Page last updated at 00:44 GMT, Friday, 9 January 2009

Back spending plan, urges Obama

Barack Obama talks about his plans for the economy

US President-elect Barack Obama has called for "drastic action" to prevent the US economic situation worsening.

Speaking two weeks before taking office, Mr Obama urged Congress to act quickly to pass an $800bn (526bn) stimulus plan.

His proposals include tax cuts and creating new jobs through increased government spending on public works projects.

He called on political leaders from all sides to come together behind a bill.

Mr Obama is facing his first big battle to persuade Congress to approve a colossal effort to restart America's economy, reports the BBC's Adam Brookes, in Washington.

His warnings were more dire than anything before, our correspondent adds, and he is piling on the pressure for action.

'Deeper crisis'

Barack Obama made his comments in a speech at George Mason University in Virginia.

No longer can we allow Wall Street wrongdoers to slip through the regulatory cracks
US President-elect Barack 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," he said.

"If nothing is done, this recession could linger for years."

Mr Obama said that, with US interest rates near zero, and economic activity and lending still shrinking, it was up to the government to act.

"Only the government can provide the short-term boost necessary to lift us from a recession this deep and severe," he said.

"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, and our nation will sink deeper into a crisis that at some point, we may not be able to reverse."

His stark warning came with US job losses for 2008 expected to reach 2.5 million when the December figure is released on Friday.

KEY ELEMENTS IN STIMULUS PLAN
Immediate tax cuts of $1,000 per family
Increased benefits and health care for the unemployed
Computerising all health care records in five years
Doubling investment in alternative energy and re-shaping energy grid
Aid to states to help maintain vital services

Mr Obama said his plan would create 3 million jobs by 2011.

But in a bid to gain bipartisan support for his plan, he is also including substantial tax cuts for both individuals and businesses, as well as a large programme of infrastructure spending on such items as roads and schools.

His task has been made more difficult by the projections by the Congressional Budget Office, released on Wednesday, that the budget deficit will reach $1.2 trillion this year - before any extra stimulus plan.

The size of the package means that his hopes of Congress passing the plan by the time he takes office have faded, with mid-February now seen as the earliest date that Congress could take action.

Mr Obama acknowledged that there was substantial scepticism among the US public about government intervention in the economy.

He said that any decisions on spending would be made transparently and informed by "independent experts", while he would launch an "unprecedented effort" to "eliminate unwise and unnecessary spending".

He also pledged to reform "a weak and outdated" regulatory system to protect consumers and investors from the "reckless greed and risk-taking" that should "never endanger our prosperity again".

"No longer can we allow Wall Street wrongdoers to slip through the regulatory cracks. No longer can we allow special interests to put their thumbs on the economic scales," he said.

Mr Obama's comments came on the day his election was formally certified by a joint session of Congress. He takes office on 20 January.


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