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Economy at risk of ‘tanking', says Biden
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Joe Biden, the US vice-president-elect, warned yesterday that the American economy was in danger of “absolutely tanking” without “bold” action, as transition officials started negotiating an expanded stimulus package with Congress that could exceed $800bn.
The officials said Barack Obama had agreed the outlines of a $675bn-$775bn two-year recovery plan in a meeting with advisers last week. But the price tag is likely to rise as Congress makes further demands. The president-elect has also increased his goal for the number of jobs to be created or saved by 2011 to 3m, up from the 2.5m target set last month, say aides.
“The economy is in much worse shape than we thought,” Mr Biden told ABC's This Week. “There is going to be real significant investment – whether it's $600bn or more, or $700bn, the clear notion is it's a number no one would have thought about a year ago.”
Obama advisers accept that the final package is likely to exceed $800bn after additions are made by Congress but the president-elect has warned legislators to keep focused on measures that will create the most jobs.
Under Mr Obama's proposals, most of the cash would be spent on tax cuts for the middle class, aid to cash-strapped state governments and investments in infrastructure, “green” energy and other policy priorities. Detailed negotiations have been under way with congressional leaders for the past few days, with a view to legislation being ready for Mr Obama to sign soon after taking office on January 20.
Mr Obama's proposal to spend $675bn-$775bn over two years is relatively conservative in comparison with calls from some economists and congressional members for an injection of $1,000bn or more. But it represents a sharp increase from the $175bn stimulus plan he proposed during the election campaign and would be by far the biggest intervention of its kind in the US economy for decades, on top of the $700bn bail-out committed to the financial and car industries.
By Jack
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