WASHINGTON - Warned that the economy may get considerably worse, President-elect Barack Obama has more than tripled the size of the economic stimulus package he embraced during the campaign and is aiming to create or save three million jobs, up from 2.5 million, transition officials said Saturday.
Obama's team is crafting a massive new economic stimulus package to reach his revised job goal. Though the president-elect has declined to specify the amount, transition aides told Capitol Hill staff that the plan may cost $675 billion to $775 billion over two years.
Those numbers far exceed the more modest stimulus package Obama laid out during the campaign, underscoring a growing worry that the economy is in a tailspin. As recently as mid-October, Obama was touting a stimulus of about $175 billion.
Obama met privately with top economic advisers Tuesday and received a sobering briefing. Aides cautioned that without an aggressive recovery plan, the economy could lose as many as four million jobs through 2011 and the unemployment rate could rise above 9 percent. Unemployment last month reached 6.7 percent, the highest level in 15 years. The last time the jobless rate topped 9 percent was in 1983, during Ronald Reagan's first term as president.
Christina Romer, incoming chairwoman of the Council of Economic Advisers and an expert on the Great Depression, told Obama that forecasts over the short and long term had darkened in recent weeks and that looming economic troubles eclipsed anything seen in the last 50 years, transition officials said.
Confronted with that prospect, Obama said the job-creation figure he announced in his weekly radio address last month - 2.5 million - would not be enough to avert disaster. He called for creating or preserving an additional 500,000 jobs over the next two years.
His call for a more ambitious plan to create and retain jobs may involve a bit of psychology.
Consumers fearful of losing their jobs have stopped opening their wallets, dampening consumer spending. With Obama pledging to aggressively save jobs as well as create new ones, he is sending a message that people need not worry about being out of work, one economic adviser said. That, in turn, could encourage spending and bolster the economy.
"The big fear people have is loss of jobs. That's haunting the whole economy," said the adviser, who spoke on condition of anonymity because he was not authorized to speak publicly. "People are holding back from buying because of fear of job loss. So, presumably, if people hear the goal is to create or preserve 3 million jobs, layoffs aren't quite as scary."
Obama's plans to revive the economy hinge on passage of his stimulus package, which Congress plans to take up Jan. 6. Though he has the votes in the House, the Senate is another matter. Republicans could delay or derail it with a filibuster.
Republican leaders have voiced skepticism about the stimulus, warning that there must be a thorough public vetting of a bill that costs so much. They have also vowed to oppose any plan that includes pork-barrel projects meant to reward special interests.
Some economists say Obama's new job goals may be rooted in salesmanship. It is virtually impossible to quantify jobs saved, so the figures have little meaning, they said. By raising the ante to three million, Obama may have something else in mind: Persuading the public that a stimulus costing hundreds of billions of dollars is necessary.
Peter Morici, an economist and business professor at the University of Maryland, said in an interview Saturday that Obama's revised job numbers are an exercise in political marketing.