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Obama Paints Grim Economic Picture

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Obama Paints Grim Economic Picture


Obama Paints Grim Economic Picture

Obama Paints Grim Economic Picture

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  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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President-elect Barack Obama urged passage of a huge government stimulus package Thursday. Tax cuts and government spending would be part of the plan and are meant to boost the struggling economy. Friday's unemployment numbers, expected to be the worst in months, may help bolster his argument for immediate action.


New unemployment numbers are out today, and they offer more evidence, if any were needed, of the troubled economy. The nation lost 524,000 jobs last month, sending the unemployment rate to 7.2 percent. The bleak employment picture is adding urgency to President-elect Barack Obama's call for a giant economic stimulus package. NPR's Scott Horsley reports.

SCOTT HORSLEY: President-elect Barack Obama says the nation is facing an economic crisis unlike most Americans have seen in their lifetimes. And he says, the situation has only gotten worse in the last few weeks.

(Soundbite of speech)

President-elect BARACK OBAMA: Many businesses cannot borrow or make payroll; many families cannot pay their bills or their mortgage; many workers are watching their lifesavings disappear; and many, many Americans are both anxious and uncertain of what the future will hold.

HORSLEY: All this week, Mr. Obama has been stressing the need for Congress to act quickly on an economic stimulus package. Yesterday, he warned that only the federal government has the wherewithal to reverse the economy's downward slide.

(Soundbite of speech)

President-elect OBAMA: I don't believe it's too late to change course, but it will be if we don't take dramatic action as soon as possible.

HORSLEY: Economists from across the political spectrum have endorsed the idea of a big government stimulus package, and many agree with Mr. Obama that it needs to come quickly. Nariman Behravesh, of the economic forecasting firm Global Insight, says if Congress acts quickly on a stimulus package, the economy could start growing again as early as this summer. Otherwise, Behravesh warns, the recession is likely to stretch into late this year or early next.

Dr. NARIMAN BEHRAVESH (Executive Vice President, Global Insight): The sooner they get this passed, the quicker they can get money into the pockets of households, businesses, and get started on some of the infrastructure spending they're thinking about. We don't have a lot of time; you know, the clock's ticking.

HORSLEY: The president-elect is proposing a mix of tax cuts and new government spending to help jumpstart the economy. He acknowledged the government has already spent hundreds of billions of dollars on bailout efforts without a noticeable improvement in the job market or confidence. He pledged that money spent in the stimulus would go for useful projects like new roads, high-speed Internet hookups and investments in clean energy.

(Soundbite of speech)

President-elect OBAMA: There is no doubt that the cost of this plan will be considerable. It will certainly add to the budget deficit in the short term. But equally certain are the consequences of doing too little or nothing at all, for that will lead to an even greater deficit of jobs, incomes and confidence in our economy.

HORSLEY: The federal government is already running on borrowed money, and it will have to borrow a lot more to pay for the stimulus package, estimated cost at least three-quarters of a trillion dollars. But even deficit watchdogs, like Robert Bixby of the Concord Coalition, seem willing to accept that for the time being.

Mr. ROBERT BIXBY (Executive Director, Concord Coalition): I think it's OK to do some short-term stimulus, and it may have to be rather substantial because we have a very large recession staring at us in the face. However, we have a huge unsustainable budget problem to begin with over the long-term, and we don't want to do anything in the short-term that's going to make that worse.

HORSLEY: Bixby says he's less concerned with the overall size of the stimulus package than how it's structured. A one-time investment in making homes or government buildings more energy efficient, for example, is easier for him to swallow than tax cuts or other programs that would be hard for the government to undo. Mr. Obama has been sensitive to that. All week, he's been coupling his message about the need for short-term spending to stimulate the economy with a promise to streamline government and cut the deficit in the long run.

(Soundbite of speech)

President-elect OBAMA: We cannot have a solid recovery if our people and our businesses don't have confidence that we're getting our fiscal house in order. And that's why our goal is not to create a slew of new government programs, but a foundation for long-term economic growth.

HORSLEY: Mr. Obama has also promised that the stimulus package would be closely monitored, with an oversight board and an online database, so taxpayers can see how the money's being spent. Scott Horsley, NPR News, Washington.

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Obama To Congress: Act Now On Economic Plan

Read Obama's Speech

President-elect Barack Obama tried to win public support Thursday for a massive economic recovery plan, warning that the U.S. could be in a recession for years if Congress doesn't act quickly.

Speaking to a group at George Mason University in Fairfax, Va., Obama said his proposal combines the country's short-term need for jobs and greater efficiency with a long-term plan for improvements in energy, health care, education and infrastructure.

"It's a plan that recognizes both the paradox and the promise of this moment — the fact that there are millions of Americans trying to find work even as, all around the country, there's so much work to be done," he said.

Obama said his proposal — which includes tax cuts for individuals and some businesses — would create or save about 3 million jobs. It's expected to cost as much as $775 billion over two years, although the ultimate price tag is not known.

Obama told the group Thursday that his plan includes proposals on:

Energy: Doubling the production of alternative energy in the next three years; modernizing more than 75 percent of the country's federal buildings; and improving energy efficiency in 2 million homes. He said these initiatives would save consumers and taxpayers billions of dollars and create job opportunities for building solar panels, wind turbines, and fuel efficient cars and buildings.

Health care: Computerizing all of the country's medical records. Obama said this would save money and jobs and reduce medical errors that cost lives.

Education: Equipping classrooms with state-of-the-art laboratories, libraries and computers. He also said his plan calls for additional training for teachers.

Infrastructure projects: Repairing roads, bridges and schools; updating the electricity grid; and expanding broadband access across the country.

In addition, Obama said he would make good on a campaign promise to give working families a $1,000 tax cut in an effort to encourage spending and get the economy moving. And he said he would continue the extension of unemployment insurance and health care coverage to help Americans who have lost their jobs during the economic downturn.

He warned that the U.S. could see double-digit unemployment, falling wages and a decrease in college enrollment if Congress doesn't have legislation ready for his signature soon after he is sworn in on Jan. 20. Some in Congress expressed concern about the plan because of its impact on the growing budget deficit — which is forecast to hit $1.2 trillion this year.

"For every day we wait or point fingers or drag our feet, more Americans will lose their jobs. More families will lose their savings. More dreams will be deferred and denied," Obama said.

Obama acknowledged that the stimulus plan would add to the budget deficit in the short term. However, he said that not pumping enough money into the economy would lead to a greater loss of jobs and personal income.

"Only government can break the vicious cycles that are crippling our economy — where a lack of spending leads to lost jobs which leads to even less spending; where an inability to lend and borrow stops growth and leads to even less credit," he said.