President-Elect Obama Works On A Plan To Cure The Economy
Monday, January 05, 2009SUSIE GHARIB: President-Elect Barack Obama said today that the U.S. economy is quote, very sick and getting worse. He was on Capitol Hill meeting with lawmakers and pitching his ambitious plan to revive the economy, which reportedly includes $300 billion in tax cuts. That could save as much as a thousand dollars for some families and includes tax incentives for businesses to buy equipment and hire new workers. Obama also pledged to be accountable to American taxpayers, saying they have a right to know where their money is being spent. Washington Bureau chief Darren Gersh has more.
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: The president- elect is a man in a hurry. At meetings on Capitol Hill and also with his economic team, Mr. Obama said he expects to sign a massive recovery package into law just a few weeks after taking office.
PRESIDENT-ELECT BARACK OBAMA: It is clear that we have to act and we have to act now to address this crisis and break the momentum of the recession or the next few years could be dramatically worse.
GERSH: According to a new analysis by Moody's economy.com, without a stimulus package, the economy could shrink almost 4 percent this year. A recovery plan of the size Obama is considering is expected to cut that decline in half. The impact would be more dramatic next year. Without a plan, the economy falls 1.7 percent. With a recovery package, the economy is projected to grow 2 percent. Numbers like those have convinced the U.S. Chamber of Commerce's Bruce Josten that passing the Obama plan is critical.
BRUCE JOSTEN, EXECUTIVE VICE PRESIDENT, US CHAMBER OF COMMERCE: We'll be supportive of a measure that's going to stimulate consumption, can stimulate business investment and stimulate job creation as well as job retention. That's what we need.
GERSH: Of course, all the added spending is expected to push the Federal deficit to somewhere around $1 trillion. Faced with that number, Mr. Obama promised what he called very serious and concrete plans to bring down the deficit as the economy recovers.
OBAMA: If we are going to grow this economy over the long term, if we are going to create a better future for our children and our grandchildren, then we can't be fiscally irresponsible about how we do it.
GERSH: While it's impossible to guarantee how Congress will act in the future, budget hawks like former Congressman Bill Frenzel say it is still important that the current recovery plan include a pledge to rein in future spending.
BILL FRENZEL, GUEST SCHOLAR, ECONOMIC STUDIES, BROOKINGS: Otherwise, the consumers, producers, investors, the market makers are going to say, hey wait a minute. We're not going to be fooled by some short-term spending program if the whole country is going over the edge in 10 or 20 years.
GERSH: But there's no question the economy needs help this year and the $300 billion tax cut Obama is considering could begin to have a big impact on consumer spending and business investment as soon as this spring. Darren Gersh, NIGHTLY BUSINESS REPORT, Washington.
