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$600 Billion Stimulus Needed, Obama Advised

Business experts from across the political spectrum have advised President-elect Barack Obama's transition team that an economic recovery package must cost more than $600 billion over two years.

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CNBC.com
Financial Crisis

Obama's economic team has solicited the opinions of a number of economists, including former advisers to Republican presidential candidate John McCain. The recommendations range from $400 billion in just one year to $1 trillion over two years, according to Obama officials.

The Obama team has not settled on a figure, but the advice represents a far bigger infusion than Obama advisers had initially envisioned. A huge stimulus package could run into Republican opposition in Congress.

Obama's top economic advisers solicited the opinions as they worked to assemble a spending plan that would meet Obama's goal of saving or creating 2.5 million jobs over two years.

Among those whose opinions Obama advisers sought were Lawrence B. Lindsey, a top economic adviser to President George W. Bush during his first term, and Harvard professor Martin Feldstein, an informal McCain adviser and former chairman of the Council of Economic Advisors under President Ronald Reagan.

Feldstein recommended a $400 billion investment in one year. Lindsey told Obama's team that a package should be in the range of $800 billion to $1 trillion.

A stimulus package that approaches $1 trillion, however, could run into significant Republican opposition in Congress. It also could cause heartburn for moderate and conservative Democratic lawmakers who loathe large budget deficits.

Obama has said he wants Congress to assemble a recovery package that includes massive spending on highway and bridge repairs and maintenance, new and upgraded schools, energy-efficient government buildings and a host of new environmentally friendly technologies.

This week, House Speaker Nancy Pelosi said Democrats are preparing a recovery bill in the range of $600 billion, blending immediate steps to counter the slumping economy with longer term federal spending that encompasses Obama's plan.

Obama's economic team believes that to put unemployment on a downward trajectory with a goal of 7.5 percent or less over two years would require a stimulus package of about $850 billion. The advisers revealed the discussions on the condition of anonymity because no decisions had been reached.

Also on Wednesday, Obama was to officially announce his choices to lead the agriculture and interior departments at a news conference in Chicago.

Obama is to announce former Iowa Gov. Tom Vilsack for agriculture secretary and Sen. Ken Salazar to lead the Interior Department, said Democratic officials familiar with the selection process. They discussed Obama's plans with The Associated Press, speaking on condition of anonymity because a formal announcement had not yet been made.

The agriculture department provides support for farmers and also ensures food safety, and the interior department oversees oil and gas drilling on public lands and manages the nation's parks and wildlife refuges.

The news conference will be Obama's third in as many days to announce Cabinet appointments. Transition officials said more announcements were likely this week, before Obama planned to head to Hawaii for Christmas vacation with his family. Obama takes office Jan. 20.

Obama on Tuesday named Arne Duncan, the head of the Chicago school system, as education secretary. The posts yet to be filled include secretaries for the departments of Labor and Transportation. Nor has Obama named leaders for the intelligence agencies, or a trade representative.