Combined with already planned spending, U.S. President-elect Barack Obama's future package of tax cuts and spending increases would push Washington's 2009 deficit to between US$1.5 trillion and US$2 trillion, it was reported on Sunday.
This indicated that the United States "is about to embrace an economic theory that was widely thought for most of the last generation to have been discredited: the idea that great bursts of deficit-funded government expenditure can jolt an economy back to growth," the Los Angeles Times said.
"The nation is poised to put this theory to the test on a scale untried in peacetime by any developed country on Earth," said the paper.
This also showed that how quickly the options for the next government were shrinking, the paper noted.
Only during World War II did U.S. government expenditures account for a greater share of economic activity, according to federal statistics. That's also true for virtually every other developed country.
In the eyes of the upcoming administration, deficit spending on a grand-enough scale can inspire the confidence to right a sinking economy, the paper noted.
Such a huge deficit would be more than 10 percent of the economy's output.
"There's been nothing of the magnitude of what the incoming administration is contemplating -- certainly not as intentional policy -- in the modern era," Adam Posen, deputy director of the Peterson Institute for International Economics in Washington, was quoted as saying.
The sheer size of Obama's plan and the considerable support it is generating among economists as well as the public are testament to the frightening dimensions of the global economic plunge -- and to the fact that, to date, efforts by government policymakers have done little more than slow the fall, the paper said.
"Obama's plan represents an unexpected comeback for the ideas of the late British economist John Maynard Keynes, who argued in the 1930s that governments could end the Depression by spending heavily to maintain demand for goods and services until frightened consumers and damaged businesses gained the courage to resume buying and selling on their own," said the paper.
(Xinhua News Agency January 12, 2009)
