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WORLD> America
Obama weighs decision about bailout funds
(Agencies)
Updated: 2009-01-12 10:04

A Collaborative Effort

Obama said his staff was working closely with the Democratic-led Congress to draft the package of tax cuts, public works spending and funds to bolster social safety net programs like unemployment insurance.

"We're going to have a collaborative, consultative process with Congress over the next few days," Obama said in an interview on ABC's "This Week." "We're not trying to jam anything down people's throats."

With the big spending plans will come inevitable budget deficits.

Nancy Pelosi, speaker of the House of Representatives, has suggested that lawmakers might have to increase taxes on the wealthy to cover that shortfall. That could be done by allowing the Bush administration's tax cuts for the richest Americans to lapse in a year.

But Pelosi told CNN's "Late Edition": "I want a repeal of the tax cuts for the highest-income people in America. I don't think we can wait until they expire. I think they need to be repealed -- not in this legislation. That's a subject for another day."

Government figures last week showed the US unemployment rate surged in December to 7.2 percent, capping a year in which employers slashed 2.6 million jobs, the most since 1945.

Obama wants passage of a stimulus plan by mid-February.

To try to persuade lawmakers he would do a better job of managing the bailout program, Obama has emphasized that he agreed with them that it needs to be overhauled.

"When you look at how we have handled the home foreclosure situation and whether we've done enough in terms of helping families ... we haven't done enough there," Obama said.

The TARP program has chiefly been used to give banks fresh capital so they can return to normal lending but Obama and his Democratic colleagues in Congress want more of that money to go directly to consumers.

Billions of dollars in these funds could go to prevent foreclosures, spur consumer borrowing and help local governments win loans under a plan from Democratic Rep. Barney Frank, chairman of the House Financial Services Committee.

Congress must give its approval to unlock the rest of TARP funds and lawmakers who have been skeptical about the program have said they may oppose that.

"Until there is a demonstrated need in our economy and a plan to address that need, I think it would be irresponsible for them to release that money," House Minority Leader John Boehner, an Ohio Republican, told CBS's "Face the Nation".

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