New US$500b stimulus plan?

The Straits Times
Dec 2, 2008 | 6:46 AM
New US$500b stimulus plan?

WASHINGTON - US HOUSE of Representatives Speaker Nancy Pelosi met leading governors on Monday to discuss the size and shape of an economic stimulus package that one Democratic aide said was likely to cost around US$500 billion (S$765 billion).

The aide, who asked not to be identified, said the legislation would include a middle-class tax cut, billions of dollars for road, bridge and mass transit construction, expanded aid to states and investments in renewable energy.

Speaking to reporters earlier, Mrs Pelosi said she hoped the job-creating legislation, which she did not detail, would be ready for President-elect Barack Obama to sign when he takes office on Jan 20.

'We'd like to have it ready for the president-elect,' Mrs Pelosi told reporters before meeting Governors Ed Rendell, a Pennsylvania Democrat, and Mr Jim Douglas, a Vermont Republican. 'I think we will be coming to some agreements today.'

Mr Rendell chairs the National Governors Association and Mr Douglas is the vice-chairman. Mr Obama and Vice-President-elect Joe Biden will meet US governors in Philadelphia on Tuesday to discuss the economic crisis.

The House passed a US$61 billion stimulus in September but opposition from Senate Republicans backed by a Bush administration veto threat killed the bill in the Senate.

Mrs Pelosi's meeting with the governors came as the National Bureau of Economic Research said the US economy entered a recession in December, 2007.

US unemployment has been rising, the financial industry is reeling even with the recent enactment of a US$700 billion government bailout, and Congress must decide whether to rescue domestic automakers, who face a Tuesday deadline to provide Washington with restructuring plans.

Governors and state legislatures are asking Congress to act quickly on an aid and job-creation bill, noting they face severe budget shortfalls in 2009 and 2010.

At US$500 billion, the measure would dwarf the US$168 billion economic stimulus that was enacted last February, which consisted mostly of tax rebates for families and small business tax benefits.

The new emergency spending would add to spiralling government spending which sent the budget deficit to a record US$455 billion in the fiscal year that ended on Sept 30.

Hoping to blunt Republican criticism that Democrats are cobbling together a massive bill full of wasteful spending, Mrs Pelosi said the measure would be aimed at 'creating jobs for the 21st century', with a focus on energy projects.

Mr Obama has said that his first priority when taking office would be signing an economic stimulus bill into law. -- REUTERS