Obama stimulus plan grows larger

  The incoming administration is eyeing an economic stimulus plan on the order of $670 million to $750 million as the condition of the U.S. economy appears to be worsening, Obama advisor David Axelrod said Sunday on CBS?Face the Nation.

   The figure is greater than previous estimates of the amount expected to be spent on infrastructure projects to create jobs and provide states support for key social services such as unemployment compensation and food stamps. House Speaker Nancy Pelosi recently suggested Congress would consider a $600 billion emergency bill.

   Lawrence Summers, President-elect Obama's choice to head the White House National Economic Council, said in a Washington Post op-ed Sunday that any economic strategy during the current crisis needs to err on the side of doing too much rather than too little.

   Many experts believe that Gross Domestic Product could be as much as negative 5 or 6 percent in the fourth quarter and that unemployment could reach double digits by the end of next year.

   The poor outlook has caused Obama to revise his goal for creating or retaining jobs to 3 million from 2.5 million.

   Summers said that spending on projects - from building roads and bridges, to schools and clean energy infrastructure - would be based on merit.

   The president-elect has insisted that investments proposed in the recovery plan meet standards much higher than has been traditional. There will be no earmarks. Investments will be chosen strategically based on what yields the highest rate of return for the economy and monitored closely not just by officials but also by the public as government becomes more transparent. We expect to evaluate and to be evaluated rigorously to ensure that Washington is held accountable for how tax dollars are spent, he said.

   Some Washington watchdog groups are skeptical that Congress and the administration will be able to discern worthy projects from all the requests proffered by states, cities and private sector interests.

   Meanwhile, N.Y. Times columnist Thomas Friedman urged Obama on Sunday to raise the federal gasoline tax as the best way to use market mechanisms to change consumer habits and drive use of energy efficient vehicles. A federal commission and many experts have recommended an increase in the gasoline and diesel fuel tax to refill the Highway Trust Fund and fund long-neglected surface transportation projects.

Source: American Shipper