Obama wants economic rescue approved 'right away'

by Maireid Sullivan | November 24, 2008 at 12:46 pm

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By BETH FOUHY
Associated Press Writer

CHICAGO (AP) -- With the economy in crisis, President-elect Barack Obama urged the new Congress to pass a quick economic stimulus bill, pledged help for the troubled auto industry and blessed the Bush administration's bailout of the financial industry.

Even so, he conceded, "The economy is likely to get worse before it gets better," a downbeat forecast, delivered 57 days before he takes the oath of office and as Americans headed into the year-end holiday season.

Barring swift action, "most experts now believe that we could lose millions of jobs next year," he said, urging the newly elected Congress to act quickly on his plans after opening its session on Jan. 6.

At a news conference, Obama was critical of the Big Three automakers, saying he was surprised they did not have a better-thought-out plan for their future before asking Congress to approve $25 billion in emergency loans.

He said once he sees a plan, he expects "we're going to be able to shape a rescue."

Obama declined to say how large a stimulus package he wants from Congress. Democratic lawmakers speculated over the weekend that the price tag could reach $700 billion over two years as the nation struggles to emerge from a recession compounded by a credit crunch. "It's going to be costly," the president-elect said.

The stock market had been climbing before Obama spoke but then slipped during his news conference, reducing its gain from 300 points to 200. It rose higher again later. Analysts said investors were looking for more specifics of an economic stimulus plan, and also wanted Obama to state that he would set aside a plan to raise taxes on the richest Americans.

Obama made his comments as he unveiled the top members of his economic team, beginning with New York Federal Reserve President Timothy Geithner to be his treasury secretary. Geithner, 47, is a veteran of financial crises at home and overseas and has worked closely with the Bush administration in recent months.

Obama chose Lawrence Summers as director of his National Economic Council. Summers was treasury secretary under former President Bill Clinton.

Obama said his newly minted economic team offered "sound judgment and fresh thinking" at a time of economic peril.

He expressed confidence the nation would weather the crisis "because we've done it before."

Obama also announced two other members of his economic team in the making. He named Christina Romer as chair of his Council of Economic Advisers, and Melody Barnes as director of his White House Domestic Policy Council.

Obama's principal theme was urgency.

"We do not have a minute to waste," he said, citing the turmoil in the financial markets as well as the deterioration of the broader economy.

He also said he would "honor the commitments made by the current administration" to deal with the problems, signaling approval of the Bush administration's latest effort to rescue Citigroup as well as the broader $700 billion bailout designed to shore up the financial markets.

Bush said earlier in the day that the government's dramatic rescue of Citigroup was necessary to "safeguard the financial system" and help the economy recover, and he said there could be more such moves if other institutions need help.

"We have made these kind of decisions in the past. We made one last night. And if need be we will make these kind of decisions to safeguard our financial system in the future," Bush said.

As a candidate, Obama was a supporter of the $700 billion bailout measure.

Any stimulus plan would greatly exceed the $175 billion price tag Obama had suggested as a candidate.

At the news conference, he said he wanted to create 2.5 million jobs by the end of 2010. He also said he wants the legislation to incorporate his campaign ideas for new jobs in environmentally friendly technologies - the "green economy." He added that deficit concerns would have to take a back seat to the goal of reinvigorating the economy.

As a candidate, Obama called for cutting taxes for the middle class and said he wanted to eliminate Bush-era tax cuts for the wealthy. In his news conference, he reaffirmed support for reducing the burden on the middle class but was equivocal on how quickly he would act on taxes affecting those who are better off. Many economists caution that raising taxes can make a recession worse, and the president-elect said he would await a recommendation from his advisers on whether to follow through on his earlier pledge.

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Amy Judd

at 11:56 on November 25th, 2008

I think the economy will get worse before it gets better too. Unfortunately - hoping that doesn't happen though!

eastvanray

at 14:02 on November 25th, 2008

Aparently it doesn't really take that much to turn American leaders from staunch defenders of Adam Smith to devtees of Karl Marx. So much for intestinal fortitude Comrad.

Maireid Sullivan

at 00:58 on November 26th, 2008

Maybe they should remember the wisdom of brilliant people like John Locke, John Stuart Mill, and David Ricardo, and, especially, the greatest economics journalist of the 19 century, Henry George, who synthesized earlier teachings on classical economics like no one else in his all-time best selling economics book "Progress and Poverty". Resource Rent rocks! ... imagine no more poverty! :) http://en.wikipedia.org/wiki/Progress_and_Poverty

Wikipedia entries:

http://en.wikipedia.org/wiki/John_Locke
John Locke (29 August 1632 – 28 October 1704) was an English philosopher. Locke is considered the first of the British Empiricists, but is equally important to social contract theory. His ideas had enormous influence on the development of epistemology and political philosophy, and he is widely regarded as one of the most influential Enlightenment thinkers, classical republicans, and contributors to liberal theory. His writings influenced Voltaire and Rousseau, many Scottish Enlightenment thinkers, as well as the American revolutionaries. This influence is reflected in the American Declaration of Independence.[1]

Locke's theory of mind is often cited as the origin for modern conceptions of identity and "the self", figuring prominently in the later works of philosophers such as David Hume, Jean-Jacques Rousseau and Immanuel Kant. Locke was the first philosopher to define the self through a continuity of "consciousness". He also postulated that the mind was a "blank slate" or "tabula rasa"; that is, contrary to Cartesian or Christian philosophy, Locke maintained that people are born without innate ideas.[2]

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http://en.wikipedia.org/wiki/John_Stuart_Mill
John Stuart Mill (20 May 1806 – 8 May 1873), British philosopher, political economist, civil servant and Member of Parliament, was an influential liberal thinker of the 19th century. He was an exponent of utilitarianism, an ethical theory developed by Jeremy Bentham, although his conception of it was very different from Bentham's.

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http://en.wikipedia.org/wiki/David_Ricardo

David Ricardo (18 April 1772-11 September 1823) was a political economist, often credited with systematizing economics, and was one of the most influential of the classical economists, along with Thomas Malthus and Adam Smith. He was also a member of Parliament, businessman, financier and speculator, who amassed a considerable personal fortune. Perhaps the most important of his contributions was the theory of comparative advantage, an fundamental argument in favor of free trade among countries and of specialization among individuals. Ricardo argued that there is mutual benefit from trade (or exchange) even if one party (e.g. resource-rich country, highly-skilled artisan) is more productive in every possible area than its trading counterpart (e.g. resource-poor country, unskilled laborer), as long as each concentrates on the activities where it has relative productivity advantage.[1]

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http://en.wikipedia.org/wiki/Henry_George
Henry George (September 2, 1839 – October 29, 1897) was an American political economist and the most influential proponent of the "Single Tax" on land, also known as the land value tax. He inspired the philosophy and economic ideology known as Georgism, that holds that everyone owns what they create, but that everything found in nature, most importantly land, belongs equally to all humanity. He was the author of Progress and Poverty, written in 1879.