for those who lose insurance from their employers.

Mr. Obama plans a down payment on his campaign promise to help pay for
hospitals and other medical providers to computerize their health records to
save billions in paperwork and administrative costs. He also might propose
subsidies to train more nurses, both to create jobs now and address a
looming shortage in the health professions.

The chief difficulty in the Obama advisers' deliberations from an economic
standpoint, someone familiar with their work said, is finding enough
projects to finance that would provide an immediate jolt to the economy by
getting money into Americans' hands so they will spend it and increase
demand for more products and services. 

Economists generally agree that aid to the jobless and some infrastructure
spending is quickly stimulative. But tax cuts for the middle class, like
those sent out earlier this year, would probably be used again on debts
rather than new spending, economists say.

Mr. Obama has spoken with Harry Reid, the Senate majority leader, and
Speaker Nancy Pelosi in recent days. Late last week, Mr. Reid's office sent
an e-mail message to other senators saying that in conversations with the
Obama transition team, "we have communicated our willingness to work within
these parameters as closely as possible and urge all offices to do the
same."



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