In the wake of more bad economic news, President-elect Barack Obama and his team of economic advisers are putting together a stimulus package totaling around $850 billion that they hope will jolt the economy into health.
The stimulus plan very likely would incorporate spending on infrastructural projects, such as improving roads and bridges, along with tax relief. Funding for other programs that ease burdens during high unemployment, such as food stamps, health insurance, and job training, is also expected to be included.
At $850 billion spent over two years, the package’s size worries some experts, who say that it could concern volatile financial markets. But some economists consulted by Obama’s team recommended spending up to $1 trillion.
The size of the plan also means that it will be difficult to pass through Congress. Conservatives are particularly wary of massive federal expenditures, favoring tax cuts instead.
But advocates argue that the need for the stimulus is only becoming more urgent as more indicators have cropped up to show that the recession is deepening. The Labor Department announced a record drop in the consumer price index this week, and unemployment reached 6.7 percent in November.
Meanwhile, the dollar tumbled against other currencies yesterday, reversing months of gains, after the Fed announced that it was cutting a key interest rate to 0.25 percent--a move that might eventually bring about fiscal recovery but has also meant that those making investments in dollar denominations will enjoy less interest.
And in bad news for the auto industry, Chrysler announced yesterday that it will close its factories for a month, rather than for the usual two weeks, in response to plummeting sales.