Obama may delay tax rise

By Caren Bohan and Terry Wade

WASHINGTON/LIMA (Reuters) - President-elect Barack Obama may consider delaying a campaign promise to roll back tax cuts on high-income Americans as he works on a huge stimulus plan to counter the worst economic crisis the world has faced in decades.

In other moves aimed at reducing the impact of the recessionary conditions sweeping many economies, the 21 members of the Asia-Pacific Economic Cooperation forum pledged at the end of a two-day summit in Lima that they would take quick and decisive action.

And diplomats also said there was a high probability the World Trade Organization would hold a ministerial meeting next month to seek a breakthrough in the stalled Doha round of global trade talks.

But the politicians are up against a steady drumbeat of grim economic and corporate news. On Friday, figures from the euro zone and Japan are expected to show increases in jobless rates, and on the same day the traditional start to the U.S. holiday shopping season promises to be one of the most wrenching for retailers in recent memory.

Earlier in the week, U.S. home sales and price data, as well as durable goods figures, are also forecast to be weak.

And on Sunday night, Citigroup (C.N), the second-largest U.S. bank by assets, was struggling to restore confidence after its share price dropped 60 percent last week. The Wall Street Journal reported that Citigroup was nearing agreement with U.S. government officials on the creation of a separate "bad bank" that would house some of its potentially toxic assets.

Such developments will be vying with any positive investor sentiment created by Obama's moves as global financial markets open on Monday.

Perhaps most importantly, two Obama aides indicated that the tax cuts brought in under the current administration of President George W. Bush may be allowed to run their course until the end of 2010, rather than being rescinded by legislation before then.

When asked if the tax cuts for the wealthy would be allowed to expire on schedule after 2010 rather than be rolled back earlier, senior Obama adviser David Axelrod told Fox news channel: "Those considerations will be made."

Another adviser, Bill Daley, said on NBC's "Meet the Press" that the 2010 scenario "looks more likely than not."

Business leaders and economists had expressed concern that raising taxes on the higher paid now would only exacerbate the economy's woes.

Obama, who will take over from Bush on January 20, is ready to announce his top economic team on Monday, holding a news conference at 11 a.m. in Chicago (1700 GMT).

He plans to nominate Timothy Geithner, president of the New York Federal Reserve Bank, as Treasury secretary, a transition official said. Lawrence Summers, 53, who was Treasury secretary in the Clinton administration, will help shape policy as director of the White House National Economic Council, the official said.

The potential size of the latest U.S. stimulus plan appears to be growing from the $100 billion to $300 billion previously suggested by congressional leaders.

One influential Democrat, Sen. Charles Schumer of New York, said on Sunday that a package of up to $700 billion was needed to support the American economy. Schumer also said he expects Congress to get the package onto Obama's desk for signature by Inauguration Day.