Obama favours $775 bn for stimulus package

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: President-elect Barack Obama told House Speaker Nancy Pelosi he favours a price tag of about $775 billion for the US economic stimulus plan, a Democratic aide said. Obama met with congressional leaders from both parties at the Capitol yesterday to help craft and shore up support for a two-year plan to boost the sagging economy. He said the plan would cut taxes for individuals and businesses and spend money on government programs to rebuild the nation's infrastructure.

“We have to act now to address this crisis and break the momentum of the recession, or the next few years could be dramatically worse,” Obama told reporters after a separate meeting with top economic advisers. He plans to deliver a speech on the economy on Jan. 8. The plan would aim to boost consumer demand by providing tax breaks worth $500 for individuals and $1,000 for couples. The change would come by altering tax-withholding rules so workers would see an immediate increase in their take-home pay. Cutting the payroll tax “would be more efficient” in helping the economy, Michael Darda, chief economist for MKM Partners LP, said on Bloomberg Television. He cautioned that “there is no silver bullet.”

Senate Republican leader Mitch McConnell of Kentucky said there will be “widespread Republican enthusiasm” to include tax relief as a large part of the stimulus package.

“The atmosphere for bipartisan cooperation was sincere on all sides,” McConnell, 66, said after meeting with Obama. He was “interested in what Republican ideas might be offered to the stimulus package,” McConnell said. European stocks and US index futures advanced on expectations the plan will help revive the US economy. The dollar also gained against the euro and Treasuries fell for a fourth day.

The package would also fulfill Obama's promise to boost jobs with spending on improvements to roads, bridges and power grids, as well as aid to states being hit by budget shortfalls.