WASHINGTON • President-elect Barack Obama plunged into rare pre-inaugural crisis talks with congressional leaders Monday, declaring the national economy is "bad and getting worse" and embracing tax cuts now expected to reach $300 billion. He predicted lawmakers will approve a mammoth revitalization package within two weeks of his taking office.

If the two-year plan is enacted, workers would see larger paychecks almost immediately because taxes withheld by the government would drop. The break would be retroactive to Jan. 1, and couples receiving a $1,000 tax cut would begin receiving an extra $40 in twice-monthly paychecks as the government tries to spark more consumer spending.

"The economy is very sick," said Obama, who met privately with leaders of both parties at the Capitol. "The situation is getting worse. ... We have to act and act now to break the momentum of this recession."

Obama, who takes office two weeks from today, has said there can be only one president at a time - and he repeated that principle Monday "when it comes to foreign affairs."

But when it comes to the economy, he clearly feels he cannot sit by until the swearing-in.

"The reason we are here today is because the people's business cannot wait," Obama said as he arrived on Capitol Hill.

"I expect to be able to sign a bill shortly after taking office," he said. Pressed on the timing, he said, "By the end of January or the first of February."

Obama's proposal to stimulate the economy includes tax cuts of up to $300 billion - including $500 for most individuals and $1,000 for couples if one spouse is employed - as well as more than $100 billion for businesses, an Obama transition official said. The value of the tax cuts would be significantly higher than had been signaled earlier.

New federal spending, also aimed at boosting the moribund economy, could push the overall package to the range of $800 billion or so. About $77 billion would be used to extend unemployment benefits and to subsidize health care for people who have lost jobs.

The rest would go toward job-creation projects such as roads and bridges and toward long-term goals such as alternative energy programs.

Meeting with Democratic House Speaker Nancy Pelosi, Obama set a tone of urgency for dealing with a financial situation that he described as "precarious."

He said, "The speaker and her staff have been extraordinarily helpful in working with our team so we can shape an economic recovery plan and start putting people back to work."

But he also met with Republicans in an effort to build broad support for quick action.

"This is not a Republican problem or a Democratic problem at this stage," he said. "It is an American problem, and we're going to all have to chip in and do what the American people expect."

At his meeting with bipartisan leaders of Congress, Obama said he would make his stimulus proposal available on the Internet, with a Google-like search function to show each proposed project or program, by congressional district, according to three people who attended.

After meeting with Obama, House Minority Leader John Boehner, R-Ohio, said he was concerned about the plan's cost.

"This is not a package that's ever going to be paid for by the current generation," Boehner said. "It's being paid for by our kids and grandkids."

Republican lawmakers want more details, Boehner said, but he replied "yes" when asked if he expected a stimulus plan to be enacted within six weeks.

The Obama plan's tax cuts for individuals and couples would be a bit different from the rebate checks sent out last year by the Bush administration and Congress in a bid to boost the slowing economy. The relief this time around would be awarded by withholding less from worker paychecks.

Details of the two-year plan if enacted

Workers would see larger paychecks almost immediately because taxes withheld by the government would drop.

The break would be retroactive to Jan. 1, and couples receiving a $1,000 tax cut would begin receiving an extra $40 in twice-monthly paychecks as the government tries to spark more consumer spending.

 
Here are some questions and answers about the evolving stimulus plan:

Q: Why have a combination of tax cuts and government spending?

A: Obama is looking to deliver a powerful dose of both short- and long-term medicine to help the economy, which has been mired in a recession since December 2007.

Tax cuts can be implemented fairly quickly - in weeks or months. Government spending on repairing roads, bridges and other public works projects typically takes longer to roll out. If timed right, though, such spending could give a critical lift to the economy later on. That's important because the economy is likely to remain weak well into next year and possibly into 2011.

Q: How would the tax cuts for individuals work?

A: Although details are still being worked out, Obama envisions withholding less from workers' paychecks, versus cutting people rebate checks. It would cost about $140 billion to $150 billion over two years.

During the campaign, Obama promised a $500 tax cut per worker and $1,000 for working couples.

Q: Why go this route?

A: Supporters believe this approach, which will result in fatter paychecks, is more likely to spur consumers to spend, and thus help revive the economy, than a one-time cash rebate.

President George W. Bush opted for massive tax cuts, including rebate checks, as part of efforts to turn the economy around after the 2001 recession. When the economy got into trouble again last year, Bush turned to a quick cash infusion through rebates. But the impact of last year's rebates of up to $600 a person was limited. It was blunted by high energy and food prices - and decisions by skittish Americans not to spend all of the cash, but rather sock it into bank accounts or use it to pay down bills.

"A permanent tax cut is much more effective at changing the behavior of consumers than a temporary rebate," said Brian Bethune, economist at IHS Global Insight. "People are better able to plan for the future when they can count on bigger paychecks. It's a totally different ball game," he said.

It's likely people will feel more inclined to "get rid of the old clunker" and buy a new car or make other big-ticket purchases if they know their taxes will go down and stay down, Bethune said.

Administratively, experts said tax relief via adjusting withholding formulas can be provided faster - perhaps in a matter of weeks - than through a rebate system.

Q: How about tax breaks for companies?

A: More than $100 billion in tax cuts would be given to businesses. One provision Obama is weighing is a one-year tax credit to companies that hire new workers or forgo laying off existing workers. Economists and others, however, think this provision would be difficult to implement and could have unintended consequences.

"You could end up subsidizing growing industries and penalizing shrinking ones. It may not be what you want to do," said tax expert William Gale, co-director of the Tax Policy Center at the Brookings Institution.

Since the start of the recession, the economy has shed 1.9 million jobs. And the number of unemployed people has risen to 10.3 million.

The nation's unemployment rate zoomed to a 15-year high of 6.7 percent in November and is expected to rise to 7 percent in December when the government releases that report Friday.

If that proves correct, it would be the highest level since June 1993.

Another tax break under consideration would allow businesses suffering losses to go back as far as five years - versus the current two years - to recoup some of the taxes paid.

Other provisions, including one to bolster investment in new equipment, also are being studied.

Bruce Josten, executive vice president for government affairs at the U.S. Chamber of Commerce, said of Obama's plan: "The tax cuts are large enough to make a difference and will benefit individuals and businesses, both of which are hurting." That said, he urged Obama and Congress to include more tax measures in the package.

Q: We've heard a lot about Obama's plans to ramp up spending on big publicworks projects. Why is the Obama camp talking about tax cuts now?

A: Tax cuts always were envisioned as a crucial element to Obama's total recovery package. The $300 billion worth of tax cuts being discussed - much more than many economists and lawmakers were anticipating - could help make the overall package more attractive to Republicans, who are skeptical about ramping up government spending.

Q: What's the timing for possible congressional action?

A: House Majority Leader Steny Hoyer of Maryland said he wants the House to approve the plan by the end of the month, sending it to the Senate in time for action before Congress leaves on its mid-February break.

That's a slower - but perhaps more realistic time frame - than had been initially promoted by House Speaker Nancy Pelosi of California. She had hoped to have a bill ready for Obama's signature on Inauguration Day, Jan. 20.

THE ASSOCIATED PRESS