Pat Dollard

Tweet

FOX:

Obama Calls for ‘Dramatic Action’ to Jolt Economy Out of Recession

President-elect says the U.S. recession could “linger for years” unless Congress acts to pump unprecedented sums from Washington into the U.S. economy.

President-elect Barack Obama, facing a more than $1 trillion budget deficit, made his strongest pitch yet Thursday for Congress to pass a nearly $800 billion spending plan, promising that it will create new jobs, offer more tax cuts, and improve infrastructure and alternative energy development.

The president-elect called for “dramatic action” as he attempted to convince taxpayers as well as wary lawmakers that “only government” can supply the short-term boost needed to pull the economy out of recession.

Obama warned of dire consequences if Congress does not act soon, saying the crisis could “linger for years.” He predicted that the steady decline would erode and eliminate everything from jobs to college educations to the country’s standing in the world.

“In short, a bad situation could become dramatically worse,” he said, delivering what was billed as a major economic address in Fairfax, Va. Obama warned the unemployment rate could reach double digits and the nation “could lose a generation of potential and promise.”

Obama delivered his speech a day after budget forecasters said the federal budget deficit would reach a record $1.2 trillion in fiscal 2009. That estimate does not factor in the stimulus package Obama and Democrats are promoting on Capitol Hill. But Obama says deficit spending is needed to jolt the economy out of recession.

He tried to assuage skeptics who say such a massive stimulus is irresponsible, particularly on the heels of the auto industry and Wall Street rescue packages.

“I know the scale of this plan is unprecedented, but so is the severity of our situation,” Obama said. He pledged not to “throw money” at the country’s problems or send it to wasteful pet projects and earmarks.

Republican leaders, holding a press conference shortly after Obama’s speech, said Obama seemed to be including in his plan GOP priorities like tax relief and accountability and that they looked forward to working with him on the package. House Republican Leader John Boehner said lawmakers must strike a balance between the need to stimulate the economy and eventually rein in the deficit.

Obama, outlining the broad platforms of his plan, repeated his goal to save or create 3 million jobs. He said most of the job creation would occur in the private sector.

He said the stimulus money would go toward infrastructure, energy, health care and science and technology research. He said he would provide a $1,000 tax cut to 95 percent of working families.

Obama laid out goals of doubling the production of alternative energy over three years, updating most federal buildings to improve energy efficiency, making medical records electronic, expanding broadband networks and updating schools and universities.

Presidents-elects typically stick to naming administration appointments and otherwise staying in the background during the transition period between Election Day and Inauguration Day, but Obama has clearly made the calculation that a nation anxious about its economic outlook and eager to bid farewell to the current president, George W. Bush, needs to hear from him differently and more frequently.

Indeed, the economic news is grim.

Consumers and companies are folding under the negative forces of a collapsed housing market, a global credit crunch and the worst financial crisis since the 1930s. The recession, which started in December 2007, already is the longest in a quarter-century.

A report due out the same day as Obama’s speech is expected to show that the number of newly laid-off people signing up for state unemployment insurance last week rose to 540,000, up from 492,000 in the previous week. The number of people continuing to draw jobless benefits is projected to stay near 4.5 million, demonstrating the troubles the unemployed are having in finding new jobs.

For all of 2008, employers probably slashed payrolls by at least 2.4 million. That’s based on economists’ forecasts for a net loss of 500,000 additional jobs in December, as well as the job losses previously reported. Some, however, think the number of jobs cut last month will be higher, around 600,000 or 700,000. The Labor Department will release that report Friday.