President-elect Barack Obama and Democrats have been pushing for a stimulus plan estimated to be between $750 billion and $1 trillion dollars, including $300 billion in tax breaks. That sum—up to 7 percent of the U.S. gross domestic product of $13.84 trillion—has caused some sticker shock in Congress and beyond.
But the United States isn't the only country proposing a massive stimulus package. Today, for example, Germany's coalition parties negotiated a stimulus package that could go as high as $68 billion.
Below, a roundup of stimulus plans announced in the world's five largest economies after the United States.
GDP: $4.384 trillion (2007 estimate) Stimulus announced in December: 64 trillion yen ($687.7 billion). Percentage of GDP: 15.7 percent
Earlier stimulus announced in August: 11.7 trillion yen ($125.7 billion). Percentage of GDP: 2.9 percent
In late December, a beleaguered Japanese cabinet announced its "immediate policy package to safeguard people's daily lives," the latest incarnation of a massive package to jump-start the world's second-largest economy.
The plan includes tax cuts on mortgages, grants for employment opportunities, and a 20 trillion yen plan to buy shares in banks. One of the most controversial measures of the package, however, is its cash handouts—12,000 yen ($128) to each resident and an additional 8,000 yen ($86) for each child and senior citizen—which critics say are unlikely to be shoveled back into the economy.
The package comes on top of an earlier stimulus plan of 11.7 trillion yen, which introduced tax cuts, reduced highway tolls, and provided support for employment services for women, the elderly, and people with disabilities.
Japan slid into recession when its economy shrank by 0.9 percent in the second quarter and 0.1 percent in the third quarter last year. Meanwhile, its industrial output slid 8.1 percent in November alone, the sharpest decline since records began in 1953.
GDP: $3.322 trillion (2007 estimate) Stimulus expected in January: 40 billion to 50 billion euros ($54.3 billion to $67.9 billion). Percentage of GDP: 1.6 to 2 percent
Stimulus announced in November: 31 billion euros ($42.2 billion). Percentage of GDP: 1.3 percent
German government leaders negotiated over a second stimulus package today, with proposals ranging from 40 billion to 50 billion euros over two years. German Chancellor Angela Merkel met with coalition leaders today to discuss the package, which should be unveiled by mid-January.
Both sides agree that the package should focus on investments in infrastructure. The major point of contention, however, is whether the plan should also cut taxes. The center-right Christian Democrats are in favor, but the center-left Social Democrats are resisting, saying that tax cuts wouldn't help Germany's lower-income households, which don't have to pay income tax.
The newest package comes on top of an earlier plan to spend 31 billion euros over two years. That package included tax breaks on car purchases, loans to businesses, subsidies for household repairs, and money for roads, but many economists, business executives, and politicians derided it as too modest to save the European Union's largest economy. They pointed out that many of the projects had already been slated, with truly new spending amounting to only 4 billion euros ($5.4 billion) in 2009.
Germany entered a recession in the third quarter of last year, and its economy is projected to shrink by 20 percent or more next year.
GDP: $3.251 trillion (2007 estimate) Stimulus announced in November: 4 trillion yuan ($585.6 billion). Percentage of GDP: 18 percent
In November, China unveiled a two-year plan to kick-start the economy, hinging on improvements to housing and infrastructure. Proposed projects include constructing 25,000 miles of railways, building 6 million affordable and low-income apartments, reducing pollution, and improving rural water quality.
The effort is the largest of its kind ever to be undertaken by the Chinese government. Worth remembering, however, is that the capital for China's infrastructural projects usually comes from state-owned banks and companies rather than from the government itself. That makes it hard to compare with other countries' stimulus packages.