Change revisted
by thesumofyourfears | Published on January 13th, 2009, 2:45 pm | News
Jan. 11 (Bloomberg) -- President-elect Barack Obama said reviving the U.S. economy will require scaling back on his campaign promises and personal sacrifice from all Americans. “I want to be realistic here, not everything that we talked about during the campaign are we going to be able to do on the pace we had hoped,” Obama said in an interview on ABC’s “This Week” program broadcast this morning. “Everybody’s going to have to give.”
Obama also said in the interview recorded yesterday that he wants stricter guidelines and greater transparency in spending the remaining $350 billion in the Troubled Asset Relief Program.
Obama takes office Jan. 20 and is pressing Congress to act quickly on a two-year economic stimulus plan of about $775 billion that includes new government spending and tax cuts. As part of his campaign to build support from lawmakers and the public, Obama has been speaking about the economy every day over the past week, warning of a deeper and more prolonged recession without government action.
Though some Democrats have resisted elements of Obama’s plan, recent economic data have helped him make his point. The Labor Department reported Jan. 9 that the U.S. lost almost 2.6 million jobs in 2008 and that the unemployment rate jumped to 7.2 percent in December, the highest level in almost 16 years. The losses were widespread, with manufacturers, builders, retailers and temporary-help agencies axing positions.
Indicators
“Whether it’s retail sales, manufacturing, all of the indicators show that we are in the worst recession since the Great Depression,” Obama said on ABC. The result is that all Americans will feel the effects of efforts to put the economy back on track, he said.
“Everybody’s going to have to have some skin in the game,” he said.
Companies including Boeing Co., the world’s second-largest commercial-plane maker, CSX Corp., the third- largest U.S. railroad, and General Dynamics Corp., the second-largest shipbuilder for the U.S. Navy, announced job cuts last week.
The Standard and Poor’s 500 Index has lost 37 percent in the past 12 months and the Dow Jones Industrial Average fell 33 percent.
The last Democratic president, Bill Clinton, faced a similar predicament. In the face of a deepening budget deficit, Clinton during his transition scaled back his spending plans and abandoned a campaign pledge to enact a middle-class tax cut.
Report on Plan
Obama yesterday released a report by his economic advisers that forecasts his two-year stimulus proposal would generate as many as 4 million jobs, higher than his previous estimates, the biggest portion of them in construction, manufacturing and retail.
The plan would also result in the U.S. gross domestic product increasing by 3.7 percent more by the end of 2010 than it would without the stimulus, according to a study compiled by Obama’s economic advisers. The study gives a forecast based on a package of spending and tax cuts totaling “slightly over” the $775 billion that has been discussed by the transition team with members of Congress.
Even with the GDP improvement forecast in the report, the unemployment rate is forecast to be about 7 percent, according to its authors Christina Romer, the president-elect’s pick to head the White House Council of Economic Advisers, and Jared Bernstein, economic policy director for Vice President-elect Joe Biden.
Construction Jobs
The single biggest job gains would be in construction, according to the report, with 678,000 created by the fourth quarter of 2010. Another 604,000 jobs would be created or saved in the retail sector and 408,000 in manufacturing.
Most of the jobs created by government spending on infrastructure, education, health and energy would come in 2010 and 2011 because of the time it would take to carry out programs in those areas, the report said.
The Congressional Budget Office forecast that the recession and government outlays for bailouts will push the budget deficit to at least $1.18 trillion this fiscal year. Obama said Jan. 6 that he expects similar shortfalls “for years to come.”
Some congressional Democrats have criticized the portion of the plan devoted to tax cuts, while Republicans have voiced concern about the size of the proposal and its effect on the deficit.
Bailout Plan
Part of the increase in the deficit estimate stems from the $700 billion financial market’s bailout plan approved by Congress last year.
Obama said that he is “disappointed with how the whole TARP process has unfolded,” including insufficient oversight. He also said not enough has been done to help those facing home foreclosures.
Obama said he intends to “lay out very specifically” ways that he would spend the next $350 billion. “We can regain the confidence of both Congress and the American people that this is not just money that is being given to banks without any strings attached and nobody knows what happens, but rather that it is targeted very specifically at getting credit flowing again to businesses and families.”
He declined to say whether he wants President George W. Bush to request from Congress access to the second half of the money before Inauguration Day.
Among the campaign promises that may be delayed is his vow to quickly close the prison camp at the U.S. Navy base at Guantanamo Bay, Cuba.
“It is more difficult than I think a lot of people realize,” Obama said, adding that he still plans to shut down the facility, used to detain enemy combatants suspected of being terrorists.
Foreign Policy
On foreign policy, Obama again declined to be drawn into a substantive discussion of the new violence between the Hamas in the Gaza Strip and Israel. Pressed on his silence on the issue, Obama said the escalating conflict “makes me much more determined to try to break a deadlock that has gone on for decades.”
He said he is putting together a team that will ensure his administration is “immediately engaged” in the Middle East peace process right after he’s sworn in.
“The politics of it are hard. And the reason it’s so important for the United States to be engaged and involved immediately, not waiting until the end of their term, is because working through the politics of this requires a third party that everybody has confidence wants to see a fair and just outcome.”
Obama said Iran “is going to be one of our biggest challenges,” and said some form of engagement with Tehran was “the place to start.”
While his administration will be willing to talk, there will have to be “clarity about what our bottom lines are,” he said, without giving details.
To contact the reporter on this story: Edwin Chen in Washington at [email protected].
Last Updated: January 11, 2009 10:26 EST
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typical democrat bait and switch
