No earmarks in stimulus package, Biden says

Economic team meets to refine massive plan

Vice President-elect Joe Biden (second from left) met with the incoming White House economic team yesterday. Larry Summers, Melody Barnes and Phil Schiliro joined Biden for a briefing. (Jim Young/Reuters)

WASHINGTON - Amid a drumbeat of grim economic reports, President-elect Barack Obama's top economic advisers met yesterday to refine plans for a massive stimulus proposal, promising the money would not go toward dubious pork-barrel projects.

Vice President-elect Joe Biden met with seven advisers for an hour here as Obama vacationed in Kailua, Hawaii. With the incoming administration conceding the stimulus plan could cost as much as $775 billion over two years, Biden seemed intent on reassuring Americans the money would not be wasted.

Transition team advisers described plans to shore up decaying bridges, roads, and schools that have long been neglected - part of an effort to build a broad public consensus and win a swift victory in Congress. Obama's team hopes the president-elect signs a stimulus bill soon after he is sworn in Jan. 20.

"It's important for the American taxpayer to know that . . . this is not going to be politics as usual," Biden told reporters. "And we will not tolerate business as usual in Washington."

Biden singled out special-interest projects. "There will be - I will say it again - there will be no earmarks in this economic recovery plan," he said. "I know it's Christmas. I know it's the Christmas season. But President-elect Obama and I are absolutely determined that this economic recovery package will not become a Christmas tree."

Reviving the troubled economy has become the incoming administration's central focus. Data released yesterday underlined the severity of the economic slump. The Bush administration reported that gross domestic product had contracted by half a percentage point in the quarter ending Sept. 30 - the largest decline since the third quarter of 2001, after the Sept. 11 attacks.

Also, sales prices for existing homes fell 13 percent in November from the year before, likely the steepest price decline since the Great Depression, according to the National Association of Realtors. The median price for an existing home is now $181,300.

Anticipating a bleak year, retailers sent a letter to Obama's team yesterday proposing that up to $25 billion in stimulus money be set aside for sales tax holidays stretched over 30 days in 2009. The federal government would use stimulus money to reimburse states for suspending sales taxes during these periods, under the plan laid out by the National Retail Federation.

"At this point it appears the economy is going to remain weak well into 2009," said Rachelle Bernstein, a federation official. "So doing this can provide that additional boost that may be needed."

At yesterday's meeting, Lawrence Summers, whom Obama has named director of the National Economic Council, said: "Without substantial policy action, we would almost certainly face the worst economic downturn since the Second World War. That's why it is imperative that we take action to maintain demand, to maintain jobs, to maintain incomes."

Biden reiterated that the incoming administration has revised its early goal of creating or saving 2.5 million jobs over the next two years. With economists projecting a grim year ahead, Obama recently insisted the number be raised to 3 million.

"Economists rarely agree, but on this score, there is overwhelming agreement that we need a robust and sustained economic recovery package," Biden said. "There's virtually no disagreement on that point with economists from left to right. The greater threat to the economy lies with doing too little."

Obama is proposing a package priced at perhaps $675 billion to $775 billion over two years, the Associated Press reported.

The plan aims to deliver both short- and long-term relief. The short-term help would flow partly from tax cuts of $1,000 for couples and $500 for individuals, costing about $140 billion over two years.

In addition, states would get as much as $200 billion over two years for Medicaid health coverage for the poor and to narrow state budget gaps, which are forcing layoffs and cuts in services. The aides spoke on condition of anonymity.

Also in the short term, the nation's governors are pushing a wish list of $136 billion in jobs-producing public works projects - chiefly road and bridge repairs - that they say are ready to go.