Obama prods Congress on economy

Calls fast action essential on stimulus package

FAIRFAX, Va. - Warning that the nation could face devastating unemployment levels and a lengthy recession, President-elect Barack Obama yesterday pleaded with Congress to move quickly on a stimulus package of carefully chosen public works projects and tax cuts that could total $775 billion or more.

In his first major policy address since the election, a somber Obama traded his campaign speech theme of hope with a chief executive's message of cold reality, bluntly stating that unless both parties put aside regional and partisan differences to pass a fiscal recovery plan, the struggling economy could deteriorate further.

"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," Obama said in the nationally televised address from George Mason University in northern Virginia.

The president-elect frankly acknowledged that the package has its skeptics, including those who don't want to worsen the record federal deficit, those who oppose using public works projects as a national economic salve, and taxpayers questioning the impact of the hundreds of billions already spent since the financial crisis emerged last fall. But he insisted that there was no other choice and, while offering few additional details, pledged that his plan would be transparent and free from politically driven projects.

"We should have an open and honest dis cussion about this recovery plan in the days ahead, but I urge Congress to move as quickly as possible on behalf of the American people," Obama said. "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. And our nation will sink deeper into a crisis that, at some point, we may not be able to reverse."

In his aggressive push for the massive package that has yet to be drafted, Obama set himself up for his first test of wills and power-sharing with Congress, even before he is inaugurated.

Although Obama will enjoy the rare benefit of having both houses of Congress controlled by his own party, he still faces the natural tension between the White House and Capitol Hill. No matter who is in the Oval Office, Congress historically has jealously protected its role in setting policy and spending money.

And while Democrats are eager to give the new president an early and dramatic legislative victory - House Speaker Nancy Pelosi said yesterday she wants it passed by mid-February - Republicans want to send a signal that their minority status does not make them pushovers.

GOP leaders yesterday, while praising Obama for including them as he puts together the economic recovery package, cautioned that they would insist on "regular order" - Congress-speak for assuring that rank-and-file members have a chance to review the package and offer amendments to it.

Conservative lawmakers are still smarting about the $700 billion financial services bailout plan Congress passed speedily last year, after the Bush administration argued that the financial emergency required fast action.

"We paid a heavy price for how the financial rescue package was dealt with back in late September because it was negotiated at a leadership level," the House minority leader, John Boehner of Ohio, told reporters. "It was run through the House and Senate rather quickly. And as a result, the kind of information that Americans would get about the severity of the problem, the potential options for helping fix the problem, all of that discussion for the American people was lost."

Obama was careful to include in his economic outline items meant to draw support from both sides of the aisle: business tax credits to make the Republicans happy, public works spending to please the Democrats, and middle-class tax cuts for which both parties would like to claim credit. But the mix of economic proposals also provoked pockets of opposition from both parties.

For instance, some Democrats, including Senator John F. Kerry and Representative Barney Frank of Massachusetts, oppose the business tax credits Obama wants in the package.

"I don't think you create a job with a tax credit," said Frank, chairman of the House Committee on Financial Services, though he said he would eventually vote for the stimulus plan.

Other lawmakers worried about the sheer size of the package, especially after the passing of the financial services bailout plan last year. With the federal deficit expected to hit an unprecedented $1.2 trillion this year - three times the level of last year's shortfall - Republicans warned against letting the package get too big, or too heavily focused on spending instead of tax cuts.

But supporters of the plan - including a collection of Democratic governors and mayors who came to Virginia yesterday - said a big package was necessary to jolt the economy into recovery and to shore up consumer confidence.

"This plan needs to be bold enough to have a psychological impact, as well as an economic impact," Governor Deval Patrick of Massachusetts said after watching Obama's address.

Governor Jim Doyle of Wisconsin predicted the package could be even larger than the $775 billion the Obama transition team has floated.

"Everybody understands it's going to be a number that's moving toward the $1 trillion" mark, Doyle said. "The number should be large enough to do something."

Obama made clear yesterday he did not want any so-called pork barrel projects in the bill, saying he wanted to fund only "well-planned, worthy, and needed" projects to create or save 3 million jobs, overwhelmingly in the private sector.

Senator Judd Gregg of New Hampshire, the ranking Republican on the Budget Committee, said Obama was on the right track in pushing a stimulus package and agreed Congress needed to control its appetite for pork barrel projects.

"We all love things like beautifying Main Street, or putting in running tracks; some people even like halls of fame for this thing or that thing," Gregg said on the Senate floor. "But that's not the type of infrastructure or investment that is going to help us be a more competitive and create more jobs. And the bottom line here is to create more jobs."