President-elect Barack Obama warned that only immediate and massive spending to jolt the world’s largest economy could avert a deep recession and double-digit unemployment. (Source: Getty Images)
President-elect Barack Obama warned of significant consequences if Congress doesn’t act quickly to boost the economy, making an impassioned pitch for his spending proposal.
“If nothing is done, this recession could linger for years. The unemployment rate could reach double digits. Our economy could fall $1 trillion short of its full capacity, which translates into more than $12,000 in lost income for a family of four. We could lose a generation of potential and promise, as more young Americans are forced to forgo dreams of college or the chance to train for the jobs of the future. And our nation could lose the competitive edge that has served as a foundation for our strength and standing in the world.”
In his American Recovery and Reinvestment Plan, Obama outlined how his administration aims to stave off the momentum of the recession, re-ignite consumer and investor confidence and reduce government expenditures, an initiative he said would require attacking spending on such entitlements as Social Security and Medicare as well as eliminating waste through the newly created position of chief performance officer.
In a speech delivered at George Mason University in Fairfax, Va., Obama placed the blame for the current economic crisis on “an era of profound irresponsibility that stretched from corporate boardrooms to the halls of power in Washington D.C.”
Not mincing words, he cast a wide net of who was to blame, accusing Wall Street executives of making dangerous decisions, banks of making loans without concern for whether borrowers could repay them, and borrowers for taking advantage of cheap credit to take on debt they couldn’t afford. Politicians were also made culpable.
But he offered up solutions to extricate the U.S. from its economic conditions and reminded people about the successes of the country.
“Our problems are rooted in past mistakes, not our capacity for future greatness. It will take time, perhaps many years, but we can rebuild that lost trust and confidence. We can restore opportunity and prosperity. We should never forget that our workers are still more productive than any on Earth. We are still home to the most brilliant minds, the most creative entrepreneurs, and the most advanced technology and innovation that history has ever
known. And we are still the nation that has overcome great fears and improbable odds. If we act with the urgency and seriousness that this moment requires, I know that we can do it again.”To help jumpstart job creation and long-term growth, Obama aims to double the production of alternative energy in the next three years, modernize a majority of federal buildings, and improve the energy efficiency of two million American homes. Those moves will “put Americans to work in new jobs that pay well and can’t be outsourced — jobs building solar panels and wind turbines; constructing fuel-efficient cars and buildings; and developing the new energy technologies that will lead to even more jobs, more savings, and a cleaner, safer planet in the bargain,†he said.
The economic tasks ahead for the future Obama administration are daunting, but “A bad situation could become dramatically worse,” Obama said, painting a dire picture.
Adding to the grim forecast, the Labor Department reported Thursday that initial applications for unemployment insurance dropped by 24,000 to a seasonally adjusted 467,000 for the week ending Jan. 3. The number of people continuing to claim jobless benefits rose by 101,000 to 4.61 million.
Unemployment figures due Friday are expected to show that the U.S. lost a net total of 500,000 jobs in December. If accurate, that would bring total job losses last year to 2.4 million, the first annual job loss since 2001 and the highest since 1945, though the number of jobs has more than tripled since then, according to the Associated Press.
On Wednesday, the nonpartisan Congressional Budget Office reported that the federal deficit will reach $1.2 trillion in the f
iscal year that ends Sept. 30, surpassing the record of $455 billion set in fiscal 2008. As the CBO unveiled the figures, officials indicated that the deficit would reach that staggering level without factoring in the wars in Iraq and Afghanistan and the tax cuts and new spending sought by Democrats to boost the economy. The CBO report offered more bad news: a 2.2% contraction in the economy and 1% dip in consumption in 2009, an additional 14% decline in home prices over two years and an unemployment rate exceeding 9% by early 2010 — the highest rate since 1982-1983 when it rose to nearly 11%.Obama’s transition team and congressional leaders are working finalize the stimulus package, which is expected to total between $775 billion to $800 billion. The plan was for it to be approved by Congress in time for Obama to sign it when he took office on Jan. 20, but the timeline has been pushed back.
Highlights of Obama’s American Recovery and Reinvestment Plan, which will jumpstart job creation and long-term growth by:
— Doubling the production of alternative energy in the next three years.
— Modernizing more than 75% of federal buildings and improve the energy efficiency of two million American homes, saving consumers and taxpayers billions on our energy bills.
— Making the immediate investments necessary to ensure that within five years, all of America’s medical records are computerized.
— Equipping tens of thousands of schools, community colleges, and public universities with 21st century classrooms, labs, and libraries.
— Expanding broadband across America, so that a small business in a rural town can connect and compete with their counterparts anywhere in the world.
— Investing in the science, research, and technology that will lead to new medical breakthroughs, new discoveries, and entire new industries.
— Derek T. Dingle and the Associated Press contributed to this article.