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

[ExpatDane]

If those of you Americans making more than 100,000 dollars a year paid taxes like those of us with similar incomes in Europe do, the country wouldn't be broke and your poorest people wouldn't be starving and without health care. Get a little "team" spirit over there and spread your wealth. You'll sleep better and feel safer, even if you have to do without that pretty prada purse or god forbid, the 4th country house.

[GretaR]

I agree! "We" Americans are spoiled brats.

[mirandawilde]

Amen, Expat.

[eilish]

Yup, I have come to the uncomfortable conclusion that I like to buy things for fun and not need. That has changed drastically. But when you say that paying more taxes on $100,000 incomes here is to share with the poor - you must not understand that the only Americans not suffering in some drastic way are in the top 1% of our wealthy. Let them pay for a change.

[Pat15]

You miss the point that is not what republicans want & they have proved it in the last 8 years. They want to give as many $ to their rich buddies so they can get bribes back to win elections...Nothing new but the clueless sheep buy it ..No Tax No tax ..that is all they want ..Now the piper has come back to roost ...remember we elected Bush twice & the republican crooks last 8 years ....Now pay the price for the next 20-30 years ...What a bargain ....Amen

[cadsuch]

We have a team spirit available. What we have is a poor memory. There are a lot of people who were not IN the 1930's depression, running our financial systems and refusing to regulate unfettered capitalism. We don't have enough people who remember what caused that depression and also remember what we did to get out of it.

We have been subjected to a whole lot of BS in the last couple of decades about how we now have an information economy and how we have a service economy, and how we don't NEED our manufacturing sector any more. Only thing I need is for someone to fill me in, as to how we are going to put value into our market place, if we don't have people actually rolling up their sleeves and getting their hands dirty doing the real building and manufacturing kinds of work, all we have left is paper shuffleing, and doing "deals". All this paper shuffleing and deal making and jump starting and kick starting "bailing" banks and companies out, is just sucking the life out of our market place.

[vjoseph]

BINGO!!!!!! I have nothing else to add

[citizensrus]

What is FIAT money? Is it sound and balanced? Can it collapse? What is hyperinflation?

[billw8017]

When the gold window was closed to the general public in '32, the US switched from the gold standard to "Federal Reserve Notes," fiat money: legal tender for all debts by government fiat. Fiat money can be sound and balanced if taxes correspond to expenditures, but it is too easy to just print the money and stop collecting taxes. Therefore, and particularly during war, huge amounts of money are printed that destabilize moneys value. Israel had 100% inflation. Zimbabwe inflation has altogether discredited the national currency. These are examples of hyperinflation. Other examples are the post World War I inflations of Germany and Hungary, Napoleonic France, the US "Continental" of the Revolutionary War, and the Chinese inflation of the seventeenth century that led to the disappearance of paper money and the creation of a dictated economy.

The Clinton administration used Social Security surpluses to pay off much debt in private hands and switch the US debt to the Federal Reserve. This made it easier for the Bush administration to simply run the government on the cheaper debt since the Federal Reserve repays its interest income by being taxed of all income beyond operating expenses.

[DieboldDemocracy]

you'll find out what hyperinflation is by summer '09

[billw8017]

China has been propping up the US dollar with an artificial exchange rate. This works like a substantial act of charity toward the US though the benefit goes mostly to the great merchants like Walmart where the Walton family has several of our wealthiest individuals. We have been abusing China's policy for the past several years with our reckless federal deficit, and China has begun to do something about it: encouraging its business people to buy US properties, re evaluating the rimidi a bit. They have a very centralized government capable of sudden turns of direction. A general air of Chinese resentment augers a radical change of policy. This could amount to a "market" correction of the trade imbalance. Certainly, China will not extend charity to the US forever.

[eilish]

Thank God. Will that mean we can buy American and not melamine?

[lynettema]

Melamine! That word makes me see red! My dogs got very sick and their stomachs have never been the same. I am now buying expensive dog food - $80 a bag - and one of them will be on meds for the rest of his life. Then think of the baby formula, tires. Ugh! All in the name of the bottom line for the wealthiest among us.

[politicogal2]

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[FreedomAgain]

They need to End Free trade with China and other countries and provide Healthcare to all Americans 100% funded by government. This will make healthcare 50% cheaper, make it cheaper for businesses to operate because they don't have to provide healthcare to employees, and applying taxes to imported goods will create millions of US manufacturing jobs and other related jobs. Then fix the tax codes.

Until they end Free Trade, its all just temporary fixes and lip service.

[FreedomAgain]

If they do use this as an opportunity to improve infrastructure I whole-heartedly support that. But until they end Free Trade with other countries, and provide national healthcare, the real economy is not going to return.

[ObjectiveRealist]

True. We cannot just pay tariffs, and not collect any. The Clinton/Bush international trade policies are not "free" they are theft.

National health care would remove the incentive of insurance companies to deny care whenever it's needed, in favor of providing only the easiest, most lucrative treatments.

[slarabee]

I would have to agree. The real problem is that as long as other countries are allowed to undermine employee safety, ignore health care and pay poverty level wages we will not be able to compete.
Certainly we have to implement some type of universal health care removing the burden from business but the real solution is to block imports from countries that have poor human rights records.
Of course my view is a simplistic one based on the ideal, still it seems we cannot compete in a global market where our competitors have no sense of responsibility.
China is a perfect example.

[rlfast]

The United States is one of those countries that undermine employee safety, ignore health care, and pay poverty level wages. Volkswagen is building a new car factory here in Chattanooga because we have cheap labor, low taxes, few regulations, and virtually no public services of any kind. It's been forty years since the U.S. led the world in anything besides bombs and pollution.

[Jazzcomedian]

I don't think ending free trade is the answer---getting reciprocity in the agreements is the answer. That's what PE Obama pointed out in his press conference. Korea send us 700,000 cars, yet only allows us to send them 7000. Can't get our rice into Japan, though we all drive their cars to the store to buy rice. And the list goes on and on with our trading partners. Who negotiated these one sided agreements? Therein lies the problem.

Agree with you totally on healthcare. Lived in Australia for seven year as a permanent resident with universal health care. A Godsend. However the Aussies willingly pay income tax rates willingly that most Americans would view as unacceptable. We'd have to educate Americans to have a different view of the connection between taxes and a more livable society. I found it ironic that Aussie paid more taxes and were much more relaxed, and Americans refuse to pay taxes and live much more stressed out.

[FreedomAgain]

You are right about the stress. I lived in Germany in the military for 5 years and got out and investigated the culture and society. I even had an emergency surgery in a german hospital and it was the best hospital stay I ever had. There hospitals are publicly funded and I never received a bill or was questioned about finances during my stay. (thanks Germans for helping me)

Knowing that your health will be cared for is a huge stress relief, and many of the health conditions Americans have are created by an enormous amount of stress. People do seem more relaxed in some of the other countries.

[FreedomAgain]

I don't think national healthcare would be more expensive. In fact, I believe it would be cheaper than many currently pay for health insurance. The reason I say that is because the larger the pool of people, the lower the risk. Also, Germany for instance pays 6% of its GDP on healthcare and is able to provide healthcare for every citizen. America pays 14% of its GDP on healthcare and is unable to provide healthcare to a large portion of Americans. So once you take out the administrative overhead and profit of health insurance companies, things become much cheaper.

[berensma]

We have to change the terms of the debate. I find that it does not take much for those of us raising children (day care! college!), paying massive out-of-pockets for our health care, as well as out-of-pockets for a million other things that are covered in a more comprehensive taxation structure, to understand that we are, effectively, "taxed" at similar rates, but with our hard-earned dollars going into profit structures, not social structures.

[vjoseph]

Its funny how those foreign nations cry when we levy taxes on their exports yet impose quotas and taxes on our products. To have real free trade, that nonsense needs to end. Well said Jazz

[vjoseph]

I miss universal health care. I have no insurance here in the States. I have to be quite careful about my health. I didn't have to, while I lived in Canada

[QuestionEveryone]

All these companies getting any of our money..should have to submit a business plan..Same as any lender would expect..That plan should be published and be able to be examined by the public for three weeks before any money is lent.. now that's transparency..and any poor plans will definitely be identified.

[Jazzcomedian]

Excellent idea.

[motoGpifupleez]

Didn't you say "shopping is the cure"?

[motoGpifupleez]

Wouldn't you rather be SHOPPING?

[Jazzcomedian]

The truth is the truth. There is an absolute, and well deserved crisis of confidence on the part of the American people with both Washington and Wall Street---because we no longer have any trust in anything they say. "I'm optimistic about our economy" (Bush). "The fundamentals of the economy are strong". (McCain). Both false statements were said to make us feel better like we were children. We currently have no faith in our government to address our society's problems, and no faith in Wall Street, and our financial institiutions to handle our money in a trustworthy fashion. A country that has no faith in it's government, and it's financial institutions has no positive future. The world has also lost faith in us, as they struggle with their own crisis caused by their purchase of our unregulated and now toxic securities.

There is only one way to regain our trust, and that is to treat the American people like adults and tell us the truth, no matter how bitter it may be. PE Obama is preparing us for the inevitable, and unstoppable hard landing, while letting us know that he'll do everything he can to mitigate it, and make sure through smart regulation, it doesn't happen again. I don't want feel good statements, I want statements based on the facts. That's the first step to building trust. If we can't handle the truth, then for all our "resilient Americans" bluster we're nothing but a nation of posturing punks.

[vjoseph]

Hear, hear

[QuestionEveryone]

People have no idea what's coming..no tax base, can't sell your home..can't buy one because you have no job.won't be buying anything so more companies close down, more people with no jobs..less tax base..less government assistance..it goes on and on getting worse and worse..the only people that survive are those that are prepared or already rich...I have the house on the market..and a condo..I am selling them so I can buy a nice RV and registering them in a state with no property tax..I will not pay taxes, I can't find a job..so I will be warm comfy and live off the lousy interst..with a part-time job here and there. I am preparing for the Great Depression II..they won't tell you..but it's coming..

[rmreddicks]

Aren't you special.

[motoGpifupleez]

"special"

[motoGpifupleez]

Tell us the truth, we're adults, we can take it. Keeping the people in the dark or outright attacking those who would reveal the looming disaster is what got us here in the first place. I am not scared of the truth nor am I afraid of being asked to sacrifice. The days of "just go shopping" are OVER. Real Americans can handle the truth, Mr. President-Elect and we are ready, nay, eager, to hear the word and heed the call. Only the selfish will refuse to help.

[QuestionEveryone]

If American's aren't buying more companies close down..more layoffs and company shutdowns..more people out of work..less taxes paid, to state and federal, the less they can do more houses in foreclosure..and on and on..shopping believe it or not does matter...

[Jazzcomedian]

You're correct in your posts about the looming disaster in my opinion. I don't know where you live, but in this climate your house and condo won't fetch as much as a year ago. Hope you're still sitting on equity. To build an economy as we have on excessive borrowing, no savings, and mindless consumerism means that our prosperity had no solid foundation. That's at an end, and we're going to find out the true value of everything. But we're also going to go back to the basics--which is long overdue. Whatever growth and prosperity we have in the future will be built on solid stuff like work and thrift. If we had done that we wouldn't be in this predicament. This is nothing but the grasshopper and ant parable come to life.

[motoGpifupleez]

Shopping: the be all end all solution. Don't do anything else, just shop. Don't build, don't innovate, don't research-JUST SHOP.

[cgoodie]

Can you say "self fulfilling prophecy"? I'm a PEO supporter, but why advertise the coming doom...

[MsDoc]

Can you imagine the ang er if this happened and we had not been warned? It gives us time to develop some financial self-discipline.

[rmreddicks]

Duck and cover.

[citizensrus]

I'm beginning to revisist the ONE WORLD ORDER conspiracy theories about the elites having it all and the rest of the world reduced to "subjects".

[rmreddicks]

It's a good laugh. But really it's not about some ORDER it's about similar interests. They'll argue among themselves sure enough. Not that it does us any good. Biggest problem for us being they've got (and continue to get) our money (which is very useful) and we've got the guns (an army of lower middle class and poor) - and numbers - (the same) which, when unorganized or ungalvanized, (or bought off) doesn't amount to a hill of beans. They even provide the weaponry (with our money) with which we fight among OURselves. Now THEY're having the really good laugh.

- Wat Tyler

[speakingtruth2power]

When the elites work together to steal the wealth of the middle class it's not a theory.

Twenty years ago I was making $50,000 a year. Now I'm working part time @ $10/hr.

[Artos]

The economy is not going to get any better, it can't, especially with the methods these guys are using. First of all they, The Corporations and our Republican Government already did all the damage they could in the past 25 to thirty years. Has anyone noticed that after every Republican since Reagan got elected there has been a concurrent recession which led to huge job losses? They do it on purpose. It's a way of humbling the public and creating some Chaos, which is supposed to lead to our begging them for jobs and doing whatever they want. They have undercut our economy by stripping away the foundation of our nation, jobs that meant something and paid decently. When Americans have no income they can't buy squat. These idiots at the top of our economic ladder are looking to us to save their bacons by spending what little money we have left. I say f' em. They have all the money locked up tight in offshore banks, let them part with some of it. Let them bring back all of those jobs they took from us. Then we can talk.

[rmreddicks]

Indeed.

If Americans want to change the world a month or so of refusing to pay the bills (no matter the origin of the debt) will do it. It will be ugly but people need to decide how much more ugliness they will tolerate as opposed to how much more they will feed the pig.

[QuestionEveryone]

Hello..but did you notice it was the Dems with all the money???It was the dems so crazy for power (votes) that they forced fannie mae and freddie mac and banks to give out loans to anyone that asked..then allowed them to roll these up in a ball and sell them. Since they weren't making money on interest..Wall street bought them and did what they do best figure out a way to make money on them...it was a house of cards being built....all it took was some mark to market markdowns in the sale of bear stearns to jp morgan that made the market loo

[Artos]

QuestionEveryone,

I do question everyone and now I'm questioning you? What reality do you live in? Dems have the money. That's pretty funny. Polls of Corporate execs and owners have shown that they predominately vote Republican. Why, because the Republican Party gives them what they want, Profit and free Trade without Government Regulation. Have you seen the paychecks these guys award themselves. Or do you read or watch the news at all? You go right ahead and support the Republicans and drink their Kool aid, but I'm telling you this, that if you do you might as well be kicking yourself in your own ass. It amounts to the same thing.

[Mugzi]

You are so wrong! I would venture to say, that the top 5% earners clearly are Repug. gw massive tax cuts largely were directed towards them. Deregulation and no oversight benefit who???...Hardly the employees...

[Nonamnesiac]

Is he giving notice to his economic team that he was only kidding about hiring them? If not, he's accepted and encouraged economic decline during his Administration. His team will be enriched, but the poor and middle class will suffer immensely from his radical, neo-liberal, voodoo economics proponent economic team.

[Dustee]

Can you take the truth, or have you not paid attention to what he's been saying all along?

He never said that "the fundamentals of our economy is strong"...up until the markets crashed.

He said "our climb is steep" and it won't be easy.

He doesn't have to make up stuff like the Bush administration did.

[Nonamnesiac]

Unfortunately I can take the truth. Obama says one thing and does another. His appointments for an economic team show Obama believes in unbridled free trade, deregulation, privatization, consumerism beyond ability to repay (Reaganomi­cs=Rubinom­ics=voodoo economics=­neo-libera­l economics). They're all excuses for a group-think of thieves who removed the regulations that were preventing this calamity so they could personally enrich themselves and those whom they represent. Obama has bought into it 100% based on his appointments. Every one of them are neo-libera­ls/Reagano­mics/Rubin­omics/vood­oo economics proponents and that's what destroyed the economy. And it destroyed the economy by causing the greatest transfer of wealth from the middle class and the poor to the wealthy in the history of the Planet.

The only way to have made the specific appointments he made is to ignore the glaringly obvious reasons for the collapse and who preached the economics that caused it. There's no reason to think they'll turn anything around. Obama has selected people who will perpetuate and expand the decline in the economy for their own personal benefit. Obama is part of group think, neo-liberal economics. Unfortunately it's a group thinking wrong who has become too wealthy thinking this way to change their thinking.

[rmreddicks]

Here's to the new boss. Same as the old boss. Obama seems intent upon merely tweaking. I hope to be proven wrong. Perhaps I won't wish in vain. But I expect to be properly disappointed. Add any trite quotes you desire to the above.

I see no radical (other than radical right). Much neo-lib. And a good amount of voodoo (as defined by Bush the Elder).

One thing gets the economy moving again. Money in the hands of people who need to spend money to survive. Everything other is crony capitalism.

[ExpatDane]

Here, here. I just don't understand why the government is bailing out wall street. If you gave every home owner a bailout voucher to pay their mortgage the banks would be getting the money they need to invest and extend credit (wisely and regulated) and home owners would be able to keep the roofs over their heads. I still haven't heard anyone explain why that form of bottom-up bailout wouldn't work.

[lissak]

Wall Street learned from the crash and the depression. Then, they lost their fortunes. Now, they lose other people's money and get bonuses.

[rollingdivision]

Fear mongering for increased political power. Just like his predecessor. No change.

[Invox]

When it came to Bush, he tried to tell us everything was just peachy! I don't call that fear mongering. I call that deception...or incompetence. I think Obama is trying to tell us the truth and to prepare for the worst while hoping for the best.

[simplify]

Still hatin

[ThunderclapNewman]

As always, you are utterly and completely wrong.

[jazzman]

You must live in a Penthouse up on Madison Avenue somewhere. Obama is only telling us what we can discern with our own eyes if we just look around a bit and do some research and thinking about the gordian knot that faces us with this financial meltdown. Unlike Bush, what Obama is telling us can be verified by doing research ourselves. We don't have to rely on a 'trust us' mentaility like we did with Bush.

Being honest about reality IS change. Big change!!

[Reaganwater]

AS usual, rollingsubversion is in his usual useless form : in full retreat from the facts , logic , common sense or anything else that might contribute to the general betterment of anything , with the possible exception of serving as a verbal sleep suppliment of the kind some folks need onn a Sat . Those whom actually work .