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

[kudzumaster]

Wave of foreclosures? I thought the bailout was supposed to halt the foreclosures. Did the banks take the money and then still stick it to the homeowners they used to push their sob story in congress? Surely not.

[oscartucker]

The banks took the money and held the money--Mine, mine, mine! No loans for cars, no loans for houses, no loans for small businesses. No one has looked into this carefully; there's no guidance about the money the banks and Wall Street received, but the auto manufacturers cannot be scrutinized too much. Keep an eye on republicans; they are still making a MESS.

[bluguy8]

sure they did-- nobody watched where the money went. i'm sure Bush filled his pockets

[rmreddicks]

Took the money and did whatever the hell with it that pleased them.

[madisonhack]

Bush announces on the FRIDAY BEFORE CHRISTMAS that his auto loan bail out MUST include union concessions that will likely bust the largest trade union in the U.S. None of the finance GIFT money is accountable to anyone, and the banks have used it to pay their shareholders dividends and bonuses to their corrupt officers. Investments are supposed to be an area of risk; that is why there is a level of return that is attractive to its investors - gambling. When you gamble on a bad or fixed game, you ought to lose...per­iod.

It isn't the union's fault that the decisions to make and sell autos was compromised by management to satisfy the oil industry's agenda, especially since the technology has always been there to produce electric and fuel cell cars. The workers would have gladly built those cars.

But we live in a country of credit and cash flow, with the problems of unregulated health insurance and finance, it seems. If the United States is going to stoop to the level of third world worker's rights and pay, then we better get ready for a total redistribution of wealth and welcome back the age of indentured servitude for most of us. It won't look like home any more, unless you're a billionaire who will have to shut your eyes when you travel in your bulletproof car.

[propitiousmoment]

You have summed it up.

[gorgol]

And now Paulson wants the other "half" of the BILLIONS..­so he can flush it down the drain before Obama comes on board...wh­at in hell is going on?? are these people trying to sink us?? Paulson wanted no oversight.­.and no possibility of "prosecution" if things turned bad..now we know that PAULSON gave out BILLIONS to his "friends".­.with no paper trail...wh­at in HELL is going on??

[allwrite]

The end of the consumer driven economy is nigh. Sustainability is the path to our salvation. . . . and the sooner everyone gets it, the better.

[Invox]

Agreed.

[separatingwheatfromchaff]

To think we have people in prison for petty theft while we're being robbed blind by government approved/employed criminals.

[zippy2112]

and congress is getting a raise

[separatingwheatfromchaff]

What I don't understand is how we were giving money to the folks that caused the problem without demanding certain obligation­s.How can we complain about them raising interest rates on charge cards and not making money available for loans if we didn't specify anything.
What I would like to know is what did they do with the first $350,000,000,000? I haven't heard about any improvement in our economy.No­t a hint of what they wanted the money for, other than some bonuses and massage parlor visits.Jus­t asking.

[AnotherMcIntosh]

"What I don't understand is how we were giving money to the folks that caused the problem ..."

There is a logical answer.

We didn't give it to them.

They took it.

[LHoney]

No, your elected representatives gave it to them.

[Mogamboguru]

I am convinced, that the american people has only been shown the tip of the proverbial iceberg, yet, when it comes to the dire situation of the economy.

I bet, the economy is MUCH, MUCH worse, actually, as even the most pessimistic observer might think. Guess, why Joe Biden came forward with the respective statement yesterday?

I bet, The Bush-criminals and all their minions have covered up the factual demise of the US-economy for YEARS, already.

And now the next bubble is about to burst. But it will be no housing-bubble, or a creditcard-bubble, or a car-bubble - but the coming bubble will contain the US-economy as a whole.

Be afraid. Be VERY afraid.

I am.

[wagthedog1001]

Urging people to be afraid is just a fantastic way to make things better. Thanks for the advice. I'll get my bomb shelter ready today. Got any saltines and bottled water?

[Right-turn]

He insisted that "a significant amount" of government spending was needed ".........­.....And this is different from Bush how???

[rcampbell]

That one is an easy answer. Bush "spent" by decreasing government revenues via the tax cuts for the wealthy (lowered rates, no capital gains, no estate taxes, etc.). Bush went on to spend in developing Homeland Security and two wars. By contrast, Obama will spend on the American people by generating jobs via public works projects (building roads and repairing bridges), saving 3 million autoworkers jobs, improvements to the electrical grid and reversing the tax cuts so that those who spend 100% of their income every payday have a bit more to pump back into the market.

[madisonhack]

I sincerely hope that all that happens. But, in watching Obama's lead-in "transition", if you will, I am uneasy with the lack of consistency in his campaign and his first proposals. It appears as though he is backing down on the tax increases for the top bracket, at least initially. I think he is doing some political posturing in order to be able to accomplish some of his goals - greasing the skids, so to speak. But my fear has always been that he is more centrist and corporatist than I would have liked, and he certainly is a politician first and we will see what else on January 20. His backpedaling during the campaign on FISA was a red flag for me - it was an exact 180-degree flip flop from his previous position and purely political, in my book. I hope that isn't foreshadowing for more surprises and disappointments. Having said that, I'm still satisfied with my vote - we could have had McCain/Palin working on this for us...you betcha.

[spartacus275]

Barack is reacting to the mess your guy Bushit and his cronies created. History tells us that Roosevelt was forced to do the same thing Obama is proposing, and most experts felt that had he done more, America would have come out of the depression sooner. Obviously you have been blinded over the years by listening to too much right-wing rhetoric. You should change your ID from Right-turn to E.W.S. Eyes Wide Shut!

[Invox]

He'll be spending it within the borders where it can be taxed and recirculated until it starts to reap benefits to the treasury. With tax cuts, trade deficits and wars, Bush's "vanish" policy brought nothing back to the treasury except thin air.

[AnotherMcIntosh]

Actually, some of the $700 billion that he and others voted for has been transferred to foreign banks. There are no conditions requiring that the funds be spent or disbursed within our borders, and there is nothing to indicate that Obama has asked for such conditions.

In addition, when funds are ultimately provided to the "U.S." auto manufacturers, some of those funds will be used to finance factories in Canada, Mexico, and elsewhere. In the absence of any mandatory conditions to the contrary, the auto manufacturers can even restructure their operations by reducting U.S. manufacturing while continuing to finance the same or greater foreign manufacturing. Obama has not indicated that he only wants the bailout funds to only be spent within the borders.

Hopefully, funds will be spent to re-build the U.S. infrastructure. Even then, it is unlikely that the funds will only be transferred to domestic contractors who will have no relationships with international corporations. Some funds will inevitably flow outside of the United States. At a minimum, since there will be no requirement that the workers should be U.S. citizens, some workers will be hired who will send their funds "back home."

If you want domestic spending, you have to insist upon it. We haven't heard Obama require such condition. If Obama wants more spending and does not do so, it will not be enough to for any of us to say that he is not Bush, McCain, or whoever.

[kolorkin]

It is so re-assuring to hear a voice of confidence that things will get done and in a way that's transparent to the american public in these times of crisis. It is so re-assuring that it's almost surreal to have someone who actually for the first time in 8 years be the commander in chief that actually is undeniably competent and qualified and can speak like a true commander in chief. Though there is still a long road ahead of us and still many uncertainties and hard work, it is indeed inspiring and encouraging to hear from such a great leader. Way to go America...­thank you for not electing another "C+" student to the White House;) We seemed to have learned our lesson!!!! On behalf of the all life on earth and the planet, thank you America!!

[PhilipTaylor]

THE MOST POWERFUL STIMULUS: The "Basically Free Money" the Big Banks have received and hoarded should NOW be used by the Government through Fannie/Freddie to offer Internet Automated Fixed 3.5% or less refinancing with minimal fees. This can save families $300 to $1,800 per month for many years!
__________­__________­__________­__________­__________­__________­__________­_______

When the Investment Banksters went wild for greed using a Derivatives Scheme they produced $Hundreds of Trillions in "FAKED PAPER" over a six year period.

So far the FED and Paulson have pushed around $8.5 Trillion at the Banks to help them. But the Banks have been unwilling to write-off all the $Trillions of BAD PAPER and foreclosures continue at a record pace making the paper even more worthless.

No one has addressed the forclosure problem, the car loan freeze, or the student loan freeze. Instead they keep giving the BANKS "Basically Free Money" that the Banks Hoard to cover the DAYS when they are FOUND OUT!

That "Basically Free Money" should be used by the Government through Fannie/Freddie to offer Internet Automated Fixed 3.5% or less refinancing with minimal fees. This can save families $300 to $1,800 per month for many years! Also, Low Cost Internet car loans, student loans, and debt payment loans should be offered via in a similar manner.

[StephenJK]

I like the internet thing for existing home owners in upside mortgages or financial crisis. Those who are able to pay should continue paying. There needs to be boundries. Not a free for all.

[wagthedog1001]

WHY bale out the crooks and the greedy and the stupid people?

FORGIVE people who have been paying on a mortgage consistently for 20 years or more the remainder of their mortgage.

FORGIVE people who are within $50,000 of paying off their mortgage the rest of what they owe. This is all basically principle. They've paid the banks their interest money already. They are obviously good credit risks if they've been paying for years.

GIVE people with high credit scores super low rates.

[cgoodie]

Agreed. Reward success, not failure.

[oneblackvote]

I have faith in Obama, he will get the job done.

[opines]

Obama is not levelling with the American people. He lacks the courage to tell the American public that a crash cannot be avoided. He is afraid of being branded a glaas 'half empty' leader, even though he sees that the glass is nearly bone dry.

Would we follow a leader who said he was powerless to prevent an imminent collapse and would not waste precious assets on quack cures?

Would we follow a leader who said it would be best to allow mismanaged, malsuited to the 21st century entities to fail and to build around industries left standing?

Would we follow a leader who told us that however severe the hard times will be, his first priority will be to assure that providing bare necessities to all Americans will be his first priority?

Or do we prefer spending on quack cures?

[Chopin]

Steady! Cut him some slack. An intelligent and effective leader has to understand and know where the people are on the long road to progress. A 1000 volt electric shock treatment just might kill the patient before therapy can begin. If you're responsible for the fate of 300 million people, you'd be more circumspect too. A great and effective leader has to have a carefully calibrated balance between prudence and courage. I think his long presidential campaign has demonstrated examples of both, and their delicate balance.

[Chibikim]

Listening to Obama, I know I did the right thing when I voted for him. He tells you the truth straight up.

[PuzzledinPeoria]

Gee, when I was a kid, Americans WERE working. We made everything you could think of, and we shipped a lot of it overseas.

In the last 30 years, we quit making things and just shipped jobs overseas. Even if we start all kinds of road and bridge projects--and they're badly needed--is anyone but construction workers going to be hired for those? It will take years for additional jobs to be created from those.

Both parties are to blame. They both deregulated and both took plenty of PAC money and business contributions while making it easy to export our industry. Now we're paying the price for greed.

Everybody, including Obama, seems to forget that ALL government money comes from taxpayers, both individual and corporate. U.S. taxpayers, at some point, are going to have to pay for this. And what happens when foreign governments call in their notes?

[Sabreen60]

Actually many skills are needed for building roads, bridges, etc. - engineers, architects, IT, administrators, office workers, suppliers, and others.

[LeLoup]

Not only that, but those who'll work on this "reconstruction" will need to eat, buy clothes, send their kids to school etc. etc. Right now, a lot of folks are doing it by making the indian scream on every penny they handle.

A bit a budget leeway could go a long way to provide other support jobs.

[Badfickle]

Your absolutely right that both parties are to blame. We need to look at the policies that went wrong.

Trickledown economics Fail
NAFTA-free trade Fail
Deregulation for deregulations sake Fail
The whole Chicago School of Economics. Short term boom followed by EPIC FAIL

[deminmo]

Wrong. The Chicago School of Economics idea of Disaster
Capitalism is working very well! That is why we are at the
edge of a cliff now. It worked well in Chile, Columbia, Costa
Rica, Ecuador. If allowed to continue here it will make this
country fall under the control of a Dictator and a mercenary
army to keep the rest of us under control. Threatened with
starvation, violence, death this system works against unions
and fair trade. Sometimes people rise up against the "order"
but it doesn't last long. Check out China for an example.

[Givethemhellharry]

Until Americans realize that we need to have public funding of all political contests if Washington is truly going to be changed from being in the total grasp of the rich and the Multinations. I read somewhere that the ROI for political contributions on average was 300 to one. No wonder the rich mult-nationals fund both parties!

I attempted to run for Congress as a Democrat in a Republican District as I believe there is no Democracy without competition. The first question asked me by the chairman of the District was did I have $150,000 to spend. When I said no, they decided that no candidate would be put up.

When it costs upwards of a million to run for a 2 year job that pays 200,000, you know that the elected will have to sell their votes if they wish to be reelected. That means that the politicians need to spend their time, energy and votes satisfying the lobbyists instead of voting for what is best for their constituents and the country. Thus the Lobbyists are the ones really setting policy, not the elected representatives.

If it was mandated that all candidates must only use public funding, then the elections would only be about qualifications and we would have more people who truly represent their constituents and know the problems of the average person instead having both houses of congress controlled by the rich and the political hacks who will sell their souls and votes.

[tlgeiger62]

When you were a kid, you lived as a kid. I don't believe anyone who makes assessments like that. You are never aware of anything as a kid except things pertaining to being a kid and things you overhear.

[DaveC19]

Obama needs to re evaluate his plans for tax cuts for everyone. I really think that tax cuts even for the middle class at a time of such deficit are irresponsible. Giving Joe sixpack an extra 300 dollars a year in tax cuts will do nothing. He needs to take that money and invest in job creation for those out of work.

I am middle class and I don't want a tax cut. I would rather that money be used to rescue our country from economic doom. A better economy helps us all in the end.

[Chibikim]

Im sure his economic team are gonna advise him well on it. He picked the best of the best so im sure he will use good judgement.

[Leahk]

No need to worry. I don't expect to see any tax cuts in this economy. Our President Elect has already prepared us for this.

[DeniseD]

I agree. My husband and I have been talking about this since the primaries. We just want the economy to get back on track, and want the deficit reduced. I doubt that Obama can do both, especially in the next four years.

[wagthedog1001]

Glad to hear someone else say it. We all have to pay and sacrifice something. We all can afford that, or at least most of us. A major reason we are in this mess now is many don't want to pay for what they have. The "cut taxes" crowd is the same mentality as the "buy now, pay later" crowd. At some point we have to pay. We all have to grow up and pay for everything we have. And we have a lot.