Jan 8 (Reuters) - President-elect Barack Obama sought to rally support on Thursday for a massive fiscal stimulus package, warning the U.S. recession could stretch on for years unless dramatic action is taken.
Obama is pressing leaders in the U.S. Congress to craft legislation that will combine 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.
Following is a list of what could be key elements of the legislation, although significant changes could occur before the House of Representatives and Senate vote on a bill:
* THE PRICE TAG: Obama officials and Democrats in Congress have been talking about spending $675 billion to $775 billion over two years. Some U.S. governors and economists are pushing for even more — around $1 trillion. Many Republicans want less, maybe in the range of $500 billion.
* PRICE COMPARISON: Washington spends about $1 trillion every year on all government activities, except for Social Security, Medicare, Medicaid and some other “entitlement” programs that together cost about $2 trillion a year. 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, mid-February now looks more realistic. Obama fears delay could deepen the recession and bring double-digit unemployment. The jobless rate nationally is now 6.7 percent.
* WHERE THE MONEY WOULD BE SPENT: Democrats want to undertake major road, bridge, transit and other public works projects, to mend crumbling infrastructure and quickly create new construction jobs. Obama also wants to spend 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 services amid falling revenues. Republicans have suggested these funds be provided as loans rather than grants.
— Billions of dollars could be spent on helping more poor people buy food and pay 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. Obama wants to give $1,000 tax cuts to middle-class families. But some Democrats in Congress question whether there are more effective ways to create jobs through tax policy. To lure Republicans, the plan might include business tax breaks to encourage investment.
* MANY SEEK RELIEF: A huge spending bill is always a magnet for lobbyists seeking a piece of the action. Auto dealers, real estate developers and others could appeal for aid.
* FISCAL CONTROLS IN A MASSIVE SPENDING BILL? Moderate Democrats, who make up a significant bloc in Congress, support deficit spending to help the sick economy. But with the U.S. budget deficit seen growing to a record $1.2 trillion this year, they want tougher controls on future spending.
* PROFILE OF THE U.S. ECONOMY: Unemployment hit a 15-year high of 6.7 percent in November; factory activity slid to a 28-year low in December. Mortgage foreclosures have been rising, 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, making it the longest recession since a 43-month contraction ended in March 1933.
Reporting by Richard Cowan in Washington; Editing by Eric Walsh