Obama Says His Plan With Tax Cuts to Get Quick OK

President-elect Barack Obama meets with House Speaker Nancy Pelosi of Calif. in her office on Capitol Hill in Washington, Monday, Jan. 5, 2009.

(Gerald Herbert/AP Photo)

President-elect Barack Obama plunged into rare pre-inaugural crisis talks with congressional leaders Monday, declaring the national economy was "bad and getting worse" and embracing tax cuts now expected to reach $300 billion. He predicted lawmakers would approve a mammoth revitalization package within two weeks of his taking office.

If the two-year plan is enacted, workers would see larger paychecks almost immediately because taxes withheld by the government would drop. The break would be retroactive to Jan. 1, and couples receiving a $1,000 tax cut would begin receiving an extra $40 in twice-monthly paychecks as the government tries to spark more consumer spending.

"The economy is very sick," said Obama, who met privately with leaders of both parties at the Capitol. "The situation is getting worse. ... We have to act and act now to break the momentum of this recession."

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Obama, who takes office two weeks from Tuesday, has said there can be only one president at a time — and he repeated that principle Monday "when it comes to foreign affairs." But when it comes to the floundering economy, he clearly feels he cannot sit by until the swearing-in.

"The reason we are here today is because the people's business cannot wait," Obama said as he arrived on Capitol Hill.

"I expect to be able to sign a bill shortly after taking office," he said. Pressed on the timing, he said, "By the end of January or the first of February."

Obama's proposal to stimulate the economy includes tax cuts of up to $300 billion — including $500 for most individuals and $1,000 for couples if one spouse is employed — as well as more than $100 billion for businesses, an Obama transition official said. The total value of the tax cuts would be significantly higher than had been signaled earlier.

New federal spending, also aimed at boosting the moribund economy, could push the overall package to the range of $800 billion or so. Some $77 billion would be used to extend unemployment benefits and to subsidize health care for people who have lost their jobs.