THINKING BIG…. We’ve heard quite a bit from the president-elect and his transition team about the need for bold and determined action in response to the financial crisis, most notably in the form of a massive stimulus package, focusing on public works.
How massive? As the crisis intensifies, the vision becomes even more ambitious.
President-elect Barack Obama’s economic team is considering an economic-stimulus program that will be far larger than the two-year, half-trillion-dollar plan under consideration two weeks ago, according to people familiar with the team’s thinking.
The president-elect is expected to be briefed on the broad parameters of the plan next week, with aides still hoping for Congress to pass a bill by the time Mr. Obama takes office Jan. 20.
With the unemployment rate now expected to hit 9% without aggressive intervention, Obama aides and advisers have set $600 billion over two years as “a very low-end estimate,” one person familiar with the matter said. The final number is expected to be significantly higher, possibly between $700 billion and $1 trillion over two years. […]
On the upper bounds, liberal economists in the team have staked out $600 billion in the first year and $300 billion to $600 billion in the second, depending on economic conditions in 2010. Incoming Obama White House Chief of Staff Rahm Emanuel said early this week he had tasked National Economic Council Director Lawrence Summers to sound out conservative and liberal economists on their views…. Christina Romer, who will lead Mr. Obama’s Council of Economic Advisers, is also surveying economists, trying to build political consensus around a larger number before it is presented to Congress in early January.
That might be feasible. Outside the Neo-Hooverite contingents of the Republican Party, there’s actually considerable support for an aggressive rescue plan, even among business interests that are generally reluctant to support Democratic economic proposals.
Paul Krugman recently noted, “My advice to the Obama people is to figure out how much help they think the economy needs, then add 50 percent. It’s much better, in a depressed economy, to err on the side of too much stimulus than on the side of too little.”
The more this becomes the consensus view, the better.