President-Elect, Congressional Leaders Strive for Swift Action on Stimulus Plan

By Paula Cruickshank and Jeff Carlson, Washington Staff Writers

President-Elect Barack Obama on January 5, 2009, said he hopes "the bulk" of the economic stimulus plan will be finished by the end of January or the first week of February. Obama met with congressional leaders as they continue to work on a massive economic recovery package that is expected to total more than $700 billion and include upward of $300 billion in tax cuts. Following a morning meeting with House Speaker Nancy Pelosi (D-Calif.), Obama noted the "extraordinary economic challenge ahead of us," but also spoke hopefully about developing an economic investment and recovery plan aimed at creating 3 million new jobs.

Incoming White House Press Secretary Gibbs told reporters there is "an added urgency" to act on an economic plan in light of worsening economic conditions. Gibbs, at a press briefing on January 4, noted recent figures on declining consumer confidence, slow holiday retail sales and what is expected to be a "sobering job report" the week of January 5.

Obama has repeated the need for bold and swift action on an economic recovery plan that creates jobs in the short term and spurs the U.S. economic growth and competitiveness in the long-term. In a radio address on January 3, he noted that economists across the political spectrum believe a large package is necessary to avoid an even deeper recession and double-digit unemployment rates.

Congressional Reaction

Congressional Democratic leaders agreed with Obama that quick action was necessary and roughly agreed on the $300 billion price tag, but were reluctant to commit to that number.

Pelosi said the figure was "in the ballpark." Following a January 5 meeting with the President-Elect, Pelosi said she hoped to have a stimulus bill ready for signing into law by January 20, the date of the inauguration. Other leaders, however, tamped down such an optimistic scenario. House Majority Leader Steny Hoyer (D-Md.) said on Fox News Sunday that a mid-February date was more likely. "It's going to be very difficult to get the package put together that early so that it can have sufficient time to be reviewed, and then sufficient time to be debated and passed," he said. House Democratic caucus leader John B. Larson (D-Conn.) noted that bumps along the road to passage would likely cause some delay, but ultimately Congress would pass the measure.

Senate Finance Committee ranking member Charles E. Grassley (R-Iowa) later warned that Republican lawmakers were concerned about further expanding entitlement spending and increasing the federal deficit without stimulating the economy. "If we don't stick to a tight definition of ‘stimulative,' we'll have trouble getting an effective bill passed," he said.

According to House Ways and Means member Pete Stark (D-Calif.) there have been ongoing meetings between Democratic members of the House and Senate tax writing panel and the Obama team and that they were in agreement on approximately 80 to 85 percent of the tax portion. He noted that there were several portions of the bill that were currently being circulated among members.

Pressed about his tax cut plans at a brief press session on January 5, Obama referred to the proposals made over the past two years. He noted that tax cuts have been the centerpiece of his economic plan throughout his presidential campaign.

In the past two years, Obama called for a tax cut for 95 percent of working families and seniors. He proposed a permanent tax cut of $500 for workers and $1,000 for families. To hasten tax relief, the proposed credits would be mailed out quickly by the IRS based on tax returns filed for the tax year 2007. His proposal would extend tax credits to retired seniors as a down payment to eliminate taxes for all senior citizens earning less than $50,000 annually.

His plans also would permit penalty-free hardship withdrawals from IRAs and 401(k)s in 2008 and 2009, and allow seniors to delay required withdrawals from 401(k)s and IRAs. It also would provide a new temporary American jobs tax credit, raise the small business investment expensing limit to $250,000 through the end of 2009 and eliminate all capital gains taxes on investments made in small and start-up businesses.

"The most important task for us is to stabilize the patient. The economy is badly damaged," Obama said after meeting with his economic advisers later in the day on January 5. At the same time, the president-elect stressed the importance of fiscal responsibility and his intention to lower the deficit after an economic recovery takes hold.

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Congress Debates Expiring Tax Provisions, Disagrees on Tax Hikes

Posted January 6, 2009.