Obama Announces Large Stimulus Package

U.S. President-elect Barack Obama yesterday promised to push for a large-scale economic stimulus package as the first step to quell the U.S. economic crisis after assembling his economy team.

The Democratic Party plans to design an economic stimulus package as large as 700 billion U.S. dollars within this week and pass the bill early next year for implementation immediately after Obama`s inauguration Jan. 20.

In his second news conference in Chicago Monday, Obama said, "That work starts today because the truth is we do not have a minute to waste. Right now our economy is trapped in a vicious cycle."

"It`s going to be costly," he said of the stimulus package. “We have to make sure the stimulus is significant enough that it really gives a jolt to the economy.”

The New York Times said he and his new economic team worked closely with President George W. Bush about risk management plans and the bailout for Citigroup.

The Federal Reserve Board and the Treasury Department will announce a major lending program today to jump-start the frozen consumer loan market. The Treasury will contribute 10 billion to 20 billion dollars in seed capital from the 700 billion dollars provided for the stimulus package. The Fed will lend to the new entity as much as 20 times that amount.

Obama also nominated Timothy F. Geithner, president of the Federal Reserve Bank of New York, as Treasury secretary and named Lawrence Summers to head the National Economic Council.

Both Geithner and Summers, who served as Treasury secretary under President Bill Clinton, are close to former Treasury Secretary and Citigroup Chairman Robert Rubin.

Under the Clinton administration, Rubin recommended Summers as his successor in 1999. Geithner also worked for the Treasury when Rubin was secretary.

"Rubinomics" has something in common with the economic policies of the Republican Party in that it stresses balanced budgets, financial deregulation and free trade.

Christina Romer, professor at the University of California-Berkeley, will chair the Council of Economic Advisers, which advises the president on the economy. Romer is an economist who has conducted research on the Great Depression.

African-American Melody C. Barnes, executive vice president for policy at the Center for American Progress, a Washington think tank, will chair Obama`s Domestic Policy Council.

The Washington Post described Obama`s new economic team as "market-friendly." The New York Times, however, said the team`s principles might clash with Obama`s promises of strengthened regulations, increased budget spending, and fair trade, saying Summers championed the law that deregulated derivatives.

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