Obama, Following Clinton, Offers $75 Billion Stimulus (Update2)
By Nicholas Johnston
Jan. 13 (Bloomberg) -- Democratic presidential candidate Barack Obama, raising rival Hillary Clinton by $5 billion, offered a $75 billion economic stimulus plan that includes tax cuts and government spending to stave off a possible recession.
The proposal, released today as Obama campaigns in Nevada, includes an immediate $250 tax cut for most Americans, an extra $250 Social Security payment for low-income senior citizens and $10 billion to help people facing home foreclosures.
``The time has come to bridge the growing divide between Main Street and Wall Street,'' Obama, an Illinois senator, said in a statement. ``We can't wait for the next president to act.''
Candidates are pressing stimulus plans as the economy overtakes Iraq as the top concern among Democratic voters in polls. Obama's chief competitor for his party's nomination, New York Senator Clinton, unveiled a $70 billion plan on Jan. 11 that includes assistance to cover rising energy costs and help avoid home foreclosures.
Economists at Goldman Sachs Group Inc., Merrill Lynch & Co. and Morgan Stanley have said the U.S. is probably slipping into a recession. A Labor Department report earlier this month showed the nation's jobless rate jumped to 5 percent in December from 4.7 percent the previous month as a slowdown in the housing market ripples through the economy.
Former North Carolina Senator John Edwards, who is running third in national polls for the Democratic nomination, proposed last month $25 billion in government aid for job creation and as much as $75 billion more if the U.S. appears to be entering a recession.
Jobless Benefits
Along with the immediate tax cut and Social Security payments, Obama's plan would provide $10 billion to help state and local governments avoid cutting services because of budget shortfalls and spend $10 billion to extend benefits for unemployed workers.
``We're seeing significant challenges,'' Virginia Governor Tim Kaine, an Obama adviser, told reporters on a conference call. ``We've got to have a strategy to keep the economy strong.''
The tax cuts would apply to workers with salaries less than $75,000. Obama said the plan will ``jumpstart the economy by putting money in the pockets of those who need it most and will spend it quickly.''
If the economy continues to deteriorate after the plan is enacted, Obama proposed an additional $45 billion in stimulus, which would include doubling the tax cut and Social Security payments to $500.
Wider Deficit
Obama economic adviser Austan Goolsbee, a professor at the University of Chicago, said the stimulus plan would widen the budget deficit in the short term, while increasing revenue in the long term by preventing a recession.
``The goal is to get the money into the economy,'' he said. ``If you put it in and take it out at the same time you don't have a stimulus.''
Clinton campaign spokesman Phil Singer noted that Clinton was first with a plan to aid the ailing economy, and said her program better addresses the housing sector.
``It's nice to see Senator Obama is following Senator Clinton's lead two days later by announcing a stimulus package that borrows heavily from her proposals,'' he said. ``Senator Clinton's stimulus package includes not only substantially more assistance to mitigate the effects of mounting foreclosures than Senator Obama's plan, but has a comprehensive agenda to end the crisis.''
Bush Tax Rebate
President George W. Bush and his economic advisers are considering a tax rebate targeted at low and middle-income Americans as part of a plan to avoid a recession, according to a government official.
Bush may present details in his State of the Union speech on Jan. 28. Democrats in Congress also are drawing up their own proposals, and several of the Republican presidential candidates last night endorsed general steps, such as tax cuts and measures to mitigate energy prices, to head off an economic decline.
``Everybody is now starting to talk about some stimulus in Washington,'' Obama backer Bill Daley, who was commerce secretary under former President Bill Clinton, told reporters. He said the Obama plan ``can get results quickly.''
To contact the reporter on this story: Nicholas Johnston in Las Vegas at njohnston3@bloomberg.net ;
Last Updated: January 13, 2008 15:53 EST |
