US president-elect Barack Obama said on Thursday the deepening US recession could stretch years into the future if Congress failed to act quickly on his call to pump hundreds of billions of federal dollars into the US economy.
In the speech at George Mason University in Virginia, near Washington, Obama cast blame on “an era of profound irresponsibility that stretched from corporate boardrooms to the halls of power in Washington.”
However, failing to right those wrongs could have grave implications for all Americans, Obama said. He warned the country could face double-digit unemployment and US$1 trillion in lost economic activity if the government failed to act at once.
“I don’t believe it’s too late to change course, but it will be if we don’t take dramatic action as soon as possible,” Obama said. “A bad situation could become dramatically worse.”
The address marked the fourth day running that Obama has urged fast action on huge spending in response to the worst US economic slide since the 1930s Great Depression. It was his first appearance directly aimed at taxpayers and the highest-profile pitch for the giant spending plan.
He 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.
Still, his remarks shed little new light on the details of his plan that could cost as much as US$775 billion over two years in tax cuts and spending intended to jolt the economy and create new jobs.
Leading lawmakers set an informal goal of the middle of next month for enacting tax cuts and government spending that could cost as much as US$1 trillion.
A call for a US$3,000 tax break for job creation drew particular criticism in a private meeting of the Senate Finance Committee, and numerous lawmakers said Obama had not ticketed enough of his tax proposal for energy projects. The second-guessing game from the left and the right: While some Democrats said the incoming administration’s proposed tax cuts were too small, Republicans warned against excessive new spending.
Obama, while refusing to weigh in on foreign policy, has increasingly assumed a presidential air as he challenges Congress to move rapidly. Twelve days remain until his inauguration.
Presidents-elect typically stick to naming administration appointments and otherwise staying in the background during the transition period between the November election and Inauguration Day.
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 have drawn into their shells and companies are failing as the recession deepens under collapse of the housing market, the nearly frozen global credit situation and trillions of dollars that vanished on the stock market. The recession, which started in December 2007, is already the longest in a quarter-century.
A new report on Thursday showed that the number of people continuing to claim jobless benefits jumped unexpectedly last week by 101,000 to 4.61 million, the highest level since November 1982. The high level of ongoing claims indicates that laid off workers are having a harder time finding new jobs.
For all of last year, 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 last month, 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 US Labor Department was to release that report later yesterday.
“For every day we wait or point fingers or drag our feet, more Americans will lose their jobs,” Obama said. “More families will lose their savings. More dreams will be deferred and denied. And our nation will sink deeper into a crisis that, at some point, we may not be able to reverse.”
A day after the release of a stunning new estimate — that the federal budget deficit will reach an unprecedented US$1.2 trillion this year, nearly three times last year’s record — Obama acknowledged the new stimulus spending would “certainly add to the budget deficit.” He also acknowledged some sympathy with those who “might be skeptical of this plan” because so much federal money has already been spent or committed in an attempt — largely unsuccessful so far — to get credit, the lifeblood of the US economy, flowing freely once again.
Such statements are coded to appeal to budget hawks in both the Republican and Democratic parties, whom Obama wants to win over so that approval of a package draws wide, bipartisan support in the Democratic-led Congress.
To answer their concerns, he promised to allow funding only for what works. He also pledged a new level of transparency about where the money is going. A day earlier, he promised to tackle the out-of-control fiscal problem posed by two key entitlement programs, the Social Security pension program and Medicare health insurance for the elderly and disabled. He also named a special watchdog to clamp down on all federal programs.
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