Obama sketches out recovery plan

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NEW YORK (CNNMoney.com) -- President-elect Barack Obama on Saturday offered the most detailed statement yet of his economic recovery plan, sketching out broad-based spending proposals and tax incentives aimed at reviving an economy mired in recession.

In his weekly radio and video address describing what he called the American Recovery and Reinvestment Plan, Obama spelled out five main goals. He said his plan proposes to:

• double renewable energy production and make public buildings more energy efficient;
• rebuild crumbling roads, bridges and schools;
• computerize the health care system
• modernize classrooms, labs and libraries;
• and provide tax breaks to American workers.

"Economists from across the political spectrum agree that if we don't act swiftly and boldly, we could see a much deeper economic downturn," Obama said. "That's why we need an American Recovery and Reinvestment Plan that not only creates jobs in the short-term but spurs economic growth and competitiveness in the long-term."

The main goal of his plan: to create 3 million new jobs. Most would come from the private sector, he said.

As Obama prepares to take office on Jan. 20, the country faces a series of severe economic and political challenges.

Nearly 2 million jobs were lost in the first 11 months of 2008 - the final government reading on the employment picture will be released on Friday - and the economy has stagnated. Investors suffered the worst year in stocks since the Great Depression, and foreclosures are rising while housing values are declining at record paces.

Virtually every state is facing a budget shortfall, forcing many to make plans to cut back on critical services and raise taxes.

To that end, Obama's advisers and lawmakers have said they expect his legislation to provide increased aid to states to pay for Medicaid, as well as a boost to unemployment benefits and food stamps. However, he didn't mention it in his address on Saturday.

Obama's video address did not attach an estimated price tag to his proposal, but his advisers have said publicly they expect the size of the spending package to range between $675 billion and $775 billion.

Many economists have called for stimulus spending to approach or even exceed $1 trillion if the government expects to successfully beat back one of the deepest downturns in more than two generations.

On Saturday, the president-elect confirmed that he will meet with Democratic and Republican congressional leaders next week to sell them on the plan.

While his aides have been in talks with Capitol Hill staffers, Democratic and Republican lawmakers have been calling on him to present details for what could be the most expensive spending bill in U.S. history.

Some Democrats and Republicans have already raised red flags about the proposed plan's potential scope and the prospect of a rushed attempt to pass the bill in time for Obama to take office on Jan. 20.

A sharp debate is likely over several crucial questions. Will the proposed measures in fact boost the economy? What's the right balance between seeding short-term stimulus versus funding long-term projects? Will money intended to yield long-term dividends for the economy as a whole end up merely serving politically motivated agendas or pet projects?

Obama attempted to assuage some of those concerns on Saturday when he called for "vigorous oversight and strict accountability for achieving results." He stressed that his plan is not an attempt to "throw money" at the economy's problems.

"I am optimistic that if we come together to seek solutions that advance not the interests of any party, or the agenda of any one group, but the aspirations of all Americans, then we will meet the challenges of our time just as previous generations have met the challenges of theirs," Obama said.