Obama warns of worsening economy

The Baltimore Sun


President-elect Barack Obama predicted yesterday that the U.S. economy would continue on its downward path, but he declined in a wide-ranging television interview to say how much his recovery plan would cost or whether he intended to raise taxes immediately on wealthy Americans to help pay for it.

Obama said his economic advisers were still "crunching the numbers" for a post-inauguration economic stimulus package. In his weekend radio address Saturday, the president-elect had said the package would include a huge public-works program to build roads and other infrastructure projects.

But yesterday, he hinted that even a major stimulus plan would not be enough to turn the economy around right away.

"It's going to get worse," Obama told NBC's Meet the Press, pointing to the "fragility of the financial system" and to recent numbers showing the highest unemployment rate in 15 years.

Some Republicans have said the stimulus plan would be far too expensive. But Obama said it was more important to spend money to revive the economy and create jobs than worry about the short-term effect on the national debt.

"We have to provide a blood infusion to the patient right now to make sure the patient is stabilized," he said.

Some analysts and Democratic lawmakers have said the stimulus plan could cost up to $700 billion. The nation's governors, meeting with Obama last week, said they had more than $130 billion in infrastructure projects already planned that could be started as part of the program.

Obama's appearance came as he faced growing pressure to exhibit leadership in the weeks before his swearing-in on Jan. 20. Lawmakers have been critical of the Bush administration's handling of a $700 billion bailout for Wall Street and have been calling on Obama to inject himself more forcefully into the debate over how that money should be spent.

Obama said yesterday that he and his advisers had been in contact with Congress and the Bush team, offering input on an expected deal this week to bail out domestic automakers. He criticized the Bush administration for not using more money from the financial system bailout to help homeowners.

But Obama said his team was primarily focused on "what we expect to inherit on Jan. 20."

He sidestepped a question about whether he intended immediately to fulfill a campaign pledge to raise taxes on Americans earning more than $250,000 a year or whether he would fulfill the pledge by waiting until the tax reduction for those earners expired in 2011.

"My economic team is taking a look at this right now," he said.

In the interview, which was taped Saturday, Obama announced that he would nominate retired Army Gen. Eric K. Shinseki to head the Veterans Affairs Department, bringing into his administration one of the military's most visible critics of the Bush administration's Iraq war strategy.

Shinseki was Army chief of staff from 1999 to 2003. In February 2003, he told Congress that it could take several hundred thousand U.S. troops to control Iraq after the U.S. invasion. Defense Secretary Donald H. Rumsfeld disputed Shinseki's prediction, and the general was removed.

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