Obama Promises Quick Response to Economic Crisis

Photo by Carlos Barria/Reuters/Landov

President-elect Barack Obama today vowed to meet the nation's economic crisis "head on" once he takes office and said he wants a new economic stimulus package to be implemented "sooner rather than later."

In his first news conference since winning Tuesday's presidential election, the first-term Democratic senator from Illinois highlighted the difficulties that lie ahead but expressed confidence that the nation can dig itself out of its economic hole if partisanship is put aside.

"Immediately after I become president, I'm going to confront this economic crisis head on by taking all necessary steps to ease the credit crisis, help hardworking families and restore growth and prosperity," Obama said in Chicago.

He said the nation urgently needs "a rescue plan for the middle class that invests in immediate efforts to create jobs and provide relief to families that are watching their paychecks shrink and their life savings disappear."

Obama spoke after he and Vice President-elect Joseph R. Biden Jr. met in Chicago with a team of 17 economic advisers who are helping to plan the transition to an Obama administration. The advisers, including current and former government officials, business executives and university professors, convened amid more dismal news on the state of the U.S. economy.

This morning, the government announced that the economy lost 240,000 jobs in October, pushing the unemployment rate up sharply to 6.5 percent, the highest rate in more than 14 years. During the past 10 months, about 1.2 million jobs have been lost, and more than 10 million people are now unemployed, according to government figures.

Obama's advisers briefed him on steps he can take rapidly to spur the economy after he takes office Jan. 20.

But one Democratic proposal -- a new economic stimulus package -- appeared to be at odds with the approach of the Bush administration and congressional Republicans.

In television interviews before the meeting, one of Obama's advisers, former Treasury secretary and Harvard University president Lawrence Summers, expressed strong support for new stimulus measures as a way to help the middle class and improve the nation's infrastructure.

"There's no question that we're going to need economic stimulus," he said on CBS. "There's no question that we're going to have to channel money towards the middle-class families whose spending propels this economy."

He cautioned, however, that "we've got a serious economic situation and one that's not going to get better soon." The nation's problems "were a long time in the making -- big deficits, financial excesses -- and they're going to take time to fix," he said.

Appearing on NBC's "Today" show, Summers, who served as Treasury secretary for six months under President Clinton, said, "We need to . . . stimulate the economy through investing in our infrastructure." He said Obama intends to adopt "a comprehensive approach that focuses on supporting the spending and the needs of middle-class families, that focuses on getting credit flowing again in our economy, that engages with the rest of the world, because we're so dependent on exports and need their demand."

Summers ducked questions on whether he would accept the job of Treasury secretary in the new administration if Obama offered it.

Among the other advisers at today's meeting with Obama were former congressman David Bonior (D-Mich.), investor Warren Buffett, former Securities and Exchange Commission chairman William Donaldson, Michigan Gov. Jennifer Granholm (D), Xerox chairman Anne Mulcahy, Time Warner chairman Richard Parsons, former labor secretary Robert Reich, former Treasury secretary Robert Rubin, Google chief executive Eric Schmidt, former National Economic Council chairman Laura Tyson and former Federal Reserve chairman Paul Volcker.

Also participating in the meeting was Rep. Rahm Emanuel (D-Ill.), a former Clinton White House official whom Obama has chosen to become his chief of staff.

At the White House, presidential spokesman Tony Fratto indicated today that the Bush administration is cool to the idea of a new stimulus package, especially one that focuses on building or repairing roads, bridges and other public works. Such measures "have an exceedingly limited impact on the economy in the short term," he said. He cited Transportation Department estimates that only about a quarter of the money devoted to infrastructure projects is spent in the first year.

Thus, a $100 billion program in this area would inject about $25 billion into a $14 trillion economy in one year, delivering "a very limited stimulus impact," Fratto said.

In an op-ed piece in today's Washington Post, House Republican leader John A. Boehner (Ohio) complained that "congressional Democrats are proposing hundreds of billions of dollars in new government spending masquerading as 'economic stimulus.' "