Tim Reid in Washington
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Barack Obama warned Americans yesterday that the US economic crisis will deepen next year, as he revealed the first details of a massive stimulus package that could ultimately exceed $1 trillion.
The President-elect, giving the most extensive interview since winning the election a month ago, spoke the day after he announced the biggest public works construction programme since Dwight Eisenhower created the interstate highway system half a century ago.
In saying twice that “things are going to get worse before they get better”, Mr Obama was not simply reflecting the realities of the stricken US economy but seeking to gain political advantage from the financial crisis.
By talking up the scale of the recession the President-elect was lowering expectations for what he can achieve next year while seeking to justify what will, in effect, be the greatest injection of federal money into the US economy since the Depression-era New Deal.
The economic crisis is so great that Mr Obama and his economic team now believe that nothing less than a giant stimulus package is needed. The depth of the worsening recession has presented him with an extraordinary mandate to throw hundreds of billions of dollars at the problem – an opportunity that he did not have even a few weeks ago – and with it the chance to fund much of his hugely expensive legislative agenda.
The economic conditions – combined with a Democratic-controlled Congress – mean that Mr Obama is perhaps the most powerful incoming President, in terms of the ability to pass legislation quickly, since Lyndon Johnson took office in 1963.
On Friday the US Government announced a net loss of 533,000 jobs in November, the largest one-month drop since 1974, bringing unemployment to 6.7 per cent. The National Bureau of Economic Research said that America has been in recession for a year.
“This is a big problem, and it’s going to get worse,” Mr Obama told Meet the Press on NBC. “My number one priority is making sure that we’ve got a recovery plan that is up to the task.” In his weekly radio address on Saturday, Mr Obama pledged a five-tier rescue plan to create jobs by melding traditional road-building projects with massive investment in new technology and green infrastructure.
The scale of the plan, which Mr Obama hopes to sign into law shortly after he takes office on January 20, appears to be increasing by the day. He wants a nationwide road and bridge-building scheme; to make public buildings more energy-efficient by replacing old heating systems and installing efficient light bulbs; the renovation of schools and installation of computers in every classroom; to extend high-speed internet across the nation; and to give hospitals access to electronic medical records.
Mr Obama said that he would make “the single largest investment in our national infrastructure” since the 1950s highway programme. The plan is expected to include spending on electrical grids, public transport, dams and investment in alternative fuels.
Mr Obama refused to put a cost on the plan, but senior Democrats are talking about $700 billion (£477 billion), with others urging up to $1 trillion. When he met the nation’s governors last week he was told that there was $136 billion worth of building projects on the state level ready to go if federal money was made available.
Ed Rendell, the Democratic Governor of Pennsylvania, said that he had no doubt the package was going to be big, adding: “He didn’t blink an eye when we talked about $136 billion.”
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ted from lake orion, you are wrong. This package is helping out this jobless problem. Obama stated that he wants to have this package to invest more money into the economy, to provide more jobs for people that are unfortunately jobless
eric, farmington, U.S.A
Yea it amazes me that the government is entitled to the money we earn. They drive the nice cars. We make more and they take more... Now the president, wife and children wear designed clothes. Also their children go to an amazing school, when we have no money for education for our children....
Samantha, Tampa, USA
I think this was meant to happen whereas America will head to a direction where everything is efficient, like a utopia. From ash you will rise as something more. But it's still Americas fault the rest of us is suffering.
VP, Vancouver, Canada
The best way to solve this economic problem is to bring jobs back.
all this stimulus package is going to do is spend tax payers hard earned cash on things we dont need.
Ted, Lake Orion, U.S.A.
I think it's obsurd that we, the American people, spent so much tax payer money crucifying Michael Vick for fighting stinking dogs but we'll allow our money to be used for killing unborn children. IMO there is no difference in this travesty and the girl from Florida who killed her little girl.
Mary, Beaumont, USA
I think the fastest way to help the economy is giving hard working folks tax breaks. This way, people can spend and help the economy in return. People who abuse the welfare system should be cutoff--don't give them our hard earn tax $$ so they can't sit on their lazy behinds and pop babies.
Duc, SC,
Low income women have a way to keep from making unwanted babies. It's called not sleeping around.
Jeff, Seattle,
I don't think that offering low income women a way to keep from making unwanted babies is a bad idea. Obama dropped it very reluctantly, and I think its a crying shame people are not willing to look long term and realize that we are going to pay a lot more for those kids.
Maria, Minneapolis,
Hey if they want to add useless items onto the Stimulus lets make the whole thing public! Do it hour by hour as it changes! Let the American people see who's adding "pork" and who's really trying to do something. We can infulence our State Senators -WE vote them in and we can vote them out!
SHARON W. , YORKANA, USA
If they want to have a stimulus, that's fine, but read the damn bill! There's more "pet project" spending in this than you can shake a stick at. Millions to move offices, millions to buy the government cars, millions to fund birth control, millions to WIC, the list goes on and on.
Chris, Toledo, USA
Saying that FDR's New Deal made the Depression longer than it otherwise would have been is a counterintuitive statement, not something we can (or should attempt) to answer. Comparing Obama's new stimulus package to communism is a sweeping an incorrect historical generalization.
A, NYC,
I voted for Obama but what ever happened to "pay as you go?"
The onliny tax cuts should go to small business, the ones that employ 80% of America. If indiviual tax cuts were the answer, this country would be rollng in jobs, money and prosperity after the tax cuts Bush pushed through. Its not
Kathy Butler, Wichita, United Sates
Obama wanted change. Now that his stimulus package got passed by the libs in congress, thats all we are gonna have.
Tony, Aloha, USA
Taxpayers unite. My husband and I are throwing in the towel and going on SS. Who is going to pay the taxes we once did? We own small businesses and no one in goverment wants to help us. We're done. Thanks to those of you who want to pull the wagon. We're angry and "not going to take it anymore"!
Rhonda, Harvard, Worcester
What happened to the idea of seniors living on
retirement and s. s not having to pay taxes on social security.
jay, kelso Wa 98632, united states
No more money for Banks or investment firms. If they collapse, let them go. Seems that when they get the money they spend like drunken sailors. Seems that the big wigs just never get it. So let em collapse!
Jeff, University Park, USA
I agree with James --- I'd rather see the people get the bail out money than these corporations. Million dollar office renovations, million dollar salaries ......... money poorly spent. The people are going to pay for it anyway eventually. Just give it to the people to spark the economy.
Sam, Jackson Michigan, USA
Look its easy cut every taxpayer 250,000 and let them pay off their house, buy new car JUST SPEND THE MONEY. You don't have to be a genius to figure that out. If you make less than 100,000 BIG TAX CUT, Over 100,000 I think you can pay your taxes just fine
James Ginn, Portsmouth, USA
what about college tuition and college students? is that included in Obama's stimulus package? I agree with Patrick from Dallas... gov't officials taking unnecessary trips that cost us millions of dollars... ridiculous!
Kat, Kansas City, USA
To Mark Manchester.. I am a single mother of 3 children. I am perfectly capable of working and after getting laid off a few months ago have yt to find a job. I am applying for 10-15 jobs per day. There is nothing out there. I never wanted a handout. I wanted to work to support my children, however
Tricia, maine, ysa
Mark Manchester I really feel sorry for you, your belief is so unreal there is alot of us on social security that worked and paid it in and alot of us, wishes with all our hearts we were not handicap or disable, so if you ever become handicap, I love for you to think of your remark, I pray for you
Mel, birmingham, usa
If our leaders continue to inform "We the People", that we must tighen our belts, then maybe they should set an example. By this I mean they should take a pay cut along with the American people. Plus maybe they should not fly all over the world spending Taxpayer money.
patrick micciche, Dallas, USA
Oh and by the way, FDR's "New Deal" and communist policies actually made the Great Depression cut deeper and last longer than it otherwise would have. This man and his crackpot ideas made millions of people starve- like Joseph Stalin. When I hear Hussein compared to FDR I get a chill up my spine.
Mark, Manchester, USA
To those who cannot/ do not work...Social Security and Medicare are in debt by over $60 TRILLION dollars. You all should THANK US for the handouts you get while we sell our soles to Chinese tyrants and Mexican druglords to support you. What's the difference between welfare and robbery? A badge.
Mark, Manchester, USA
300 milion people is not 300 million tax payers. How about a stimulus package that really helps the economy and not just floats a corrupt company for a few more months. I would guess about 150million are actual taxpayers.
ks, daytona,
Maybe making the house and senate econically responsible would help with our crisis. When was the last time the house and senate did not give themselves a pay raise? Stimulating the economy, getting budget under control might happen if House and Senate took a pay cut rather than raise.
dab, jacksonville, usa
it's ultimately our tax dollars that bail out the bad guys and while they are still living the good life, the rest of us suffer. Why can't all Americans deserve a bailout of at least $50,000. Talk about stimulating the economy. Bad guys down, new banks starting up!
peg, wichita, kansas
Like others I feel the need for some help with those of us that are either unable to work or beyond the age to work. We also need some help as everything we need to survive is costing so much more and there is no way to increase our income. Going into debt is a losing solution.
Lynne, Lima, USA
50,000 to each American to pay off old debts renegotiate mortgages and stimulate our failing economy. This is how it should be done
stnr, indianapolis, usa
I hope someone monitors how many contracts are awarded and how much money actually touches the hands of those associated with the Chicago machine!
Paul M, Ann Arbor, USA
i am totally disabled i can not work even if i wanted to so i will get exactly nothing from these trillions of dollars this seems unfair to me new bridges and lightbulbs do not excite me at all i can not drive either Tthis is just wrong
PAULA lord, greensburg, usa
``the greatest injection of federal money into the US economy since the Depression-era New Deal."
Maybe this will dispel the concept of ``jobs that no American will do" since there was no such job during the depression.
Kevin, Butler, PA, USA
So far they are talking 4.6 trillion for Wall Street and Main Street... You divide that up by the tax payers. As of 2007 there are 138 million tax payers in the U.S. Instead of giving it to big business... give it to us, that is $33,333.00 going to each citizen. We'll be paying it anyway.
Ryan Mercer, Speedway, IN, USA
The US made a fortune from Britain during WW2. This helped to finance massive factory investment that was free from bombardment. Post war production switched to consumer goods which heralded a massive boom. Nothing is going to help the US get out of this mess unless they invade Canada and Mexico
Harry H, London, UK
I still have not heard anything about taking to task those who are to blame for this cataclysm - bankers. When are we going to see some justice?
Ray, UlanBataar, Mongolia
How about bailing the little people out?! I have 20,000 in debt and my husband might not have a job come march are you going to help us?
Donna, LeRoy, USA
Alexey: The UK recently had the Bank of England quietly push through an amendment to the way that they have to report the amount of money they print. Basically they no longer have to which means its extremely likely the UK, like the US is about to start the presses in earnest. Hyperinflation..
Paul Sullivan, Chester, UK
Obama certainly has been reading his history books; this is the modern answer to President Hoover's plan to take America out of recession. While it worked then, hyperinflation is also a possibility with a plan such as this, and that, as I'm sure it is, needs to be considered.
G. James, Sydney, Australia
I would like to know who is going to supply this $1 trln. ? Or US government is just going to start printing machine?
Alexey, Moscow, Russia
Hey Jeannie, what a great idea, it would be easy, just print it and give it out! Duh!
Doug Bates, St. Albans,
Change? He's using 1930's tactics for a 21st century financial crisis. Very scary. This article is the only one to point out that the "crisis" is slyly being used to dismiss fiscal responsibility and implement enormously expensive programs which will have to be paid for at a later date.
Lou, Heidelberg, Germany
It's like Obama wants another Great Depression! When will people learn that printing money does not create wealth, it just redistributes it to the government's friends/the rich/those that are poor with their money or unproductive, from the poor/hard-working/productive/thrifty. Sigh.
Sam, London,
does anyone ask or care where this money will come from?is it ok to print money like newspaper or toilet role? markets are responding positively to the news but this massive inflation causing act will destroy and damage the economy even further.
should the governments be allowed to print money ?
ebbi britt, valencia, spain
It's funny; without all those speeches and the ecstatic campaign momentum, he's just another Washington croney.
Alex, London,
The only change Obama needs to make is for the US Govt to take back control of the money supply from the Federal Reserve Bank (fundamentally a private for profit organization) .To paraphase Thomas Edison "If the govt can print bonds surely it can print its own money"
Gareth, Taipei,
In order to rebuild what has become obselete there must be structural and fundamental change, Changing the infrastructure of a society begins with changing the way a society thinks. Thinking about rebuilding the infrastructure of our society may lead to rebuilding the infrastructure of our lives.
Steven, Baltimore, USA
Obama hasn't a clue that it is the private sector which creates long term jobs through investment and innovation, not government works projects. He needs to lower trade barriers, lower business and personal income tax rates, and put nuclear power plant licensing on the fast track. No more spending.
Martin, San Francisco, USA
Jeannie, time for some maths. The population of the USA is around 300 million people. $700 billion divided by 300 million is around $2300 per person. So, just to be clear, you are proposing a bailout package around 430 times bigger than the one on the table.
David McGregor, Fitzroy, VIC, Australia
Jeannie, Guilford, USA, Well said. I dont even need one million, half-a-million will do really. And out of that half-a-million, half can be given as "bunny" cards so that I dont hoard cash, this way spending will increase. Will "People's President" hear this?.
srini, Herndon, USA
Missouri could use some of that money for the I-70 corridor between K.C. and St. Louis. I've been riding and driving on I-70 since the age of 12 and am now 60, so it's about time to replace it. It sure beats sending our money to countries which hate us. Let them build their own bleeping highways.
Henry, Warrenton, Missouri
Another trillion to spur the economy. We just distributed a similar amount and it did nothing. So now we are going to borrow another trillion, or two, or three from the Chinese. If the Chinese choose to call in their loans at anytime the dollar and the country will collapse. God help us.
William, Stuart, Florida, USA
Mandate. What mandate. Fully 95% of Democratic and Republican incumbents were re-elected, and slightly over 50% voted for Obama, and slightly under 50% voted for McCain. What mandate?
William, Stuart, Florida, USA
How about helping out the poor americans with some of the money he is giving out. Give it to us instead of the rich and let us get america back on track. If every american got 1 million dollars we could buy houses and cars and what ever to get the economy going.
Jeannie, Guilford, USA
The budget has a deficit of 1 tril only this year. They want to spend another 1 tril. And this is on the top of 11 tril debt already. How US gonna pay all of this back? I doubt they ever will do. So the question is when this pyramid gonna collaps?
Igor, Krasnodar,
Since we are emulating the 1930's, when will we have a World War to bring us out of recession. Maybe we could escalate the two we have by racheting them up a little ? FDR and Carter as heroes, what a piece of work this man is !
Desmond Taylor, Houston, USA TX
This is not a good idea. We would be much better off investing in new technologies and education as opposed to bridges and roads. President-elect Obama means well but it is difficult to see what the long term benefit of many repaired roads would be. Much better to repair the broken education system.
Andre, New York, USA
The Honorable President-Elect has lost the plot.
What happens when the bridges and roads are fixed, and all the lightbulbs have been installed? Bread lines for the bridge-builders et all? The correct thing to do is foster innovation en masse.
Well, we get the leaders we deserve...
Eric, Boston, USA
Jim, bubbles are a natural consequence of investor psychology. No amount of political "system change" will alter that fact. We just have to live with them and deal with them whenever the cycle hits. Some further regulation is needed, but not so much as to stifle innovation.
Robin Laundon, Cambridge, Cambridgeshire
Wait a minute...
Bailed-out companies like AIG, Bear Stearns etc. with roughly 100 billions are not included here?
Also the 700 billions from congress are not included here?
And the FED's newly created 800 billions "quantitative easing" neither?
All that was just the beginning?
Peter, Berlin, Germany
I think that this is a step in the right direction no matter how you look at it. He's telling us exactly what he is going to do without going into super specifics. That is already something that is change in the way our president lets us in on whats going on.
Tim, tempe, USA
The emphasis is being placed on the creation of a third world debt level. However the system of financial controls and the stockmarket are the problems. Obama has not indicated changes to these systems. The short term $ stimulus will not solve the system problems. They need political system change.
Jim Wills, Brisbane, Australia
Lets hope Obama's plan to save the auto industry is not a plan for the future that never was.
kevin, Redlands, ca.,