Obama: Governors Will Help Design Stimulus Package

December 2, 2008 11:20 a.m. EST

Philadelphia, PA (AHN) - Meeting with the nation's governors a day after the Bush administration said the economy has been in recession since December 2007, President-elect Barack Obama on Tuesday pledged to let the nation's top state executives help craft an economic stimulus package.

"As President, I will not simply ask our nation's governors to help implement our economic recovery plan. I will ask you to help design that plan," the president-elect said, according to the transition team, in his opening remarks in his meeting with the National Governors Association (NGA). "Because if we're listening to our governors, we'll not only be doing what's right for our states, we'll be doing what's right for our country."

"These are difficult times, and we're going to have to make hard choices in the months ahead about how to invest precious tax dollars and how to save them... I won't stand here and tell you that you'll like all the decisions I make. You probably won't. But I promise you this - as President, I will seek your counsel. I will listen to you, especially when we disagree. And we will once again be true partners in the work of rebuilding our economy, strengthening our states, and lifting up our entire country," Obama added.

The meeting was held a day after the National Bureau of Economic Research officially announced that the U.S. economy has been in recession since December 2007.

Vice President-elect Joe Biden, who joined Obama in the meeting, also made opening remarks. He said, "Our nation can't succeed unless our states succeed... That is why help for you - everything from direct aid, to countercyclical investments, to benefit programs, to infrastructure investment - will be key parts of our economic plan."

"On infrastructure specifically, we have a huge opportunity... In the longer term, we are calling for the creation of a new National Infrastructure Reinvestment Bank that will help us make the investments we need to build a 21st century transportation system - while creating jobs and taking the politics out of infrastructure spending. And it has the added benefit of making American business more competitive in the world," Biden added.

States are currently facing record shortfalls. The NGA released a statement a day before the meeting calling on Congress and the Bush administration to "take early action to stabilize the nation's economy." Twenty states already have cut $7.6 billion from their 2009 budgets, according to the NGA, and 30 states have more than $30 billion in deficits.

Obama is working with Democratic leaders for a second economic stimulus package that reportedly could cost as much as the $700 billion financial bailout Congress approved in October.

Congress passed a $168 billion stimulus package in February that allowed the government to give tax breaks to companies and send rebate checks worth $300 to individuals and $1,200 to every family.

Democrats heightened their calls for a $50 billion second economic stimulus package in September as financial crisis deepened with the disappearance of two of the nation's largest investment banks, Lehman Brothers and Merrill Lynch. They were able to pass a $61 million stimulus package in the House but were blocked in the Senate.

In October, Democrats renewed the calls for a stimulus, saying an economic rescue plan is needed for taxpayers and ordinary Americans because the government's $700 financial rescue plan is essentially a bailout for Wall Street.

Republicans have expressed opposition to the plan, saying it would be an excuse for Democrats to spend "irresponsibly" on infrastructure.

House Minority Leader John Boehner (R-OH) has called the Democratic proposal for a second stimulus a "spending spree" and has announced a Republican alternative. Boehner's plan provides tax relief to the middle-class by raising the child tax credit given to families from $1,000 to $2,000 per child. It would suspend the capital gains tax for the next two years in order to spur investment. The plan will also reduce the corporate rate tax from 35 percent to 25 percent, as well as give tax relief to businesses by letting them "carry-back" losses for three years.

House Speaker Nancy Pelosi (D-CA) on Monday met with Pennsylvania Gov. Ed Rendell and Vermont Gov. Jim Douglas, the chair and vice chair of the NGA respectively, about the stimulus. She told reporters during a photo-op before the meeting, "The infrastructure issue is not a partisan issue... The package that we want to put together, we have already done a prototype of it -- the $61 billion recovery package we passed in the House."