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01 October 2023

Obama demands 'bold' action on stimulus plan

US President-elect Barack Obama meets with Democratic and Republican congressional leadership on Capitol Hill in Washington, DC. After arriving in Washington over the weekend with his family, Obama met with the Congressional leaders to begin work on an economic stimulus package that he hopes will include hundreds of billions of dollars worth of tax breaks for individuals and businesses. (GETTY IMAGES)

President-elect Barack Obama Monday demanded bold action on his near $800 billion stimulus plan, warning Congress would send the US economy into an even deeper hole if it fails to act swiftly.

Obama touted a sweetener of $300 billion in tax cuts in an apparent bid for opposition Republican support, as he plunged into the fray on his first day since moving to Washington, two weeks before his inauguration.

"The most important message today is that the situation is getting worse, we've got to act boldly, and we've got to act swiftly. We cannot delay," said Obama who met leaders from both sides of the political divide on Capitol Hill.

"It's clear that we have to act and we have to act now to address this crisis and break the momentum of the recession, or the next few years could be dramatically worse," Obama said.

Obama sent a jolt of momentum through Washington after several congressional leaders Sunday dismissed expectations that the mammoth stimulus plan could be on the new president's desk when he is sworn in on January 20.

Mid-February is now the target date for action by both chambers of Congress.

The president-elect's aides meanwhile divulged details of the massive scope of the package, his opening political gambit as he takes office amid the worst global economic crisis for more than 70 years.

Obama will propose tax cuts totaling $300 billion over two years, or around 40 per cent of a package that could top $775 billion, a transition source said on condition of anonymity.

The president-elect has said the stimulus will include a multi-billion-dollar program of public works, including highway and bridge repairs, renovating school classrooms and aid to cash-strapped states.

The plan is designed to create or preserve three million jobs over three years, includes tax and spending incentives for renewable energy production and provides extra healthcare benefits for needy Americans.

US citizens can expect immediate tax relief of around $500 for individuals and $1,000 for couples under the plan, and some businesses would be able to write off last year's losses against their tax return.

Republican leaders, seeking to position their party after a drubbing in November's elections, were cautious after the talks.

Senate minority leader Mitch McConnell suggested Obama should adopt some Republican ideas -- including making aid to states as loans rather than handouts to win symbolic big majorities in Congress.

House minority leader John Boehner praised the idea of tax cuts but expressed anxiety at the size of the wider package.

Senate Democratic Majority leader Harry Reid however raised the prospect the package could balloon through the one trillion dollar barrier.

"I have not received, of course, the exact package from the president-elect and his folks, but he has indicated that there's at least 20 economists that he's talked with, and all but one of those believe it should be from $800 billion to $1.2 trillion or $1.3 trillion," Reid said.

Obama's transition team said that he would maintain his focus on the economy on Tuesday with more meetings with his economic brain trust, including treasury secretary designate Timothy Geithner and the director designate of the council of economic advisors Lawrence Summers.

On Sunday, congressional leaders played down hopes the stimulus plan would be ready for Obama's signature as soon as he is sworn in.

House speaker Nancy Pelosi, who also met Obama Monday, would not commit to a timetable for moving the stimulus plan, but promised quick action.

"We know what the time constraints are, they are dictated by the sense of urgency that the American people have about their economic well-being," Pelosi said.

Obama flew to Washington on Sunday, after the first bump in what has been a smooth transition when New Mexico Governor Bill Richardson withdrew his name from the Senate confirmation process for commerce secretary due to an investigation into a financial company doing business with his state.