Posted by Jed Lewison on Wed Jan 7, 2009 at 4:03 PM Pacific

Obama open to larger economic recovery plan

Updated with video (6:15PM):

Original post:

In an interview to be broadcast tonight at 8PM on CNBC, President-Elect Obama told John Harwood that that his recovery and reinvestment plan could get larger.

Harwood pressed Obama on arguments by economists who say $775 billion isn't enough. Obama's answer:

We've seen ranges from $800 to $1.3 trillion and our attitude was that given the legislative process, if we start towards the low end of that, we'll see how it develops.

Here's the full transcript:

Harwood: Tomorrow you're going to give a speech and talk about your economic stimulus package.

Obama: Right.

Harwood: It looks like it's going to be at the high end of your range, around $775 billion.

Obama: That's correct.

Harwood: If it's correct that, as your aides have said, the danger is doing too little rather than doing too much ...

Obama: Right.

Harwood:  ... why stop at $775 billion? Why not go to the $1.2 trillion that some economists have recommended? Is that because you think that the political figure of a trillion dollars is too politically charged to get over? Is it because you think more spending would be pork rather than stimulus? Or do you think you've figured out exactly the right amount of stimulus that's needed?

Obama: Well, first of all I think it's important to note that every economist, conservative or liberal, at this point agrees that we have to have a substantial recovery plan that helps to jump-start the economy, that short-term it's going to be expensive, but it would be much more expensive to see the economy continue in the tailspin that it's been going in. We've seen ranges from $800 to $1.3 trillion and our attitude was that given the legislative process, if we start towards the low end of that, we'll see how it develops. We are concerned ...

Harwood: It's going to get bigger.

Obama: Well, we don't know yet. But what we are concerned about is making sure that the money is spent wisely, that there's oversight, that there's transparency. We are going to use this money to temporarily boost the economy, to create or save three million jobs, but also to put some down payments on things that we should've been doing over the last several decades that can help create a more competitive U.S. economy. Examples: making sure that we are doubling alternative energy, and creating much more efficiency in our buildings and in our transportation systems, making sure that we are reducing the cost of health care using health information technologies, building up world class schools so that our children are benefiting and can compete in the global economy. So what we want to do is make sure that any money we're spending is, number one, creating jobs, stabilizing the economy, but also is being used prudently so that when we come out of the current stretch that we're in, we're going to see a stronger economy, a better economy, a more efficient economy.

The key point here is Obama is signalling $775 billion is not set in stone. If there is a compelling, pragmatic argument that a larger stimulus is needed, then a larger stimulus might just be what we get.