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Obama says drafting bold economic stimulus

(Agencies)
Updated: 2008-11-23 11:08

CHICAGO - US President-elect Barack Obama said on Saturday that he was crafting an aggressive two-year stimulus plan to revive the country's troubled economy, warning that swift action was needed to prevent a deep slump and a spiral of falling prices.

US president-elect Barack Obama waves as he leaves his first press conference following his election victory in Chicago, in this file photo from November 7, 2008.[Agencies]

Obama gave a bleak assessment of the economy in his most detailed comments on the subject since winning the November 4 election and just a day after US stock markets rallied on his apparent choice of Timothy Geithner, president of the New York Federal Reserve, as Treasury secretary.

"If we don't act swiftly and boldly, most experts now believe that we could lose millions of jobs next year," Obama said in a weekly radio address.

"We now risk falling into a deflationary spiral that could increase our massive debt even further," he said.

Obama said the plan would aim to save or create 2.5 million jobs by January 2011 and would be "big enough to meet the challenges we face." Any additional jobs would offset what is expected to be a dismal employment picture in the near future.

Obama, who succeeds President George W. Bush on January 20, moved rapidly to form the team that will address US economic and foreign policy challenges, convincing former rival Hillary Clinton to be his secretary of state and selecting Geithner, a Treasury official in President Bill Clinton's administration.

Those appointments underscored a centrist bent to the personnel decisions being made by Obama, who had a liberal record as a U.S. senator from Illinois.

But the Democratic president-elect, who has been silent about his Cabinet picks, focused his Saturday address on a program to create jobs and warned that the economy was likely to get worse before it gets better.

Still, as fears grow that the US economy could be in for one of its most severe downturns in decades, Obama is signaling anything but a middle-of-road approach on economic stimulus.

He called in October for a $175 billion stimulus measure, but his radio speech suggested he was ready to push for a much larger package. He did not give a price-tag in the speech.

The two-year time frame for the stimulus further indicated a sizable proposal. Most such plans are aimed at covering a one-year period.

'Likely to Get Worse'

Obama and his economic team have worked for weeks to lower expectations that the economic problems can be solved fast.

"There are no quick or easy fixes to this crisis, which has been many years in the making, and it's likely to get worse before it gets better," Obama said.

The top Republican in the House of Representatives warned against increasing government spending to help the economy.

"The time for endless and aimless Washington spending has passed," US Rep. John Boehner said in a statement, adding he was willing to work with Obama on an economic recovery bill.

Obama said recently the United States should not worry about its budget deficit for the next two years as it worked to prevent a deep recession.

The number of Americans joining the unemployment rolls surged to the highest in 16 years, up more than 540,000, the Labor Department said on Thursday. Government data also painted an increasingly dire picture of the housing market.

"The news this week has only reinforced the fact that we are facing an economic crisis of historic proportions," Obama said in his address.

Later Saturday, Obama announced the choice of close aide Robert Gibbs to be White House press secretary.

A senior Democrat said Obama was expected to announce his economic team, including Geithner, as early as Monday.

US stocks, which had been sinking all week, surged more than 6 percent on the news that Geithner, 47, had been selected. US Treasuries fell and the dollar surged.

Congressional Democrats have promised to make a broad economic stimulus a priority when they reconvene in January. The package is expected to include middle-class tax cuts and billions of dollars for public works projects, such as the construction of roads, bridges and mass transit.

Hobbled US automakers are negotiating with lawmakers and the White House over a bailout package they say is urgently needed. Obama has kept a low profile in that debate.