Obama Details Recovery Plan
An Aggressive Push Before Congress Considers Package

By Philip Rucker
Washington Post Staff Writer
Sunday, January 25, 2009

President Obama pressed aggressively for his massive economic recovery plan yesterday, laying out the most detailed benchmarks to date of a stimulus package that would cost at least $820 billion and warning that the nation's economy could become dramatically worse without major federal investment.

With Congress preparing to take up the stimulus bill this week, Obama described what he would do with a recovery package aimed at saving or creating as many as 4 million jobs. The White House outlined proposals designed to appeal to Republicans who have resisted the scale of federal spending, as well as to average taxpayers, many hit hard by the recession, who have not felt the benefit of earlier government bailouts.

In his first weekly presidential radio and video address, Obama said his American Recovery and Reinvestment Plan is critical to jump-starting the economy, which lost 2.6 million jobs last year. The plan, he said, would protect workers from losing health-care coverage; modernize public schools, roads and sewer systems; lower energy costs and taxes; and make college more affordable.

This week, the new administration will step up its lobbying efforts to ensure that Obama's signature legislation passes Congress by mid-February. The president, who met with his chief economic advisers yesterday, plans to visit Capitol Hill on Tuesday to court Republican leaders, and top administration officials will fan out on today's political talk shows to press their case.

"Our economy could fall $1 trillion short of its full capacity, which translates into more than $12,000 in lost income for a family of four," Obama said yesterday. "And we could lose a generation of potential, as more young Americans are forced to forgo college dreams or the chance to train for the jobs of the future.

"In short, if we do not act boldly and swiftly, a bad situation could become dramatically worse."

Some congressional Republicans remain opposed to his plan, saying it includes too many spending programs that may not provide immediate economic relief and arguing that the roughly $225 billion in tax breaks in the Democrats' package is not enough. Obama wants to cut taxes by $1,000 for 95 percent of workers and their families.

"Unfortunately, the trillion-dollar spending plan authored by congressional Democrats is chock full of government programs and projects, most of which won't provide immediate relief to our ailing economy," House Republican Leader John A. Boehner (Ohio) said yesterday in his party's response address.

Boehner spokeswoman Antonia Ferrier described the White House proposal as "just another unfocused, runaway bill loaded with slow and wasteful Washington spending on every conceivable goal."

Boehner criticized some spending proposals in the House Democratic plan, including $6 billion for colleges and universities, many of which have large endowments, and $50 million for the National Endowment for the Arts. "All told, the plan would spend a whopping $275,000 in taxpayer dollars for every new job it aims to create, saddling each and every household with $6,700 in additional debt," he said.

The White House released a four-page report yesterday outlining spending priorities and accountability measures for the recovery package. Obama wants to double renewable energy capacity within three years, creating enough additional capacity to power 6 million homes, and he plans to leverage $100 billion to finance private-sector clean-energy initiatives.

His plan also calls for an expansion of the child tax credit, which would provide a new tax cut to the families of more than 6 million children and increase the existing credit for the families of more than 10 million children.

"I think there's been a real effort to include proposals that have strong bipartisan support," said Rep. Chris Van Hollen (D-Md.), citing a renewable energy proposal he developed with Rep. Zach Wamp (R-Tenn.) that is included in the stimulus package. "That doesn't mean that Republicans will support the overall package, but I think it will be difficult for them to argue that it does not include provisions that they think are effective in strengthening the economy."

Van Hollen said Obama's proposals, taken together, will help accomplish two goals: "to have an immediate boost to the economy, and the second is to make investments that will ensure greater competitiveness in the 21st century."

A bonus for businesses in Obama's plan is a provision that would allow them to carry back their losses into taxes filed for the previous five years, which would produce a windfall, said C. Clinton Stretch, a tax expert at Deloitte Tax LLP. "That puts cash very quickly in the hands of businesses, which are, by definition, struggling," said Stretch, a contributor to Democratic campaigns.

House Speaker Nancy Pelosi (D-Calif.) said yesterday that she is committed to having a stimulus bill passed and ready for Obama to sign by the President's Day holiday on Feb. 16. On Tuesday, the Senate Appropriations and Finance committees will consider their versions of the package, while the full House is expected to take up the measure Wednesday. The White House said it plans to spend at least 75 percent of the stimulus package in the first 18 months after passage.

House Majority Leader Steny H. Hoyer (D-Md.) said the goals outlined yesterday "will serve as a benchmark of progress to ensure accountability."

Some of Obama's plans are aimed at working-class citizens; one would expand COBRA, the temporary health-care program that newly unemployed workers can get when they lose their health insurance. That expansion is estimated to guarantee coverage for nearly 8.5 million people.

Among the other major goals are laying more than 3,000 miles of electric transmission lines; installing 40 million "smart" utility meters, which help control energy use, in U.S. homes; and weatherizing at least 2 million homes and 75 percent of federal buildings. Major infrastructure investments include enhancing security at 90 major ports and modernizing the nation's water system by launching 1,300 wastewater projects, 380 drinking-water projects, and 1,000 rural water and sewer system projects.

"This is not just a short-term program to boost employment," Obama said. "It's one that will invest in our most important priorities -- like energy and education, health care and a new infrastructure -- that are necessary to keep us strong and competitive in the 21st century."

In the area of education, Obama's plan calls for renovating 10,000 schools and funding the shortfall in Pell Grants, which would increase college affordability for 7 million students. The plan also calls for providing access to quality pre-kindergarten programs to an additional 350,000 children.

Obama's proposal is designed to inject quick investments into programs across priority areas identified during his presidential campaign and transition, said an economic aide to the president. "In order to achieve those levels of investment, you need to look for ways of investing both quickly and efficiently across a broad spectrum," said the official, who spoke on the condition of anonymity to discuss the plan.

But enacting an array of spending programs can be risky, said N. Gregory Mankiw, a Harvard University economist who served as chairman of former president George W. Bush's Council of Economic Advisers. "Fundamentally, you've got to look at these things item by item, and my fear is that since there's this push to do something so fast -- which makes sense, given the crisis -- there won't be a careful vetting to make sure that each item passes a cost-benefit test," Mankiw said.

The White House also spelled out a plan for greater transparency, saying the proposal would include no earmarks and would be subject to oversight by an independent review panel. The administration said it would launch a Web site, www.recovery.gov, which would tell citizens how the recovery funds are being spent.

"Instead of politicians doling out money behind a veil of secrecy, decisions about where we invest will be made public and informed by independent experts whenever possible," Obama said. "We'll launch an unprecedented effort to root out waste, inefficiency and unnecessary spending in our government."

Staff writers Paul Kane and Anne E. Kornblut contributed to this report.

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