President-elect Barack Obama is hearing from private sector economists, and some members of his economic advisory team that Congress should consider — and he should sign into law in January — a far broader stimulus package than anyone has publicly discussed to date.
Instead of $300 billion dollars, which has been the upper limit, they are now talking about $500 billion, which is 3 to 4 percent of GDP.
These advisers are looking at analysis that says next year unemployment could top eight percent, private sector spending could drop six percent of GDP, and the Federal Reserve is basically out of room to do anything more with monetary policy.
So they argue the nation’s economy will need that injection of capital.
How? They’re talking about implementing it through infrastructure — roads and bridges. Tax cuts. Investments in so-called green-jobs and alternative energy development. Unemployment extensions. And other aid to state and local governments.
But the big question is: how do you get the stimulus without making it permanent spending that increases the deficit over the long term?
President-elect Barack Obama has made no final decisions on a stimulus package, but this is what they’re contemplating right now.
Source: ABC News