Authored by Jon Mercer in Economy
Published on 12-24-2008
As the nations economists warn of an even deeper recession, President-elect Barack Obama has announced that he will more than triple his economic stimulus package in an effort to create or save three million jobs. Transition aids told Capitol Hill last week that the new package will cost $675 to $775 billion over the next two years, although Mr. Obama has refused to specify the exact amount he intends to allow for the stimulus plan.
Concerned over the country’s worsening economic troubles, Obama laid out the stimulus package idea during his presidential campaign; however at that time the amount he vowed would spend on the plan was much lower. In his campaign promises, Obama said the stimulus package was only to involve about $175 billion.
Tuesday, President-elect Obama met with top economic advisers and received the sobering news that without an aggressive stimulus plan, our economy could lose as many as four million jobs by 2011. This would raise the unemployment rate to above 9%, the highest in three decades. Unemployment has already risen to 6.7% as of last month, the highest level in fifteen years. During President Reagan’s first term in 1983 was the last time unemployment rose above the 9% level.
Top economic advisors told President-elect Obama that in the last few weeks the economy had worsened to the point that short and long term affects could be now be expected to worsen beyond what the country has seen in about fifty years. With this news, Obama told his advisors that his original plan for an economic stimulus of about $175 billion would not be nearly enough. He proposed that an additional 500.000 jobs should be saved or created over the next two years to make his plan viable.
The prospect of more job losses is the main thing that is hurting the economy. In November, employers eliminated 533,000 jobs, the most since 1974. The fear of even more job losses is preventing people from spending, thereby causing other jobs to be put into jeopardy. President-elect Obama’s plan rests solely on the passage of his economic package; congress plans to hear the details of the package on January 6.
Republican senators have voiced skepticism about the stimulus package. Although Obama appears to have the votes needed in the House of Representatives, the Senate could potentially delay or stop the plan with a filibuster. The senate has already vowed to oppose any plan that would include pork barrel projects that were meant to reward special interest groups.