Jan 5 (Reuters) - President-elect Barack Obama and leaders in the U.S. Congress are trying to craft legislation that they hope will stimulate the U.S. economy, which has been in a recession for more than a year.
Their recipe is a combination of emergency spending by the federal government and tax cuts to create or save 3 million jobs and put more money in people’s pockets to spend on consumer goods.
The following is a list of what could become the key elements of the legislation, although significant changes could occur before the House of Representatives and Senate actually vote on a bill:
* THE PRICE TAG: Obama officials and Democrats in Congress have been talking about a spending $675 billion to $775 billion over two years. Some U.S. governors and economists are pushing for something even larger -- around $1 trillion. Many Republicans want a more modest bill, maybe in the range of $500 billion.
* PRICE COMPARISON: To put the potential cost in perspective, Washington spends about $1 trillion every year on all government activities put together, except for Social Security, Medicare, Medicaid and some other “entitlement” programs that together cost about $2 trillion a year.
A year ago, an economic stimulus bill costing $168 billion over two years was enacted before the U.S. economy sunk into deeper trouble. About $850 billion has been spent on the wars in Iraq and Afghanistan over the past eight years.
* WHEN IT WILL HAPPEN: Even though Democrats had hoped to present Obama with a bill to sign into law on his first day in office, Jan. 20, it’s now looking like mid-February is more realistic. Obama fears a delay could deepen the recession and bring double-digit unemployment. The current jobless rate nationally is 6.7 percent.
* WHERE THE MONEY WOULD BE SPENT: Democrats want to undertake major road, bridge, transit and other public works projects, both to mend crumbling “infrastructure” and to quickly create new construction jobs. Obama also wants to spend some of the money to help the healthcare industry create electronic medical records. Well over $100 billion could be spent on the various projects.
-- Other likely recipients: States want $250 billion to help pay the rising costs of Medicaid health insurance for the poor and other social services amid falling revenues. Republicans have suggested these funds come in the form of loans rather than grants.
-- Billions of dollars could be spent on helping more poor people buy food and pay for winter heating costs, along with extending benefits for the increasing number of jobless people.
* WHO COULD GET A TAX BREAK: Obama could ask Congress to approve more than $300 billion in tax cuts. Democrats want to target the middle class, possibly through a $500 tax credit for individuals and $1,000 for couples. To lure Republican support, the legislation also might include another round of tax breaks for businesses to encourage investment.
* MANY ARE SEEKING RELIEF: A huge government spending bill always is a magnet for lobbyists hoping to get a piece of the action. Real estate developers, auto dealers and others hard hit by the recession could try for aid.
* FISCAL CONTROLS IN A MASSIVE SPENDING BILL? Moderate Democrats in Congress support deficit-spending to help the sick economy. But with record U.S. budget deficits, they want tougher controls on future spending to eventually halt the red ink. These moderates make up a significant bloc of votes in Congress.
* PROFILE OF THE U.S. ECONOMY: The unemployment rate hit a 15-year high of 6.7 percent in November; factory activity slid to a 28-year low last month. Meanwhile, mortgage foreclosures have been severe, leading to plummeting home values, and the country is suffering the worst credit crisis since the 1930s. Many economists expect the downturn to last well into 2009, which could make it the longest recession since a 43-month contraction that ended in March 1933.
Reporting by Richard Cowan in Washington; Editing by Eric Beech
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