Obama's Bold Stimulus Plan

Obama's economic stimulus plan

US President-elect Barack Obama says his two year stimulus plan will create millions of jobs.

This was the first time that the US President- elect went into such detail about the status of the troubled US economy.

His proposals for a two year plan indicate the large effort involved in reviving the ailing economy.

He said the plan would create around 2.5 million more jobs by 2010. The Labour Department announced that unemployment has reached its highest levels in 16 years.

Obama warns swift action needed to avert deflation

Obama says plan would save or create 2.5 million jobs

Picks of Geithner, Clinton suggest centrist policy bent

CHICAGO - US PRESIDENT-ELECT Barack Obama said on Saturday that he was crafting an aggressive two-year stimulus plan to revive the troubled economy, warning that swift action was needed to prevent a deep slump and a spiral of falling prices.

Mr Obama gave a bleak assessment of the economy in his most detailed comments on the subject since winning the Nov 4 election and just a day after US stock markets rallied on his apparent choice of Mr Timothy Geithner, president of the New York Federal Reserve, as Treasury secretary.

'If we don't act swiftly and boldly, most experts now believe that we could lose millions of jobs next year,' Mr Obama said in a weekly radio address.

'We now risk falling into a deflationary spiral that could increase our massive debt even further,' he said.

Mr Obama said the plan would aim to save or create 2.5 million jobs by January 2011 and would be 'big enough to meet the challenges we face'.

Any additional jobs would offset what is expected to be a dismal employment picture in the near future.

Mr Obama, who succeeds President George W. Bush on Jan 20, moved rapidly to form the team that will address US economic and foreign policy challenges, convincing former rival Hillary Clinton to be his secretary of state and selecting Mr Geithner, a Treasury official in President Bill Clinton's administration.

Those appointments underscored a centrist bent to the personnel decisions being made by Mr Obama, who had a liberal record as a US senator from Illinois.

But the Democratic president-elect, who has been silent about his Cabinet picks, focused his Saturday address on a programme to create jobs and warned that the economy was likely to get worse before it gets better.

Still, as fears grow that the economy could be in for one of its most severe downturns in decades, Mr Obama is signaling anything but a middle-of-road approach on economic stimulus.

He called in October for a $175 billion (S$267.45 billion) stimulus measure, but his radio speech suggested he was ready to push for a much larger package. He did not give a price-tag in the speech.

The two-year time frame for the stimulus further indicated a sizable proposal. Most such plans are aimed at covering a one-year period.

'Likely to get worse'
Mr Obama and his economic team have worked for weeks to lower expectations that the economic problems can be solved fast.

'There are no quick or easy fixes to this crisis, which has been many years in the making, and it's likely to get worse before it gets better,' Mr Obama said.

The top Republican in the House of Representatives warned against increasing government spending to help the economy.

'The time for endless and aimless Washington spending has passed,' US Rep. John Boehner said in a statement, adding he was willing to work with Mr Obama on an economic recovery bill.

Mr Obama said recently the United States should not worry about its budget deficit for the next two years as it worked to prevent a deep recession.

The number of Americans joining the unemployment rolls surged to the highest in 16 years, up more than 540,000, the Labor Department said on Thursday. Government data also painted an increasingly dire picture of the housing market.

'The news this week has only reinforced the fact that we are facing an economic crisis of historic proportions,' Mr Obama said in his address.

Later Saturday, Mr Obama announced the choice of close aide Robert Gibbs to be White House press secretary.

A senior Democrat said Mr Obama was expected to announce his economic team, including Mr Geithner, as early as Monday.

US stocks, which had been sinking all week, surged more than 6 percent on the news that Mr Geithner, 47, had been selected. US Treasuries fell and the dollar surged.

Congressional Democrats have promised to make a broad economic stimulus a priority when they reconvene in January.

The package is expected to include middle-class tax cuts and billions of dollars for public works projects, such as the construction of roads, bridges and mass transit.

Hobbled US automakers are negotiating with lawmakers and the White House over a bailout package they say is urgently needed. Mr Obama has kept a low profile in that debate. -- REUTERS