Wallace ran through some of the key talking points of the plan: "Roughly $300 billion of that relief money will go directly to tax cuts for 95% of American workers...For businesses, a proposed $100 billion in tax incentives and refunds to jump start job creation...Of the 3.2 million jobs that the Obama Administration says will be saved or created, a million will come from a $25 billion investment in infrastructure...while making a long-term investment in renewable energy and other green initiatives." Wallace concluded her report: "Obama is confident he can get his stimulus plan passed within two weeks of taking office. Some economists believe the sooner, the better."
Some doubt of Obama’s stimulus plan was expressed following Wallace’s report, when co-host Harry Smith discussed it with Fox Business Network anchor Alexis Glick: "...you could hear in the voices of the people on the economic team from the Obama Administration, 'we need to get this thing going,' what is the likelihood that it will actually get traction and get done, that it's not February, or March, or April before a name gets signed on the bottom?" Glick replied: "...the belief is, is that President-elect Obama's going to come in here with a stimulus package, and it's going to cure the economy. He cannot cure what has been going on now for decades, particularly in housing, in the course of a year or two years."
Later, Smith asked about the cost of the plan: "The other thing that's actually come up now is the sense of what this all costs. Trillion-dollar deficits. We're used to a couple hundred billion. Trillion dollars, you're talking about real money that you're passing on as debt to the generations to come." Glick responded: "It will be trillions. And President-elect Obama is telling you that the budget deficit, we are not going to figure this out, or we're not going to pay down that debt for years to come. Now, the Congressional Budget office says by 2012, it could be down to $300 billion, but this is going to cost a lot more than even we know." Smith acknowledged: "There's no magic wand."
Here is the full transcript of the segment:
7:00AM TEASE:
HARRY SMITH: Economy in the ER. A nervous Wall Street braces for today's new jobs report as the president-elect prepares to take action.
BARACK OBAMA: We know we are facing a crisis in our economy, one that requires immediate and decisive action.
SMITH: We'll break down Obama's stimulus plan and tell you where your money's headed.
7:03AM SEGMENT:
JULIE CHEN: Now to the economy. President-elect Obama unveils the details of his economic stimulus plan today. But will it calm jittery nerves on Wall Street? CBS News correspondent Priya David is at the New York Stock Exchange with more. Priya, good morning.
PRIYA DAVID: Julie, good morning. He certainly has his work cut out for him. The New Year's party on Wall Street died yesterday. The Dow fell more than -- almost 250 points, the Nasdaq was down more than 50 points. Overnight, Asian markets reacted with a 4% drop in the Hang Seng and Nikkei indexes. Meantime, the Bank of America is expected to cut its interest rate to a 315-year low, would you believe that, to try and stave off the recession that's happening there. Meantime, back here in the United States, more bad news on the unemployment front. The number of Americans who are expected to file for first-time unemployment benefits is up to 540,000 people. That's a 26-year high. Also, one last point, major chain stores will report December sales numbers today. They're expected to be the worst in 40 years. All of this bad news has the futures down slightly, and the market is expected to open down this morning. Harry, let's go back to you in New York.
HARRY SMITH: Priya David at the New York Stock Exchange, thanks. Let's take a closer look at the major points of President-elect Obama's economic proposal. CBS News correspondent Kelly Wallace has a breakdown of the numbers.
KELLY WALLACE: Facing the most serious economic crisis since the Great Depression, the Obama Administration is asking for the biggest stimulus plan in history. An estimated $775 billion to prop up a very sick economy.
NARIMAN BEHRAVESH [ECONOMIST, GLOBAL INSIGHT]: We really need something big, bold, and swift to kick start the U.S. economy. And I think the Obama plan looks like it meets almost all those criteria.
WALLACE: Roughly $300 billion of that relief money will go directly to tax cuts for 95% of American workers. For households making less than $200,000, a permanent tax cut up to $500 for individuals and $1,000 for families.
DAVID WYSS [ECONOMIST, STANDARD & POORS]: The good news of that is those are the people most likely to spend the money. And that's what you really want now. You want people out spending.
UNIDENTIFIED MAN: We specialize in coverage for small businesses.
WALLACE: For businesses, a proposed $100 billion in tax incentives and refunds to jump start job creation. Existing businesses which add full-time employees will receive a $3,000 refundable tax credit for each hire. Of the 3.2 million jobs that the Obama Administration says will be saved or created, a million will come from a $25 billion investment in infrastructure. Building and renovating roads, bridges, and schools, while making a long-term investment in renewable energy and other green initiatives.
BARACK OBAMA: Thank you, everybody.
WALLACE: Obama is confident he can get his stimulus plan passed within two weeks of taking office. Some economists believe the sooner, the better. Kelly Wallace, CBS News, New York.
SMITH: Joining us now is Alexis Glick, anchor on the Fox Business Network and host of 'Money For Breakfast.' Alexis, good morning.
ALEXIS GLICK: Good morning.
SMITH: I want to talk about the stimulus package in a second, but first, I want to talk about the markets. This unemployment number that's, you know, looming out there. We know that across the states they've just been slammed by new applications for unemployment insurance. This portent -- this idea that this is really going to continue to build. Have the markets built this in already, which people so often say, or might we see more instability in the markets in the weeks to come?
GLICK: You know, you're absolutely right. Look, we are built in for bad news. But what we saw yesterday with the markets selling off 3% was a reaction to the fact that not only did we see the ADP numbers come out with a much higher than expected job loss, particularly in the private sector, but also we saw companies like Intel yesterday come out for the second time in a month and a half and cut their projections for the first -- for the fourth quarter by 23%. We also saw Alcoa announce that they're laying off 15,000 people. So listen, when we look at this stimulus package and we talk about job growth and creation, that's fine and grand if we can create some jobs. We are not going to be able to offset the vast amount of job losses that we will probably see tomorrow morning and for months to come.
SMITH: Which you could hear in the voices of the people on the economic team from the Obama Administration, 'we need to get this thing going,' what is the likelihood that it will actually get traction and get done, that it's not February, or March, or April before a name gets signed on the bottom?
GLICK: Well, as you can see, they are right now setting expectations. They're lowering expectations because the belief is, is that President-elect Obama's going to come in here with a stimulus package, and it's going to cure the economy. He cannot cure what has been going on now for decades, particularly in housing, in the course of a year or two years. If this thing gets signed into law by mid-February, which is what it is projected to do, you probably won't start to see the results or ramifications of it into the third quarter.
SMITH: Sure.
GLICK: And that's why you have a lot of economists who are suggesting that we might have a second half of the year recovery. I've got to be honest with you. I don't really buy into it. I'm really concerned about it. And one of the biggest things that we've seen in the past two longest recessions post the Great Depression is that when people are feeling the pain, they save the money. They don't spend it.
SMITH: Right. The fists get tighter.
GLICK: Yeah. I mean, look, we're paying down debt right now. Look at the last stimulus checks that we got last May. We all pocketed that money just like the banks are pocketing the money.
SMITH: Right, To pay our bills off. Exactly right.
GLICK: And that's the risk right now, is that will this stimulus program, will it cause you and I to spend?
SMITH: Because the sense is that if any recovery happens at all, it's really going to be 2010, or maybe even deeper into 2010, before it actually happens. The other thing that's actually come up now is the sense of what this all costs. Trillion-dollar deficits. We're used to a couple hundred billion. Trillion dollars, you're talking about real money that you're passing on as debt to the generations to come.
GLICK: Oh, yeah. I mean, look, we -- the estimates right now suggest that we have already allocated up to $8 trillion toward this, between the Federal Reserve bank, the Treasury Department, and what we saw from the Congressional Budget Office yesterday. It will be trillions. And President-elect Obama is telling you that the budget deficit, we are not going to figure this out, or we're not going to pay down that debt for years to come. Now, the Congressional Budget office says by 2012, it could be down to $300 billion, but this is going to cost a lot more than even we know.
SMITH: There's no magic wand.
GLICK: There isn't.
SMITH: Alright, Alexis as always, thanks so much.
GLICK: Great seeing you.
