Obama wants economic rescue approved 'right away'

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.