Axelrod on Economy: We Have to 'Do Something Big'

Key Democrats says Obama needs "pretty big" economic stimulus package.

November 23, 2008, 12:27 PM

WASHINGTON, Nov. 23, 2008— -- As President-elect Barack Obama continues to push Congress for a wide-ranging economic stimulus package to be ready on his desk by Inauguration Day, questions remain surrounding the price tag of such a plan.

This morning, incoming White House senior adviser David Axelrod suggested Obama would push for a much larger package than the $175 billion stimulus he put forth on the campaign trail.

"He wants a plan big enough to deal with the large challenges we face. And I think there's a growing consensus across the spectrum among economists that we're going to have to do something big," Axelrod said in a "This Week" interview with George Stephanopoulos.

"We need to start digging our way out of this hole here or climbing our way out of this hole and stop digging, and that is our objective and that is what we are going to do," said Axelrod.

But Axelrod declined to comment on the cost. "I'm not going to throw a figure out here," he said.

In a separate interview, however, Sen. Charles Schumer, D-N.Y., the Joint Economic Committee chairman, priced the stimulus package between $500 billion and $700 billion. "I believe we need a pretty big package, here. ... I think it has to be deep. My view has to be between $500 and $700 billion. And that's because our economy's in serious, serious trouble," he said.

In response, ranking member of the Senate Banking Committee, Sen. Richard Shelby, R-Ala., said Schumer's stimulus number was too high. "That's a lot of money," he explained. "One thing, we'd better be careful about not just throwing money, borrowing a lot of money and throwing it at deal and creating no jobs to speak of."

But Shelby also reiterated the importance of jump-starting the economy. "What we need is to really get the economy going. And we'll -- I think it's fair to say that we Republicans will look at the details and see if we can support it. I want to support things that are meaningful for the economy."

On Saturday, the president-elect announced an ambitious tax and spending plan. "I have already directed my economic team to come up with an economic recovery plan that will mean 2.5 million more jobs by January of 2011 -- a plan big enough to meet the challenges we face that I intend to sign soon after taking office," Obama announced in his radio address.

The plan, which has garnered comparisons to the New Deal, would consist of investments in infrastructure, green jobs and alternative energy development, in addition to a tax cut for lower- and middle-class workers.

On the future of the auto industry, Axelrod said Obama would like the Big 3 automakers to devise a plan to reform their industry before receiving a federal bailout. "We all have a stake in the survival and the prosperity of the auto industry. Millions of jobs depend on that," said Axelrod. "But in order to do that, they're going to have to retool and rationalize their industry for the future."

Axelrod said Obama would like to see the Big 3 automakers return to Washington in early December, "hopefully on commercial flights," with a plan. "If they don't do that, then there's very little that taxpayers can do to help them," he said.

Schumer agreed. "We first need a plan for future viability, then the money, not the money first, and then the plan," he said. "We can't put money into these problems unless there is a plan for the future. There can be. There will be. And then Congress will step up to the plate."

When asked if would support a rescue plan to save the Big 3, Shelby explained, "not a bailout plan, not taxpayers." Instead, he suggested the companies should be allowed to file for Chapter 11 bankruptcy.

"They've got failed models, failed leadership," he said. "I believe the companies could turn themselves around. With the proper management, proper leadership, they could get lean; they could get competitive. But I believe what they're interested in is getting on the taxpayers' relief fund. ... I don't believe $25 billion will be enough. I don't believe $50 billion will be. I believe it will take several hundred billion, and still, they might not make it. So I believe they've got an opportunity to go through restructuring in Chapter 11."

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