Obama: A Continued Economic Decline Is Not Acceptable

Barack Obama, addressing the press for the fifth straight day, offered perhaps his gloomiest assessment yet on the current economic situation. Relaying how the talks with his economic teams have revealed a landscape far more challenging than previously imagined, he insisted that "a significant amount" of government spending was needed "on the front end."

"What is striking in the conversations that we have had with economists from the left and the right over the past several months is how the economic forecasts have deteriorated, and the conclusion has been with credit freezing up, with businesses laying off workers, with a continued weakness in the housing market, and escalating foreclosures, that unless you have a bold approach, you could see the economy continuing to decline at a pretty rapid clip. That is not acceptable to me," he told reporters. "I don't think it is acceptable to the American people."

More bad economic news is indeed anticipated. The housing market is expected to get hit with another round of massive foreclosures as rates on subprime and other loans get bumped up. Moreover, state budgets are precarious and governors could also end up pleading for bailouts from the federal government.

Reports from inside the transition and on Capitol Hill suggest that the stimulus package Obama will sign after taking office could grow to $1 trillion. It is a sum of money that humbles even the president-elect.

"First of all, I'm concerned about the numbers being talked about," he said. "We are not intending to spend money lightly. You know, the tax burden on Americans are already high. We are inheriting a deficit that is probably above $1 trillion. And so, look -- I'm a taxpayer like everybody else, and I don't want to see money wasted."

Obama went on to note that, in this environment, tough budgetary choices will have to be made. And that the idea of narrowing the deficit was unrealistic. That, however, wasn't an excuse for fiscal prudence. Or, for that matter, to not have one's eye on the long-term effect of near-term spending.

"I am confident that we are going to put people back to work," said Obama. "I'm confident that businesses are going to start growing again. It is going to take some time, but we can get this done. Once we have an economic recovery and the economy is growing again, then we are going to be confronted with this enormous deficit... and so, part in parcel of the overall economic plan is going to be a mechanism to get our mid-term and long-term budgets under control. I want to be very clear, we are going to make some difficult choices on the budget, and I'm going to make sure by the way that some of the difficult choices are under my watch and not just somebody else's watch."

Comments

[cayuse]

Well what do we expect or deserve?

When you take issued stock put it up for a lottery RISK FREE. Outside of any value to the stock issuer, except as tax free compensation to the Executives.

Then discredit and devalue the workers who's genious and sweat make the company. Lay the workers off so profits are higher till the ability to create a widget are lost. Obama does have it right, if we can make it another 30 days and then wait 6 months to 2 years.

But have you seen the REIT or MOB that is going on out there. It is the above on STEROIDS

[Kerin]

The main isuue I have with the economic bailouts that have been been proposed by president-elect Obama is that they run contrary to his basic economic premise: Growing the economy from the bottom up. The bailout funds that have been dispersed or are presently proposed are typical "trickle-down" economics.

What I think will work is to start at the botton: Refund 1/3 of all taxpayers Federal withholding taxes paid in 2008. This is for induviduals and for small busineses. That would place a substantial amount of money in peoples' pockets, boost consumer confience, help consumers reduce debt, increase their savings and encourage spending.

The results would be immediate. People would have the money for a downpayment on a home or for the purchase of new cars, re-finance their homes to get out from under a negative equity position , infuse banks with much needed funds, purchase stocks and bonds for their retirement (since many good companies are undervalued at this time) and most importantly, give taxpayers a renewed confidence in the economy.

Politically, this would reduce the anger in our country which stems from the preception that we are rewarding the very rich with taxpayer money and send a much needed signal (after 8 years of Bush) that the middle class is the driving force behind ecomonic growth and the Obama administration is a real agent for change.

[KKojei]

I don't like the tax refun merry-go-round. Most of us who have worked all of our lives to contribute to the tax system have collectively invested trillions of dollars into our country only to have our leadership completely disrespect our contributions by dropping million dollar bombs from billion dollar planes on hapless civil populations on behalf of corporate greedigarchies. The fed should take responsibility for this mess, redefine our tax structure to include giving taxpayers a real say in how the money is spent. The vote by our so-called representatives should have been a referendum like Prop 8. Sad that we would spend so much money and time to prevent gay people from marrying each other but on something as important as a bailout of the very criminals who stole trillions of dollars from trusting investors, we think two senators and a few house reps have more wisdom that our entire population. 80% of the people who responded to surveys about bailouts of banks said let the bums boil. We were right. AIG execs immediately went back to business as usual while dumping employees into the street. Banks continued to shrink credit availability and squander taxpayer resources on nothing that would help the economy. The fed should offer the taxpayers and non-taxpayers[who would be if they had jobs] a grant of their own money to the tune of at least $50,000 to mitigate the harm a failed government has done to our economy.

[Kassandra]

"80% of the people who responded to surveys about bailouts of banks said let the bums boil. "
Once again the hoi polloi were right. Are they EVER going to listen to their consitituents? except in the election years?
This was a bi-partisan outcry and they did it anyway and poorly at that.

[BillMyers]

I need your help on this one Barack.

Small business in America must raise capital for start-up or expansion. Limitations on how they can do that mainly centers around NOT being able to advertise to the public when selling private unregistered securities. The SEC 504 Reg D and other "Rules" don't allow it. Selecting this "Exemption" from registration also means that they cannot advertise in any manner to find potential investors.

Meanwhile, trying to sell stock in a small private venture is nearly impossible anyway if you have only a hand full of relatives and friends with capital and an open mind to risk.

Therefore, I propose that this method of raising capital by offering stocks, bonds or other securities, must be opened up further so that small businesses CAN advertise to reach a wider investment audience cost effectively and quickly.

To do so will greatly increase capital (NOT LOANS) flowing into small American businesses that will be spent in America generating new jobs, purchasing materials, stimulating the real estate market through rentals or ownership, R&D, manufacturing new products and leading to enrichment of owners and investors.
BILL MYERS 800.927.2949

[gbrooks]

Maybe that's a good idea you have there Bill, but I suspect that Obama probably doesn't read the comments on HuffPo.

[hypnotoad72]

Thanks to recent events, I doubt he and his staff will ever again, assuming he had in the first place.

[brynn6]

Why don't you submit your idea to change.org. It would have a better chance of being seen there.

[westcoastsc]

I agree with you. I was thinking that we should start a stock market specifically for small businesses and start ups with realistic caps on how much money that can be allowed to be raised for a business depending on realistic projections. There needs to be serious regulation such as equal opportunities for people to invest.

[blueskybigstar]

Part 3

There will always be debt. People will always loan money. It is the unregulated system that has brought us to the point of our needing to begin again. Investing is important, but the way it has been allowed to be done without good regulation has wrecked the economy. Money is for the living. Money that is not based on something, like gold, only works when there is confidence in the market. When people lose confidence in government and balances of the money become so outrageous, then the economy will collapse. There needs to be a basis for prices to seem fair for the economy to work. The debt that normal people are in keeps them from being free, but also prevents them from being creative and pursuing business.

[blueskybigstar]

Part 2

Start a new currency, a new dollar. The government should pay back with these new dollars all the people who are owed money by the deregulated institutions. The government should pay back all of what is owed them up to 10 million dollars. Beyond that, the government should pay everything back on a 1/3 of the dollar and perhaps a scale. The idea of having money working for you is nothing but speculation and there need to be controls. Banks and companies will only get paid back on a third of the dollar. Most individuals will no longer have debt and will be free to start up businesses and begin again. Demand that all money over a certain amount to be proven to have been made legitimately before it can be traded into the new currency. Come up with a new credit rating system, one that works, is fair, and rewards the idea people. Eliminate the fraud which is 2% of all transactions.

I will be posting 13 different points on how to keep corporations and their interests under control.

I will post these on my profile.

[blueskybigstar]

Part 1
Europe absolved the debt of Germany in WW1. We absolved the Marshall plan. The Third World's debt has been absolved twice. I have absolved debt that people have owed me when I knew they could not pay me back. People have done the same for me. We were able to maintain our friendships by doing this. Society needs to do the same. The economy needs a reboot that solves the disparate wealth that has thrown the whole system out of whack. Debt has made people into slaves. The French Revolution started because the aristocratic class grew and demanded ever more of the society's resources.

The economy cannot be run on debt or it will eventually shut down. Do not borrow from Peter to pay Paul. What happened to basic concepts of how to do business? There needs to be major reform. the Bilble, interestingly enough, was right about how to do business. Absolve all debt for the reason that so much business was based on hedging, the hedges must be covered. This is the only way to do it.

[ebbtide]

not acceptable. What is acceptable­--taxpayer money spent on rescuing corporations that give them the finger. Nope, not acceptable that the economy is sinking fast===remedy---use the taxpayer money---works everytime.

[Indie2008]

If the economy was getting this bad, wouldn't the Bush administration have been aware of it? If they were aware, wouldn't they have warned us about what was coming? ...So I guess that means they were either incompetent, or just didn't want to distract the American people during an election year.

[kasinca]

Duh! And they have been forthcoming about what in the past eight years that would have made you expect them to be forthcoming now? The robber doesn't tell you when he is going to rob you.

[JamesInDenver]

Bush has never been a communicator. He doesn't know enough words.

[jmpfjoy]

How could Bush be aware of anything when he had his head up his @ss?

[swo68]

Well, there were democrats in important positions who were saying everything's all fine and dandy.

There's plenty of blame for both sides. You can't nail this to Bush only.

[Mugzi]

gw is the "decider", so yes we can nail him on this one. He is the boss :(. The repug platform has always been "no oversight", even the first plan gw submitted was nothing more than 1 /2 pages and oversight was not to be had...so yes, this is majorly another gw fiasco!

[rollingdivision]

Talking economic disaster to scare the electorate to agree to the most massive government power grab in history. He is better than Bush, Obama fear monger par excellence!

[senorlou]

You think this isn't really happening? Maybe you'll believe in the crisis - which is 100% real - when you're standing in a bread line, waiting in a homeless/ refugee center, or better still - when you're out roaming the countryside for woms, grubs, and berries? How's that for some fear? Fear for the whole family to enjoy. Your attitude toward this horrible, looming catastrophe reminds me of an old video from nearly 30 years ago. There was a song called "Can't Happen Here". Basically, the band (the band was called Rainbow) was trying to say how we've all become so complacent and docile that we can't smell smoke from a burning fire. Now the fire is raging. Smell that smoke yet?

[rollingdivision]

This isn't anything like as bad as is being talked up.

[Bitsko]

Do you read anything besides Parade magazine? Every economist in the world is saying practically the same thing as Mr. 0bama.

[mikep]

Maybe, but pretty much every one of these economists also missed forecasting this whole thing to begin with. They really have no idea what happened or what to do about it. The best ones at least admit it. The last people we should be listening to at this point are the economists; aren't they the ones who got us into this mess to begin with? Their only solution to everything is just to throw money at it. That's not economics, that's guesswork.

[vjoseph]

Take it on up with those magazines then
1. The Economist
2. Financial Times
4. The New Republic
5. etc.., etc...

Everyone is saying the exact same thing. Maybe you should go live in a bubble. Meanwhile, I like my leaders to be upfront with me

[aweissnet]

They are in a bubble.

[leeman79]

You obviously haven't lost your job yet.

[TalkingOutLoud]

Wait a minute; are you really George Bush? You've taken to trolling...well, guess you gotta do something after you're out of office...can't you just go away?!?!?! :(

[senorlou]

Obama is our last bullet. He's pretty much the only hope we've got left. What else can we do aside from hope he saves us from complete economic collapse? Guess it's time to read up on the Great Depression. Those who don't study history...

[zippywpinhead]

heck of a job, Bushie

all the revisionism tours in the world aren't going to salvage your legacy

on the plus side, the Hoover family thanks you for improving Herbert's...

[DieboldDemocracy]

zippywpinhead, if you think that this is Bushes fault, you are 1/8 right. His wars have ballooned our debt and his support of NAFTA hasn't helped either. But you need to take into account the Federal Reserve (3/4 of the problem) for artificially lowering interest rates to create the bubble.......on purpose I might add, ourselves (1/8) for spending drunkenly into debt by thinking our rising home prices=extra money we can spend, and the democrats for their CRA (Community reinvestment Act) for REQUIRING banks to give loans to unqualified loan candidates.

If you think Obama has any sort of plan to resuce this economy other than supporting the 800 billion bailout (5 trillion by Bloomberg Financials accounts) and assuming that the only way to get out is to get citizens to borrow more and spend more, then you need an economics refresher course

[zippywpinhead]

if you think that Bush's only culpability is his having started those wars and his support of NAFTA then it is you who needs a refresher course. I never said he was solely responsible, but he was the one in charge and it was his policies of neglect and deregulation that caused much of the mess, not to mention his energy policy and his general incompetence...

Sorry, but as Truman said,'the buck stops here' and it is on his watch that our economy unraveled...

[Bitsko]

At least Hoover deserved the Nobel Peace Prize for saving millions of people from starving in the decade after World War I.

[lynettema]

Bush Co must have been hoping the bottom would wait to fall out until the next president took office. Did they really think their lousy economic policy would work?

[ProfSamuelDBornstein]

I would like to bring a very important bit of information to your attention that relates to this economic crisis that was overlooked until now.

On Sunday, 12/14/08, CBS 60 Minutes aired a segment "The Mortgage Meltdown".

Scott Pelley's piece on the 2nd Wave of Foreclosures overlooked a critical fact.
The segment missed the fact that this next wave of Foreclosures in 2009 Will Take Self-Employed and Smaller Businesses who have these TOXIC mortgages. In fact, ALT-A, Option ARMS, Interest-Only, the TOXIC Mortgages that are considered the "Troubled" assets in TARP were specifically marketed to the self-employed who fell prey to them.

The upcoming defaults on these risky "Toxic Mortgages" will result in an increase in foreclosures. But worse, once these small businesses fail, the resulting loss of jobs will cause millions to add to the ranks of the unemployed. Note that self-employed business owners (16.2 million according to the SBA) employ between 1-10 employees.

An NASE survey at www.nase.org , was the first to provide compelling evidence of small business involvement in the upcoming toxic mortgage crisis. According to this survey, it is estimated that 3,709,800 small business owners hold Alt-A and other toxic mortgages, and 1,279,800 are already delinquent as they have missed one to three or more monthly mortgage payments at mid-November, before the expected Resets that are scheduled to begin in 4th Quarter 2008 through 2012.

[OkieMon]

the bush-republican induced depression will be with us a long time...last depression took 20 years to recover from and that was with the help of wwII.....

[TheBlackCat]

listen, it wasn't just the Repubs who did this.

Yes the de regulation that started with Reagan is hugely responsible for our conditions.

But Democrats didn't fix this under Clinton, or even REALLY try to. They used it themselves when it served their purposes, like with Fannie and Freddie.

They didn't take a strong stance against wall street excess, against massive outsourcing of American jobs, against the increasing pay of CEOs at the expense of pay and benefits to their workers. They didn't fight for universal healthcare, removing that burden from employers.

They may have given these things lip service. And I'll give it to Hillary she really tried to do something with health care. But NO ONE took these issues seriously enough. No one was paying enough attention. The Dems didn't want to kill the golden goose of Wall Street capitalism anymore than the Republicans did.

This isn't so much a partisan issue as an issue with the huge cultural problem in America where we tend to A. only think in the short term and B. think we should all try and live above our means.

[TheJibreelaMonsters]

yep, you was public school educated
FDR caused and prolonged the depression

[phal4875]

FDR and his policies had brought the country about halfway back to prosperity and recovery by 1937 and 1938. He took the advice of conservatives at that time and pulled back on government spending. It then took the spending of World War II to firmly establish recovery.

Private spending is generally better than public spending because it involves decisions by those who are committing their own resources to a purchase. When private resources and the possibility of private borrowing nearly disappear, government is the spender of last resort.

Sorry about your McCain-Palin loss.

[vjoseph]

LOL, that was debunked 3000 times. You fail once more

[Fernando]

A) FDR was elected as a result of Hoover's handling of the economy. The market crashed in 1929, FDR took power in 1933. Read your history.

B) Although conservatives love to say that government intervention worsened the economy the story is not that simple. The New Deal actually helped a lot of families from falling into indigence.

C) What took the US completely out of the Depression was the increase in productivity from WWII. The Marshall Plan aid package kept the European markets going and buying our goods after the end of hostilities. It is no accident the US became THE superpower as a result of these measures.

I went to public schools in NYC and I know my history.

[Sursum]

My depression-era mom taught me that buying on excessive margins is what caused the Great Depression. And massive gov't spending -- first on the New Deal, then much more on the war -- is what finally ended it and ushered in new prosperity. Then there were the Eisenhower years of 80-90% tax rates on the top earners to pay off the debts and the war bonds.

Over-leveraged mortgage-related securities instruments have brought on this collapse. Only massive gov't spending -- such as a Obama's advisor's are suggesting -- will pull us out, I suspect. And then there will be the debt to pay. Higher rates on higher incomes didn't hamstring the post-war economy. All the boats rose with the tide, at least until the Reagan years.

How about "New Energy/Inf­rastructur­e/Educatio­n Bonds" now? How about finding ways that those who speculated excessively and took excessive risk bear most of the economic burden? How about having all who sold a credit default swap pay 1/2 the money back to the buyer to spread the risk? How about having the holders of the troubled mortgages -- if we can even identify them -- take a reduction in principal to save everyone lots of anguish and money?

[getoffmedz]

"Over-leveraged mortgage-related securities instruments have brought on this collapse." - only one of many, many factors that total cessation of oversight spawned.

The very rich get and remain rich by being greedy. Someone thought it would be a good idea to not interfere with these greedy folks.

What lame maladministration would that be?

[eilish]

I don't get it. Instead of empty, vandalized houses why don't banks opt to drop principle & interest on existing mortgages to keep some kind of income on those loans? Am I just completely naive in believing that some sort of profit is better than sitting on a dwindling, nonproductive asset?

[senorlou]

Some of these homes exist in far flung communities in the middle of nowhere that nobody in their right mind want to live in. Here in Los Angeles, in Northern LA Country - Lancaster, there are tract homes without water (they are located in a desert). The "planning" that went into a lot of these developments was pretty insane. I don't know what they'll do with some of these - they'll probably become ghost towns. People who live in Lancaster drive 90 minutes both ways to work. Who the hell wants to do that anymore? So what I'm saying is, the demand for some of these houses is non-existent. They may very well be a total loss, be boarded up, and will rot in the California sun for generations.

[Artos]

eilish ,

I have been saying something very similar. When the Government saw how big this was getting they should have and could have declared a national emergency on the order of Protecting our National Interests. Sort of how Bush Sr. and Bush Jr. managed to get us into the Iraq fiasco with their ,Protecting our Vital National Interests (oil) reasoning. This time it would be to enact legislation that would automatically call upon all ARM loans to be made into fixed loans at the Percentage that the loan began at or what would be deemed reasonable such as 5 and a half or 6. Then they should have mandated that all the homeowners be given the opportunity to catch up on the payments at reasonable schedule. That would have solved the mortgage fiasco right then and there. Sure loan agencies would have lost potential interest but now they have lost a lot more and some are even bankrupt or gone. They might still be around otherwise.