Obama Pushes States to Cover More Unemployed
07.01.09
By JONATHAN WEISMAN and LAURA MECKLER
President-elect Barack Obama's economic team is pressing ahead with a costly economic-stimulus plan despite a projected $1.2 trillion budget deficit this year.
The incoming administration is convinced that international lenders will be more likely to keep the U.S. government afloat if they see aggressive action to emerge from recession, and that the potential costs from insufficiently bold action are greater than the dangers of rising interest rates from swelling deficits.
And Mr. Obama appears ready to up the ante. In an interview with CNBC on Wednesday, he acknowledged that the plan's price tag, currently $775 billion, is likely to rise. "We've seen ranges from 800 [billion] to 1.3 trillion and our attitude was that given the legislative process, if we start towards the low end of that, we'll see how it develops," he said.
Mr. Obama and his senior economic aides confronted projections from the nonpartisan Congressional Budget Office on Wednesday that the federal deficit will reach $1.2 trillion in the fiscal year that ends Sept. 30. That would shatter the nominal dollar record of $455 billion set in fiscal 2008. Measured against the size of the economy, the deficit -- at 8.3% of gross domestic product -- is expected to eclipse the postwar record of 6% in 1983.
Source: Wall Street Journal