His economic team in place, Mr Obama has tasked his aides with assembling an ambitious measure to pump money swiftly into the battered economy, but also create 2.5 million new jobs, send a tax cut to the poor and middle class, and make massive government investments in energy-saving and other technologies designed to pay for themselves in the long run.
Some senior Democratic lawmakers put the cost of the package as high as US$700 billion, a figure Mr Obama's team calls premature and several Democratic aides said was unlikely. One top Democratic congressional official, speaking on condition of anonymity because talks on the economic rescue measure are ongoing, said it will probably cost between US$400 billion and $500 billion over two years.
The package would worsen an already swollen US deficit, and Mr Obama said he planned a news conference on Tuesday to discuss the need 'to scour our federal budget, line-by-line, and make meaningful cuts and sacrifices as well.'
Mr Obama named New York Federal Reserve President Tim Geithner the next treasury secretary at a Monday press conference, where he said the United States faces a 'crisis of historic proportions' and played down expectations his administration could put the brakes on quickly.
He also named Mr Lawrence Summers as director of his National Economic Council. Summers was treasury secretary under former President Bill Clinton and is a former president of Harvard University.
Democratic officials said Mr Obama on Tuesday would name Mr Peter Orszag as his budget director, turning to Congress' chief adviser on spending and taxes as he fills out his economic team. Mr Orszag, 39, is serving a four-year term as head of the Congressional Budget Office.
The president-elect has acknowledged that the price tag of his rescue package will be far higher than the US$175 billion economic aid plan he advocated while he was campaigning for the White House.
'We have to make sure that the stimulus is significant enough that it really gives a jolt to the economy, that it is putting people back to work, that it is making investments, that it is restoring some confidence in the business community that, in fact, their products and services are going to have customers,' Mr Obama said on Monday as he announced his economic team.
Declining repeatedly to estimate the cost of the plan, Mr Obama said, 'It's going to be costly.' Democratic congressional leaders have been pressing for months for another 'stimulus' plan to follow the US$168 billion package of tax rebates enacted in February.
In a statement on Monday praising Mr Obama's economic team, Democratic House Speaker Nancy Pelosi said President George W. Bush and congressional Republicans should agree to a second economic aid plan before year's end, to 'provide a down payment on new job-creating infrastructure investments, help states avoid deep cuts to health care and other essential services, and provide nutrition assistance to struggling families.'
But there's little chance that Bush and the Democratic Congress will reach a breakthrough on such a measure. Instead, Mr Obama's team and Democratic leaders are hard at work on Plan B: The new Congress that convenes in early January will move swiftly on an aid package, readying it for Mr Obama's signature as one of his first acts after being inaugurated.
The measure is likely to a beefed-up version of a US$61 billion stimulus plan the House passed in September, which included US$37 billion in spending on public works projects such as road-building and water and sewage projects; about US$15 billion in aid to cash-strapped states to guard against cuts to health care for the poor; a US$3 billion boost in food stamp aid; and a US$7 billion jobless benefits extension for unemployed workers whose payments would otherwise run out.
Those elements are likely to grow, given that economic conditions have worsened since that legislation was drafted, said people familiar with the emerging plan.
Mr Obama has also embraced calls for a 'green jobs' program that invests as much as US$100 billion in projects to slash harmful emissions. This could include projects such as retrofitting buildings to make them more energy-efficient, upgrading the electrical grid and improving mass transit.
'It turns out that putting money into green technologies ... has a very large positive employment effect relative to tax cuts,' said Mr Robert Pollin, a University of Massachusetts-Amherst economist who has written extensively on what he calls the 'green recovery.'
'It's very efficient in terms of creating jobs for a given amount of spending, and it has the added benefit that the short-term effects are compatible with long-term needs in the economy,' Mr Pollin said.
Democrats also plan to include tax cuts for low- and middle-class workers, along the lines of what Mr Obama proposed on the campaign trail. One likely component is Mr Obama's proposal to send tax credits of US$500 to individuals and US$1,000 to couples, including payments for people who make too little to owe any taxes. Those credits are estimated to cost about US$115 billion in their first two years, according to the nonpartisan Tax Policy Center.
Mr Obama's aides have said the early-January recovery plan will not include a tax increase for those earning US$250,000 or more annually, something the president-elect has vowed to put in place to, in his words on Monday, 'restore some balance to our tax code.' But economists caution that the measure, which will add substantially to the already soaring deficit, will have to contain some significant trade-offs to avoid making things worse.
'If you're going to do something that is big and long-run, like a major infrastructure effort that lasts into the future, then you need to offset it some way - either with tax increases or other kinds of spending cuts,' Mr Rivlin said. -- AP