Obama's Stimulus Plan Is No Quick Fix

President-elect Barack Obama's grand stimulus package is set to include both tax cuts and new spending aimed at jumpstarting the flagging U.S. economy, but market observers warn that the recovery plan may disappoint those hoping for a quick remedy to the current malaise.

While details still need to be hammered out, multiple reports say the proposed stimulus plan has been penciled in for $675 billion to $775 billion over two years. Obama met with lawmakers in Washington on Monday to begin seeking support for the massive rescue package, one that is larger than either Republicans or Democrats were expecting. Obama is planning to deliver a speech about the economy on Thursday, with more details expected to surface then.

At the center of the package is $300 billion designated as tax cuts to individuals and businesses. Another $200 billion would help individual states pay for their Medicaid programs, and a large portion of the remainder would go toward infrastructure spending, including the rebuilding of roads, bridges and schools, computerizing the health-care system, and the modernization of schools and libraries.

"The overall concept that a big piece of the stimulus should go in the form of a tax reduction is good news," said Brian Bethune, director of financial economics for Global Insight Economics. "By the time Obama takes office, we will have been in a 13-month recession. They need to do something urgently, and obviously tax cuts are the way to go. Right off the bat, Obama is showing that a tax cut needs to be a big priority."