Obama plan would mean fatter paychecks

WASHINGTON - President-elect Barack Obama plunged into rare pre-inaugural crisis talks with congressional leaders Monday, declaring the national economy was "bad and getting worse" and embracing tax cuts now expected to reach $300 billion.

He immediately set to work reassuring skeptical Republicans, which earned him praise for seeking their input but questions from those averse to hundreds of billions of dollars in new spending.

If the two-year plan is enacted, workers would see larger paychecks almost immediately because taxes withheld by the government would drop. The break would be retroactive to Jan. 1, and couples receiving a $1,000 tax cut would begin receiving an extra $40 in twice-monthly paychecks. Obama plans to lay out more details about the plan Thursday in a prime-time address.

The meetings were a mix of symbolism and substance between the man who in two weeks will be sworn in as the 44th president and the congressional leaders who hold the fate of his agenda in their hands. He pledged to help advance the legislation in any way he could, participants said, including inviting skeptical lawmakers to meet with him.

"This is not a Republican problem or a Democratic problem," he said. "It is an American problem and we're going to all have to chip in and do what the American people expect."

After meeting privately for about an hour in the Lyndon B. Johnson Room near the Senate chamber, congressional leaders said they expected a bipartisan effort to approve the massive economic stimulus package by early February. Lawmakers said they were waiting for Obama to present a written proposal -- perhaps even draft legislation -- within days.

Obama's proposal includes tax cuts of up to $300 billion -- $500 for most workers at an overall price of $150 billion -- and more than $100 billion in tax incentives for business. Businesses could apply current losses to taxes paid back as far as five years ago, reaping an immediate cash windfall. And they would receive a $3,000 tax credit for every job they create or preserve. The total value of the tax cuts would be significantly higher than had been signaled earlier.

Key details remain unresolved. For instance, upper-income individuals would not be eligible for the income tax credit, but the income threshold for phasing out the benefit has not been set. Obama officials said it would likely be about $200,000 a year.

Obama officials said they tried to keep the package ideologically neutral, rejecting an option to make people who are not working eligible for a "refundable" tax credit.

The president-elect rejected suggestions that the tax cuts were designed to win over GOP votes. "The notion that me wanting to include relief for working families in this plan is somehow a political ploy, when this was a centerpiece of my plan for the last two years doesn't make too much sense," said.

He said he would make his stimulus proposal available on the Internet -- an idea offered by Rep. Eric Cantor, R-Va. -- with a Google-like search function to show each proposed project by congressional district, participants said.

Sen. Mitch McConnell of Kentucky, the top Republican in the Senate, praised Obama for being willing to consider ideas from Republican, who until Monday had been left out of negotiations between Obama's advisers and congressional Democratic. He predicted widespread GOP enthusiasm because a significant percentage of the package includes tax relief.

He suggested the legislation would likely be signed into law by mid-February, but Obama said he would like a bill on his desk by the end of January or beginning of February.

"The economy is very sick. The situation is getting worse. ... We have to act and act now to break the momentum of this recession," he said. "The people's business cannot wait."