WASHINGTON (Reuters) - The U.S. economy needs a $900 billion government boost focused on Main Street over the next two years to pull it out of a deep recession, a new report from labor and public interest groups said on Tuesday.
“We need a substantial, strategic and sustained plan to get this economy going,” said Robert Borosage, co-director of Institute for America’s Future, a research group that helped craft the report and describes one of its core missions as challenging “failed conservative policies.”
With the United States facing its worst economic crisis in decades, President-elect Barack Obama and congressional leaders have promised to move quickly on a new economic stimulus package next year.
Obama said his plan includes the biggest U.S. investment in infrastructure since the 1950s, as well as huge efforts to reduce energy use in federal buildings and to connect more schools and libraries to the Internet.
The new report, endorsed by the AFL-CIO labor federation and other labor groups, said the cost of the package should be at least $450 billion annually for two years, which would be equal to about three percent of U.S. economic output.
It should include a $145 billion tax cut for low- and middle-income workers in the first year and put a big focus on public investment in green technology, reducing U.S. dependence on foreign oil and addressing global warming, the report said.
“Public investments are far more efficient at stimulating the economy than tax cuts for either individuals or businesses are,” the report said.
Data suggests only 20 percent of recent tax rebates to stimulate the economy were spent, with the rest saved or used to reduce consumer debt, the report said.
It recommended $75 billion in infrastructure spending in the first year and $150 billion in the second, and $50 billion in green technology investments in both years.
The package should boost funding for states, education, research and development, education, health, unemployment insurance, food stamps and poverty reduction, the report said.
Reporting by Doug Palmer, Editing by Anthony Boadle