Obama Says Stimulus Will Redound to Private Sector

President-elect Barack Obama, seeking to quiet concerns that his economic stimulus package would lead to an unsustainable expansion of the public workforce, said today that 90 percent of the 3 to 4 million jobs created or saved by his plan would be in the private sector.

In his weekly radio address, Obama said that nearly a half-million of the new jobs would be created by investing in clean energy, while another 400,000 would be created by repairing schools, roads, bridges and other infrastructure.

"The jobs we create will be in businesses large and small across a wide range of industries," Obama said. "And they'll be the kind of jobs that won't just put people to work in the short term, but position our economy to lead the world in the long term."

Only the broad outlines of Obama's still-emerging stimulus plan have been made public. The package is expected to cost roughly $800 billion over two years. Obama has set ambitious goals for the plan, including a doubling in the production of alternative energy, modernizing 75 percent of the nation's federal buildings, making 2 million homes more energy-efficient, computerizing health records in five years and providing an immediate tax cut of up to $1,000 for most Americans.

The package also includes a package of tax cuts for small businesses and money to extend unemployment insurance, to increase food stamps, and to provide aid for cash-strapped state and local governments.

Still, it has met with concerns from members of Congress from both parties -- some of whom worry about the enormous price tag and the implications for the future size of government, and others who are concerned about the effectiveness of business tax cuts in stimulating economic growth.

The job-creation estimates cited in Obama's address are contained in a new report released today by Christina Romer, who is slated to head the White House Council of Economic Advisers, and Jared Bernstein, who has been chosen as Vice President-elect Joe Biden's chief economic adviser.

An economic stimulus package assumed to be just over $775 billion, the report estimated, would stoke economic growth by 3.7 percent by the end of next year and create or save about 3.3 to 4.1 million jobs.

The report also defends the use of tax incentives and fiscal relief to states in the package, saying that while those measures are likely to create fewer jobs than direct government spending, they can be implemented more quickly. By contrast, the report said, "there is a limit on how much government investment" that can be carried out efficiently in a short period of time.

Even with the plan in place, the report estimates, the unemployment rate at the end of next year would stand at about 7 percent -- not much improved from the 7.2 percent the federal government reported yesterday for the end of 2008.

The Labor Department also reported yesterday that the nation lost more than a half-million jobs in December, 2.6 million jobs for the full year.

Obama cited the report in underscoring the urgency of enacting a stimulus package.

"These numbers are a stark reminder that we simply cannot continue on our current path," the president-elect said. "If nothing is done, economists from across the spectrum tell us that this recession could linger for years and the unemployment rate could reach double digits."