'Obama needs 18 months to turn around US economy'

WASHINGTON: President-elect Barack Obama will need at least 18 months to turn around the US economy, even if he ���does everything perfectly,��� Columbia University Professor Joseph Stiglitz said.

���It won���t be easy,��� Nobel Prize-winning economist Stiglitz wrote in the Outlook section of early editions of Monday���s Washington Post.

���More than 1.2 million private- sector jobs have already been shed this year, and by the end of the year an estimated 1.15 million people will have exhausted their unemployment-insurance benefits.���

Stiglitz said Obama, who���s argued against cutting taxes for upper-income Americans, should also consider rolling back outgoing President George W Bush���s 2001 to 2003 tax cuts as well as taxing dividends and capital gains as ordinary income.

���It would reduce the deficit, have few short-term adverse effects on an already reeling economy and make the tax code more fair,��� he said.

He also said Obama should prohibit banks that take federal aid from using the money for dividends, bonuses and acquisitions.

���US taxpayers got a raw deal, compared to the terms won by other governments (such as Great Britain) or by the legendary investor Warren Buffett, who provided capital to the best-capitalised investment bank, Paulson���s own Goldman Sachs,��� he wrote.