WASHINGTON (AP) -- President-elect Barack Obama is embracing an unexpectedly large tax cut of up to $300 billion which includes $500 tax cuts for most workers. Obama says the country faces an "extraordinary economic challenge."
Obama commenced face to face consultations with congressional leaders Monday. Besides $500 tax cuts for most workers and $1,000 for couples, the Obama proposal includes 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.
Before meeting with Senate Majority Leader Harry Reid, Obama told reporters, "We have to act and act now," in order to break what he called the "momentum of this recession."
Obama earlier met with House Speaker Nancy Pelosi. He said he went to Capitol Hill ahead of his inauguration because "the people's business cannot wait."
"The reason we are here today is because the people's business cannot wait," Obama said as he arrived on Capitol Hill in late morning for talks with House Speaker Nancy Pelosi, D-Calif. "The speaker and her staff have been extraordinarily helpful in working with our team so we can shape an economic recovery plan and start putting people back to work."
Obama will be sworn in as the nation's 44th president in just over two weeks.
The tax cuts for individuals and couples would be similar to the rebate checks sent out last year by the Bush administration and Congress in a bid at that time to boost the slowing economy. A key difference is that the tax cuts this time around may be awarded through withholding less from worker paychecks. That provision would cost about $140-150 billion over two years.
For businesses, the plan would allow firms incurring losses last year up to take a credit against profits dating back five years instead of the two years currently allowed.
Another provision brought to the negotiations by the Obama team would award a one-year tax credit costing $40-50 billion to companies that hire new workers, and would provide other incentives for business investment in new equipment.
"We've got an extraordinary economic challenge ahead of us," Obama said. "We're expecting a sobering job report at the end of the week."
Of Pelosi, Obama said: "I can't think of a better partner in doing what is necessary in putting this economy back on track."
Said Pelosi: "It is a great honor and personal privilege to welcome you to this office. Tomorrow we will swear in a new Congress and we will hit the ground running on the initiatives ... to ease the pain being felt by the American people."
Obama had meetings scheduled later Monday with a broad array of House and Senate Democratic leaders and with a bipartisan group of key lawmakers. He had hoped to have Congress enact the recovery plan in time for him to sign when he takes office Jan. 20. But even his spokesman, Robert Gibbs, conceded Sunday night that was "very, very unlikely."
"We don't anticipate that Congress will have passed, both houses, an economic recovery agreement by the time the inauguration takes place," Gibbs said.
House Majority Leader Steny Hoyer of Maryland said Sunday he wants the House to approve the plan by the end of the month, sending it to the Senate in time for action before Congress leaves on its mid-February break.
Obama has insisted that bold and quick action is necessary if the nation is to rebound from the greatest economic crisis since the Great Depression. He has said repeatedly he wants a plan that will create 3 million new jobs.
"Economists from across the political spectrum agree that if we don't act swiftly and boldly, we could see a much deeper economic downturn that could lead to double-digit unemployment and the American dream slipping further and further out of reach," he said in his Saturday radio and YouTube address.
Obama arrived Sunday night in Washington - a place he largely has shunned since winning election - just hours after New Mexico Gov. Bill Richardson withdrew from consideration as commerce secretary amid a grand jury investigation into how some of his political donors won a lucrative state contract.
The Richardson withdrawal marked the first major hiccup in a smooth transition that saw Obama select his Cabinet in record time, largely because of the magnitude of the economic and national security challenges facing the new administration.
Obama aides have said the package Obama has dubbed the American Recovery and Reinvestment Plan could cost as much as $775 billion. The president-elect has refused to put a price tag to the plan.
Congressional aides briefed on the measure say it likely will include tax cuts of $500 to $1,000 for middle-class individuals and couples, as well as some $200 billion to help revenue-starved states pay for health care programs for the poor and other operating costs. A large part of the new spending would go for infrastructure projects, blending old-fashioned road and bridge repairs with new programs to advance energy efficiency and rebuild health care information technology systems.