President-elect Barack Obama’s advisers hope to finish an economic recovery blueprint by Dec. 25 so that Democratic Congressional staff members can draft legislation by the new year, as the two branches of government try to converge on a two-year plan by late January that could total just under $1 trillion.
Democrats familiar with the early deliberations say the preliminary price tag has grown to about $800 billion from the roughly $600 billion that House Speaker Nancy Pelosi had estimated in recent days.
Mark Zandi, a Republican economist who is advising the Democrats, said in an interview that the worsening economy could push his updated recommendation in January up to $1 trillion for a two-year government stimulus.
About a fifth of the Obama package could go toward health care, Democrats say. The biggest piece would be up to $100 billion to subsidize the states’ growing Medicaid caseloads of the poor. Mr. Obama also will call for a down payment on the $50 billion he proposed during his campaign to help medical providers buy information technology and save costs on health records.
Mr. Obama is considering roughly $200 billion in tax relief for low-wage and middle-class workers, including a payroll tax holiday to fatten paychecks and encourage Americans to spend more and spur economic activity, according to several people with knowledge of the options he is weighing.
The Obama plan has five main parts, according to Democrats in Congress and the Obama transition office. Besides the health care financing, it would propose billions of dollars for energy-saving programs, public works projects, school construction and renovation, and expanded jobless aid and food stamps for “the most vulnerable,” as well as tax cuts.
The scale and speed of the emerging package could exceed anything in recent memory, according to White House and Congressional veterans, in keeping with Mr. Obama’s admonition that the size of the stimulus must be proportionate to the economy’s ills.
One trillion dollars. That is some serious money.