Obama provides internal analysis of economic plan
Facing growing criticism of his economic recovery plan, Barack Obama made public a detailed analysis by his economic advisers that estimates the $775 billion plan of tax cuts.world Updated: Jan 10, 2009 19:59 IST
Facing growing criticism of his economic recovery plan, President-elect Barack Obama made public on Saturday a detailed analysis by his economic advisers that estimates the $775 billion plan of tax cuts and new spending would create 3.5 million jobs over the next two years.
But the president-elect's advisers concede in the 14-page report Obama posted on the Internet that their estimates are "subject to significant margins of error," both because of the assumptions that went into their economic models and because no one knows the final outlines of the package that will emerge from Congress. "These numbers are a stark reminder that we simply cannot continue on our current path," Obama said Saturday in his weekly radio and YouTube broadcast address.
"If nothing is done, economists from across the spectrum tell us that this recession could linger for years and the unemployment rate could reach double digits _ and they warn that our nation could lose the competitive edge that has served as a foundation for our strength and standing in the world," he said.
Obama, who previously has provided few details of the massive spending and tax cut plan, released the report one day after the unemployment rate jumped to 7.2 percent, the highest in 16 years. The nation lost 524,000 jobs in December, bringing the total job loss for last year to 2.6 million, the largest since World War II. If Congress fails to enact a big economic stimulus plan, Obama's advisers estimated that another 3 million to 4 million jobs will disappear before the recession ends.
As lawmaker criticisms of parts of his plan grew during the week, Obama agreed on Friday to modest changes in his proposed tax cuts. Democratic congressional officials said his aides came under pressure in closed-door talks to jettison or significantly alter a proposed tax credit for creating jobs, and to include relief for upper middle-class families hit by the alternative minimum tax. The new report is likely to intensify debate over the economic recovery plan even more, as economists outside the Obama team begin delving into the analysis. The report, for example, estimates that the unemployment rate at the end of 2010 would be 1.8 percentage points lower if the plan is enacted.
Top Democrats on Capitol Hill say there is far more agreement than disagreement on the major parts of the recovery plan: aid to cash-strapped state governments, $500-$1,000 tax cuts for most workers and working couples, and a huge spending package blending old fashioned public works projects with aid to the poor and unemployed and a variety of other initiatives.
The new report provides detailed breakdowns of how many jobs each part of the plan would create, even going so far as to provide estimates that more than 40 percent of the new jobs would go to women and that 90 percent of them would be created in the private sector. It also provides estimates of how many new jobs would be created in each different sector of the economy.
"It's not too late to change course _ but only if we take immediate and dramatic action," Obama said. "Our first job is to put people back to work and get our economy working again."
First Published: Jan 10, 2009 19:55 IST