Stimulus price tag might top $1.3 trillion

President-elect Obama and Democratic leaders Monday pledged to work with Republicans to pass an economic stimulus package as soon as possible that could provide as much as $1.3 trillion over two years.

"We all recognize that the country is in a financial difficulty that we have never seen -- maybe in the history of the country," Senate Majority Leader Harry Reid, D-Nev., said after the meeting. "And what we did at the meeting with President-elect Obama just a few minutes ago is to say that we would join together and try to move some economic recovery relief for the American people as quickly as possible."

Reid said that a final price tag of the package has not been determined, but it could be as much as $1.3 trillion over two years. Democratic leaders are waiting for a detailed set of principles for the bill from the Obama transition team.

"We have not received, of course, the exact package from the president-elect and his folks, but he has indicated that there are at least 20 economists he has talked with and all but one of those believe it should be from $800 [billion] to $1.2 or [$1.3] trillion," Reid said.

The bill is expected to include roughly $300 billion in tax cuts and about $500 billion in spending, including funding for road, bridge and school improvements, renewable energy projects and aid to states to help them pay Medicaid costs.

Transportation lobbyists said that they expect about $50 billion-$60 billion for transportation projects.

Lawmakers this Congress will try to pump billions more into the federal highway coffers over the next several years but only after fixing financing and other problems through a multiyear surface transportation reauthorization bill.

"You really shouldn't funnel too much money through a broken system," as part of the stimulus package, said Deron Lovaas, federal transportation policy director at the Natural Resources Defense Council.

Democratic leaders are still determining when to move the package through Congress after conceding over the weekend that having it ready by the Jan. 20 inauguration would not be possible. But according to one source, Obama told leaders at the meeting that he wanted the package on his desk by Presidents Day.

"I won't make an announcement about how soon, but we all know what our tasks are," said House Speaker Pelosi, who spoke after Reid. "This legislation will begin in the House of Representatives. We know what the time constraints are: They are dictated by sense of urgency that the American people have about their economic well being."

That sense of well being is expected to be shaken again Friday morning when the Labor Department is scheduled to announce new unemployment figures.

Obama said at a photo opportunity with Pelosi that "The reason we're here today is because the people's business can't wait. We've got an extraordinary economic challenge ahead of us; we're expecting a sobering job report at the end of the week."

At a briefing after the Democratic leaders spoke, Senate Minority Leader McConnell and House Minority Leader Boehner, who also attended the meeting, said that they believe Obama's bipartisan gestures to be sincere and were pleased that a large portion of the stimulus would be devoted to tax cuts.

"I think [Obama] would like to have a large bipartisan vote in favor of this package," McConnell said. "And he knows ... that the way to do that is obviously for it to have elements that are appealing to Republicans and to have Republican participation. I think this bill is going to start out and hopefully end as an example of very significant bipartisan cooperation."

McConnell said Congress should explore making the aid to states a loan, similar to loans made to banks and financial institutions under the $700 billion financial rescue plan.

"I think that is certainly worth taking a look at, and I think that the states [that] did take advantage of loans would be very careful about how they spent the money," McConnell said.