Facing resistance from within his own party on his almost US$800 billion economic recovery plan, US president-elect Barack Obama pointed to alarming new unemployment figures to urge its passage in Congress.
Obama sought to patch fissures with senior Democrats on Friday over key features of the still emerging plan, that he vowed to “hone and refine” with help from both Republican and Democratic lawmakers.
The need for a plan grew more pressing with the release of a US Labor Department report showing job losses of 524,000 last month and a 7.2 percent unemployment rate, the highest in 16 years.
Democratic congressional officials said that Obama aides came under pressure in closed-door talks to jettison or significantly alter a proposed tax credit for creating jobs.
Democrats also sought inclusion of relief for upper middle-class families hit by the alternative minimum tax (AMT). The AMT was originally designed to make sure the very wealthy did not escape taxes, but it now hits many more people because inflation has pushed up average incomes. Congress every year tries to prevent it from reaching tens of millions of middle-income families.
The package is getting off to a rocky start, with top Democrats openly complaining about key provisions, especially the design of his tax cuts.
“If members of Congress have good ideas, if they can identify a project for me that will create jobs in an efficient way that does not hamper our ability over the long term to get control of our deficit, that is good for the economy, then I’m going to accept it,” Obama said at a press conference. “What we can’t do is drag this out when we just saw a half-million jobs lost.”
He noted that jobs were lost in all 12 months of last year and said it was the worst year since World War II.
The Labor Department’s unemployment report showed widespread damage across US industries and workers — hitting blue-collar and white-collar workers, people without high school diplomas and those with college degrees.
“One word comes to mind — dreadful,” said Stuart Hoffman, chief economist at PNC Financial Services Group.
There’s no relief in sight. The year got off to a rough start with a flurry of big corporate layoffs and there were more on Friday. Airplane maker Boeing Co said it planned to cut about 4,500 jobs this year and uniform maker G&K Services Inc is eliminating 460 jobs.
Employers are also cutting workers’ hours and forcing some to go part-time. The average work week last month fell to 33.3 hours — the lowest in records dating to 1964 — and a sign of more job reductions in the months ahead since businesses tend to cut hours before eliminating positions entirely.
“There is no indication that the job situation would stabilize anytime soon,” said Sung Won-sohn, economist at the Martin Smith School of Business at California State University. “This could turn out to be one of the worst economic setbacks since the Great Depression.”
Economists predict a net total of 1.5 million to 2 million or more jobs will vanish this year and the unemployment rate could hit 9 percent or 10 percent, underscoring the challenges Obama will face and the tough road ahead for job seekers.
The Dow Jones Industrial Average fell 143.28 points, or 1.64 percent, to 8,599.18 on Friday, ending the week down nearly 5 percent, the worst week since November.