President-elect on Capitol Hill to talk about tax cuts, spending plans
Saying the U.S. economy is bad and getting worse, President-elect Barack Obama took his plan for $300 billion in tax cuts to Capitol Hill on Monday, reaching out to lawmakers in an effort to win approval for a massive stimulus plan he says is needed to jump-start the U.S. economy.
"The people can't wait. We have an extraordinary economic challenge ahead of us," said Obama at the beginning of a meeting with House Speaker Nancy Pelosi on Monday morning.
Monday afternoon, the president-elect makes his case to a bipartisan group of congressional leaders for his $775 billion stimulus plan. Obama is scheduled to have talks with Pelosi, Senate Majority Leader Harry Reid and Republican leaders Rep. John Boehner and Senate Minority Leader Mitch McConnell.
"The economy is bad. The situation is getting worse," Obama said, following a meeting with his economic team.
Obama plans to spend about $775 billion over two years, putting people to work on infrastructure projects and giving aid to states. In all, the tax cuts or breaks would account for about 40% of the value of the stimulus.
The overall stimulus figure is already making Republicans uncomfortable, and Democrats said on Sunday that getting a plan through Congress could take six more weeks. They had hoped to approve a package for Obama to sign immediately after being sworn in.
Obama said Monday that he wants to sign a package "shortly after" he's inaugurated on Jan. 20.
Pressed by a reporter about a timetable, Obama said "it's going to take some time, even on an expedited schedule, to get a bill passed and on my desk.
"But we anticipate that by the end of January or the first week in February we have gotten the bulk of this done."
At the top of his meeting with Pelosi, Obama said a "sobering" jobs report is likely to underscore the fragile economy when it comes out on Friday morning. Economists polled by MarketWatch are expecting a drop of 500,000 jobs in December, which would mean that more than 2 million jobs were lost in 2008. See Economic Preview.
Jobs and taxes
The president-elect is aiming to create 3 million new jobs with his stimulus package, with more than 80% of them in the private sector.
Some of the tax-cut provisions aren't new. Most workers would get a $500 payroll tax credit, a proposal Obama put forward on the campaign trail. Meanwhile, businesses would get a number of tax breaks. On Monday, Obama denied that the tax cuts were designed to attract Republican support for his plan.
Tommy Vietor, an Obama spokesman, said the aim of the tax cut plan is fast economic stimulus.
"We are working with Congress to develop a tax cut package based on one principle: what will have the biggest and most immediate impact on creating private sector jobs," he said.
William Gale, a budget and tax expert at the Brookings Institution, said pressure is on lawmakers and the incoming Obama administration to act on the stimulus.
"They've got to have something passed by Presidents' Day, when they all take a break," he said. He said the $500 tax credits would be effective stimulus but added that other proposals, like a one-year tax credit for companies that make new hires, wouldn't be.
Obama would give businesses a host of tax breaks, Vietor said.
Companies would be allowed to write off losses incurred last year, as well as any losses from 2009.
And small businesses would be allowed to write off several different expenditures up to $250,000 in 2009 and 2010.
On Monday, Obama also said he and his economic team are studying how to stimulate the economy in the long run while trying to bring down the deficit.
"If we're going to grow this economy over the long term, if we're going to create a better future for our children and our grandchildren, then we can't be fiscally irresponsible about how we do it," Obama said.
