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

[curiousasheck]

We are going to FAIL if the Rich and Wealthy are not FORCED to pay their fair share.

Bets?

[curiousasheck]

Example where are all these dynamic jobs and industries for the future tax cuts was supposed to create?

[handyallen1]

the rich will get off free, say goodby to single payer health care "only the little people pay taxes"

[Carolab]

Then that is taxation without representation. It's time for a revolution.

[Drdemocrat]

We do NOT want a second Great Depression. Obama do what you need to do to prevent this from happening.

[curiousasheck]

Whatever it TAKES.

[hortonhearsawho2]

He will.

[Tom Joad]

one thing that will emerge from this turmoil is that ALL OF US will be asked to reassess our lives and what we consider to represent 'success' or a reasonable standard of living. We will all learn to do with less, and be happy for those small things we actually have. I believe we are witnessing the end of the conspicuous consumer. houses will be smaller, more efficient, and contain less stuff. nothing wrong with that in my mind.

[spartanmom]

You Joads are all alike.
I do hope you are right.

[wesinohio]

I think that is a good thing, however, what about the robber barons who have made off with so much already? I think, as an earlier poster suggested, a windfall profits tax on anyone who makes over $10,000,00­0.00 per year might be a good idea. That's plenty of money for anyone. Maybe an asset cap of some kind would be a good idea too for those who are already filthy rich. This would mean a mandatory surrender of excess wealth by the super wealthy. A wealth cieling of some kind, set at a high level like $10,000,00­0.00 per year, is still high enough to motivate and to richly reward innovators and entrpreneurs.

[cindyfromfalls]

we have to pressure our congressional reps to do whatever PE says we must do...the republicans must not think thiere is political hay to be made in standing in the way of what needs to be done!

[vjoseph]

With three seats still left to be filled before congress reconvene, we definitely have to start pressuring those moderate republicans and those blue dog democrats. They are key to getting that big stimulus pass

[OrganOfThought]

he is already on the right path by putting smart people around him

he can't show his entire hand before he takes power. if he says too much now before he has true authority, it will give saboteurs time to counteract.

he has told us what his bold vision is. he is preparing himself for the long hard fight. he will be ready.

i'll judge his actions after he does something wrong. for now, he has my support and i understand that he doesn't officially have any power yet.

we all need to wait until after jan20 to even start stressing out about his decisions. he will get it done. democrats have done it before and he is the best we have ever had.

[vjoseph]

You are definitely an organofthought. I am quite glad you here

[bygollymissmolly]

Well, if Congress doesn't give Paulson the other 350 billion, you can bet that when Obama allocates the money, some pretty stiff conditions will be placed on the bailout money. Like, if a bank gets money, they have to immediately make the amount of the bailout available to companies and people as lines of credit. Paulson put zero conditions on the money he doled out and we got zero in return for it.

[vjoseph]

Paulson is as bad as Cheney. Ok Cheney is worst, but Paulson is a close second

[darleneslee]

I disagree vjoseph. I think we, the progressive liberal Obama voters are. How in a sane
world did we allow a man to run out with a three page document and ask for $750 billion
dollars and we didn't revolt. We allowed Bush and our current congress to wait on one
man to clean up an on going mess that had been brewing for eight years.

[Carolab]

Please, Barack, halt the second half to Paulson.

[bigdaddyvike]

Paulson has given the biggest banks $300B+ to "unfreeze" credit. And dropping the interest rate to almost nothing. And if you don't have a credit score of 750+, forget about it. I believe that is most of the "middle class" that will never get a loan.

[Carolab]

It's not even that. The "middle class" doesn't have any disposable income to spare to buy anything, credit scores notwithstanding. We need to stop bailing out these bankers who got us into this mess, nationalize our bank, cancel the debts owed to the middlemen private banks, stop declaring illegal wars, collect tax on manufacture, sale and consumption, and reinstate tariffs, in other words, do it as our founding fathers laid it out.

[OrganOfThought]

very well said, thank you

And by nationalizing our banks, I support nationalizing the Federal Reserve System. The Fed is not part of our government. We don't own the Fed. The Fed is a private corporation that doesn't even pay taxes on its profits.

We need to reinstate "United States Dollars", not this ridiculous fiat (read fake) money system that was instituted in 1913.

So, they tell us to save and reinvest our fake money into the stock market that only profits the oligarchs?! They pay our paychecks in fake money and sell us houses with fake values and get us to give them back as much as we can into a fake scheme and they call it retirement savings.

None of this is real folks. Your money is not US government currency. Your savings are just numbers in a computer. Your stocks are all a puff of smoke.

We need our country back and they only way to get it is by taking our money system back.

[vjoseph]

Let's implement the VAT. That is the best invention the European ever made(beside wine, cheese and social democracy).

[bygollymissmolly]

And the banks didn't unfreeze credit. I have a credit score of way over 750 and I can't get a loan for a car right now.

[BUZZARDSTKE]

President Obama is laying the foundation for all of us, reporters included who try to lay the blame of this finanicaial crisis at his feet, after he lays out his ecomonic stimulus plan and the price tag.....th­at way when ppl start screaming about the defecit they will remember the Bush years and the trillion dollar debt that the proud REPUBS have left us!!!

so, MEDIA.....­.RMEMBER WHO GOT US INTO THIS MESS.....B­USH, BUSH, BUSH.....N­OT OBAMA!!!

BUZZARDSTKE

[vjoseph]

Well said

[adamsmith3]

These massive stimulus packages don't work. They either take too long to plan or develop, or you spend it quickly on plans that aren't thought out very well, or worse yet a bunch of pork projects that state governors are clamoring for. We could invest in repairing infrastructure (surely a good plan and a needed one) but that doesn't employ that many people. Also, when you use public funds in a massive effort, you risk crowding out the private sector to do some of these jobs (leaving a net gain of job creation of little to none).

Why can't Obama take a more centered approach? Spend money on ready-to-go public jobs that already need to be done anyway. On top of that, slash capital gains taxes, corporate taxes, and income taxes for a specific amount of time so that investors and businesses have some confidence and some idea of what their balance sheets will look like for the next two years. With more confidence, they can keep more employees on their staff and maybe even hire some. We're going to be getting massive deficit spending no matter what over the next two years. Why not mix some keynesianism with some supply-side economics? They both have their benefits, and we have seen that FDR's pure deficit spending did nothing to help unemployment during the Great Depression.

[texastrixie]

Businesses will have greater profits if they don't have to pay taxes, but will not hire more workers unless there are more BUYERS. And even if you took away all our taxes, most people now are not going to buy anything they don't have to have unless they think the govt will be helping to create jobs. Where do you think all those empty malls come from?

We aren't rich, but our income is fairly safe (as safe as most regular people could be). But we spent nothing on Christmas. We aren't going out for any fancy dinner over the holidays, and there won't be any after Christmas shopping at the malls. I do have one online provider that cuts its offerings by 80% eventually each season, and I plan on stocking up on necessary jeans etc. at that time. But even then, I won't be spending more than $100.

My goal next year is to buy NOTHING except food, drugs, etc. No clothes, no books, nothing. Until I see evidence that Obama is putting people back to work, and that the safety net is strengthened via unemployment benefits, Medicaid, etc., I will not feel comfortable. The stock market may go up - who cares. If we have extra money, it will go into CDs. We won't increase spending at all, and neither will anyone else. JOBS. Don't you get it. Only having a steady paycheck is going to improve people's outlook. And lowering taxes on businesses won't help.

[adamsmith3]

"Don't you get it. Only having a steady paycheck is going to improve people's outlook. And lowering taxes on businesses won't help."

You're right, only steady paychecks will help. Don't you think that businesses with extra capital can avoid layoffs more easily? Nobody wants to layoff workers if they can afford it.

[1201SLD]

"Businesses will have greater profits if they don't have to pay taxes..."

Investors and businesses go for the short-term financial return: they create jobs overseas.

[OrganOfThought]

"""Businesses will have greater profits if they don't have to pay taxes, but will not hire more workers unless there are more BUYERS."""

perfect response

[bygollymissmolly]

Why can't Obama take a more centered approach? Spend money on ready-to-go public jobs that already need to be done anyway.
----------­----------­----
This is pretty much what his stimulus package is all about. But cutting capital gains taxes and corporate taxes is not a wise move at this time. Very few corproations pay any income tax so a better approach would make them all pay their fair share. And why cut capital gains? Why should someone who doesn't work for their money pay less taxes on it than I pay on the money I work my a$$ off for?

[adamsmith3]

"And why cut capital gains? Why should someone who doesn't work for their money pay less taxes on it than I pay on the money I work my a$$ off for?"

Nobody is stopping you from investing money. You don't think people work their a$$ off for the money that they invest?

"Very few corproations pay any income tax so a better approach would make them all pay their fair share."

Some companies do use some loopholes and tax havens, but that's greatly exaggerated. Just look at oil companies. They make record profits, but they pay more to the government in taxes than they make in profit. So you can partly thank the evil oil companies for greatly helping in paying back whatever deficit Obama creates with his stimulus package.

[noamjunior]

buy a history book and read it

[1201SLD]

Investors and businesses create jobs overseas. Infrastructure development and maintenance create jobs here, and the people in those jobs spend here, at least on the first go-around.

[donaldw6]

You're taxed on profit. When corporations struggle, most of them manage not to have too much of a tax burden to worry about. Why don't you give the whole trickle-down thing a rest? It doesn't work. It never could have worked. Forget it.

[curiousasheck]

Why doesn't he just come out and say we're screwed?

[bygollymissmolly]

I think that is what he is doing if anyone cares to listen. And we didn't need Obama to tell us that. Anyone who has an IQ out of room temperature range who educates themselves on current events knows that we are screwed and have been for quite some time.

[vjoseph]

The key words are" care to listen". As I am reading through the comments, I see a lot of people doing just the opposite. Behaving like the tinfoil hat is too tight on their heads

[1201SLD]

He does the solo; we do the chorus.

[curiousasheck]

You wonder, to put it bluntly, how far gone we really are.

[vedder110]

It's gonna be a depression, no question. It's not gonna be as bad in terms of standard of living as the Great Depression, I think, simply because we have lowered the cost of food production so much in the past 80 years. Nonetheless, there is no way it is gonna be over by the end of Obama's first term.

[bluemamie]

For Truth.

[planetjeffy]

not very far, yet. People are just starting to get laid off. This will start another round of home foreclosures, driving prices down further. Stingy consumers are just starting to affect businesses, which will then start laying off more employees, which will lead to more mortgage defaults, and on and on. We have a long way to go before this bottoms out.

on a good note...I'l­l finely be able to afford a house.

[rockyb26]

why can't they stop bumping the mortgage rates up?

[bygollymissmolly]

You must not be paying attention. They just cut interest rates and mortgage rates are at the lowest they have been in 30 years. Unless you are talking about subprime loans, then the banks will soak for for all they can get out of you.

Anyone wonder what would have happened if the banks hadn't raised the interest rates on teaser loans from 4% to 20%? If they had just raised the rate to 6%, which was the going rate, then they wouldn't be sitting on all those bad loans and millions of people would still own their homes.

I believe that this whole monetary crash was engineered and done completely on purpose. Hell, look what it got them. They got the original money from their sub prime loan and then they got the government to GIVE them money to pay for the sub prime loan when it went bad. Sweet deal if you can get it.

[curiousasheck]

The damage is beyond repair. I wish him luck anyway.

[hapiday]

People are asking why isn't PE Obama helping poor people? That's what he keeps stressing, he wants to help the middle class and the poor. The way things are going, there won't be a middle class, just rich and poor. With the number of billionaires we now have, being a millionaire is nothing to speak about. Every press conference he gives it gets more bleak and dire about the economy. No one seems to be listening. I know his head must be ready to ex.plode and he's not even president yet. He still has to get his plans approved by congress. The republicans have already said they aren't going to be cooperative.
We are in a fine MESS! Don't forget the people he is selecting will still have to be confirmed and congress plans to block that too.

[scjk67]

the dems are working out a stimilus plan now, and the new congress gets sworn in on jan. 6th and get it passed so it will be the first thing Obama will sign on the first day in office on jan. 21st. they already know Bush is waving the veto pen....pat­ients only 31 days left till we kick the Bush regime out!!

[ema]

Fortunately we have a stronger majority in both houses this time around.

[vjoseph]

We are still trying to figure out who will be the Senators in Illinois, Minnesota and New York. That might spell trouble for us. Lets not be too complacent

[ema]

If we had just bailed out the people with trouble mortgages a year or so ago we would have avoided this entire crisis and spent FAR less money.

But everyone would have screamed: why are you helping out the people who were irresponsible? And that would have been socialism, right?

[bygollymissmolly]

If the Banks hadn't raised their rates from 4% to 20% we wouldn't be in this mess either. Could you still afford your mortgage if your bank all of a sudden asked you for 20% interest on your loan?

[scnilajo6]

Ok guys. I understand that we are going to invest in infrastructure and create millions of jobs to get the economy back on track, but won't that take forever to start...le­t alone before the money starts flowing? This are going to get A LOT worse before any plan is even implemented. Is that ok?

[vedder110]

It isn't ok, or not ok. It just is.

[bygollymissmolly]

Not really. There are lots of "shovel ready" infrastructure in every state. They have been planned and are ready to go. All they needed was a way to fund them.

[vjoseph]

You need to start paying more attention to what he says. He precisely said that there are shovel-ready projects waiting for his signal.

[scjk67]

the only blame goes to the neo-cons, they hate America, hate hard working families trying to make a living. the neo-cons ideology is have the wealthy have control of this country and nothing less. to them all they think about is God and money and thats is totally out of character of them being so called christians. Jesus had warned these days were to come. you know that He says of you cannot serve two masters...­God and money.
i pray that we will all get out of this mess, just as Obama says we all need to work together either if a democrat, republican, right or left, gay or straight, and or white or black, asian or hispanics. we all got to lift this heavy fog that Bush and gang are leaving us with.

[Marlyn]

"all they think about is God and money" ???

Actually, the Neocons don't care about God. They just give it lip service to fool the foolish masses. For the Neocon, it is MONEY and POWER, the power to wage war and make even more money.

[scjk67]

thats why i said " being so called christains "......