Obama vows swift action on economy

CHICAGO — President-elect Obama said Saturday that he had started work on a two-year economic-stimulus plan designed to provide 2.5 million jobs, funnel money toward public-works programs to repair the country's failing infrastructure and invest in alternative-energy programs.

Obama's plan, which he announced in the Democratic radio address, is broader and more expensive than the pledges he offered while campaigning for president.

He said the worsening financial outlook demanded more robust action, so he directed his economic team to devise "a plan big enough to meet the challenges we face that I intend to sign soon after taking office."

Obama said he hoped to have the plan completed, approved by Congress and ready for his signature shortly after he takes office Jan. 20. He is already coordinating with the Democratic leaders of Congress, who have said they will begin work on the plan in December.

"The news this week has only reinforced the fact that we are facing an economic crisis of historic proportions," Obama said. "We now risk falling into a deflationary spiral that could increase our massive debt even further."

Though advisers said they have not begun to fill in the details, Obama's proposal would go beyond the $175 billion stimulus plan he proposed in October. That included a $3,000 tax credit to employers for each new hire above their current work force and billions in aid to strapped states and cities.

More announcements

Separately, Democratic leaders in Congress have been calling for a robust economic-recovery initiative of up to $300 billion, including large spending on infrastructure to create jobs. President Bush has refused to consider a package so large, yet even some conservative economists have said $300 billion is the minimum needed to spur the economy.

Obama's announcement is seen as an effort to calm the tumultuous financial markets.

He plans Monday to announce some top players on his economic team. The disclosure Friday that he will name as his Treasury secretary Timothy Geithner, president of the Federal Reserve Bank of New York, sent the stock market up nearly 500 points after days of steep losses.

Those market declines and the prospect of automakers and other storied companies near collapse last week had sparked growing criticism that Obama was sitting on the sidelines. His statements about "one president at a time," the critics said, ignored that Bush has been ineffectual in dealing with the crisis, and Congress proved unable to do much in its quick one-week session.

Obama's economic team also is expected to include Jacob Lew, a budget director under former President Clinton, who will serve as National Economic Council director, and Peter Orszag, head of the Congressional Budget Office, who will be the next White House budget director.

Former Treasury Secretary Lawrence Summers is to be director of the National Economic Council in the White House, the president's principal economic adviser and policy coordinator, an Obama aide said late Saturday.

Summers has advocated for a forceful government-stimulus plan in recent newspaper columns and has argued that the recent $700 billion bailout package means the federal government should be doing more, not less, in areas such as health care, energy, education and tax relief. Obama appeared to echo those ideas in his radio address.

"We'll be working out the details in the weeks ahead, but it will be a two-year, nationwide effort to jump-start job creation in America and lay the foundation for a strong and growing economy," Obama said.

"We'll put people back to work rebuilding our crumbling roads and bridges, modernizing schools that are failing our children, and building wind farms and solar panels," as well as fuel-efficient cars.

Though few details were provided, Obama's proposal would most likely require the new administration to go back to Congress for approval of a significant jobs and infrastructure program beyond the money it has authorized for the financial bailout.

"There are no quick or easy fixes to this crisis, which has been many years in the making," Obama said. "And it's likely to get worse before it gets better."

Tax-cut strategy

In the presidential campaign, Obama focused largely on tax cuts for low-wage and middle-class workers and tax breaks for small businesses. But as part of a stimulus package, his advisers have discussed letting the Bush tax cuts for the wealthiest Americans expire after 2010 as scheduled.

That, in effect, would delay the tax increases that rich taxpayers would have faced had Obama repealed the Bush tax cuts a year or two early, as he had suggested in his campaign.

Obama would extend the Bush tax cuts for households with less than $250,000 annual income.

That could have economic and political benefits. Economically, Obama would not be open to the charge from Republicans and other critics that he is raising taxes in a recession. His Republican presidential rival, Sen. John McCain, raised that argument in their election battle.

Politically, by simply letting the tax cuts expire, Obama would get the benefit of higher revenues in 2011 and beyond to help finance his proposed health-care plans without having to take any action himself, and without the Democratic majorities in Congress having to take a vote.

Obama hinted that he knows his proposal would entail a political battle.

"I know that passing this plan won't be easy," Obama said. "I will need and seek support from Republicans and Democrats, and I'll be welcome to ideas and suggestions from both sides of the aisle. But what is not negotiable is the need for immediate action."

Information from The Associated Press is included in this report.