Obama warns economy likely to get worse

Other members of Obama’s broader economic team are likely to include:

• Peter Orszag, a former Clinton administration economic aide, as the White House budget director. Orszag has been director of the Congressional Budget Office since January 2007.

• Jason Furman, Obama’s top economic policy coordinator during the presidential campaign, is likely to get a senior role, probably as the No. 2 official at the National Economic Council.

Top aides said Sunday that Obama wants Congress to use its large Democratic majority when it convenes Jan. 6 to prepare tax cuts for low- and middle-income earners as part of the massive government intervention designed to pull the country out of its frightening economic nosedive.

Some economists have endorsed spending up to $600 billion to revive the economy. Sen. Charles Schumer, a New York Democrat, and Clinton-era Labor Secretary Robert Reich, a member of Obama's economic advisory board, both suggested $500 billion to $700 billion.

Before winning the presidency Nov. 4, Obama had said he looked to create a $175 billion stimulus package. While the new plan will be significantly larger, it was expected to incorporate his campaign ideas for tax cuts and new jobs in energy technologies to lessen dependence on foreign oil and to reduce carbon emissions.

"I don't know what the number is going to be, but it's going to be a big number," Obama economic adviser Austan Goolsbee said on Sunday. "It has to be. The point is to, kind of, get people back on track and startle the thing into submission."

Over the weekend, Obama directed his team to construct a plan to create 2.5 million new jobs by the end of 2010, and aides said his broader economic program was designed to quickly offer tax relief to lower- and middle-income earners.

No tax hike on wealthiest for now
Significantly the plan would not offer an immediate tax increase on wealthy taxpayers. During the campaign, Obama said he would raise taxes on people making more than $250,000.

"There won’t be any tax increases in the January package," said one Obama aide, who spoke on condition of anonymity because the details of the Obama package have not been fleshed out.

Obama could delay any tax increase to 2011, when current Bush administration tax cuts expire.
House Republican leader John Boehner of Ohio urged Obama to make that explicit. "Why wouldn’t we have the president-elect say, 'I am not going to raise taxes on any American in my first two years in office?'"

At the press conference Monday, Obama declined to specify whether he would pursue a tax increase for the wealthy or simply allow the 2001 tax cuts to expire after tax year 2010 as scheduled.

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