Obama warns economy will get even worse

U.S. ‘fragility’ tied to worldwide financial crisis, president-elect says



The economic recession will get significantly
worse before it starts to improve, President-elect Barack Obama said,
seeking in an interview broadcast Sunday to tamp down expectations as
he prepares to assume the presidency in 44 days.

“If you look at
the unemployment numbers ... the fragility of the financial system and
the fact that it’s an international system,” the recession “is a big
problem, and it’s going to get worse,” Obama told NBC News’ Tom Brokaw
on Saturday. The interview aired Sunday on NBC’s “Meet the Press.”
Acknowledging
that his agenda had changed sharply just in the month since he was
elected, Obama said passing a short-term economic stimulus package was
now his top priority.

“We’ve got to provide a blood infusion right
now, make sure that the patient is stabilized,” he said, adding that
the budget deficit, by some estimates more than $1 trillion, would have
to be put on the back burner “for now.”

“We’ve got to get the economy moving,” he said.

Roads, highways, state projects first targets

The
president elect said the new White House economic team would put forth
an economic recovery package featuring a short-term stimulus element
paired with “a strong set of financial regulations” under which “banks,
ratings agencies, mortgage brokers, a whole bunch of folks [would]
start having to be much more accountable and behave much more
responsibly.”
In the near
term, Obama said, the government will speed ahead with “shovel-ready
projects,” saying it would get “the most bang for the buck” by
“investing in the largest infrastructure programs,” such as roads and
bridges already in the pipeline at the state level.
Such spending
not only would be “an immediate stimulus,” he said, “because I think we
can get a lot of work done fast,” but the projects would be “down
payments on the kind of long-term sustainable growth that we need.”
In his
weekly radio address
Saturday, Obama said his plan would put millions of people to work by
“making the single largest new investment in our national
infrastructure since the creation of the federal highway system in the
1950s.”
The
president-elect also singled out the auto industry Sunday as the target
of special concern, saying the government should be prepared to provide
major assistance, but only if it was “conditioned on them making
significant adjustments.”
The White House and Congress were trading proposals throughout the weekend on a plan to extend up to
about $15 billion in emergency loans
for the so-called Big Three U.S. automakers — General Motors Corp.,
Chrysler LLC and Ford Motor Co. — whose fortunes have plummeted.
Obama endorsed the negotiations, saying “the auto industry is the backbone of American manufacturing.”

“It is a huge employer across many states,” he said. “I don’t think it’s an option to allow it simply to collapse.”

At the same time,
he said, “they do not have a sustainable business model right now,”
insisting that the industry needed an overhaul involving “labor,
management, shareholders, investors.”
“If the want to
survive, then they better start building a fuel-efficient car,” Obama
said, and accept that the future will never again be as “rosy as they
project.”


Shinseki to be tapped for VA

Obama
was interviewed in his hometown by Brokaw, who is stepping down as host
of “Meet the Press,” an assignment he assumed in June on the sudden
death of longtime moderator Tim Russert. NBC’s chief White House
correspondent, David Gregory, will become permanent moderator next Sunday.


Obama announced
during the interview that at a news conference later Sunday, he would
nominate retired Gen. Eric K. Shinseki, who clashed with the Bush
administration as Army chief of staff, to head the Department of Veterans Affairs .

“I think that
General Shinseki is exactly the right person who is going to be able to
make sure that we honor our troops when they come home,” Obama said.
Shinseki’s
clashed repeatedly with President George W. Bush and Defense Secretary
Donald Rumsfeld during Bush’s first term, when he contradicted their
contention that the war in Iraq could be won with a relatively small
number of troops.
In a direct
slap at his bosses, Shinseki testified before Congress that the United
States would need several hundred thousand more troops than Rumsfeld

predicted, prompting Rumsfeld to publicly rebuke his Army chief.

Shinseki retired shortly thereafter.
Obama said
history had shown that Shinseki “was right” and said the general had
demonstrated special concern for the plight of veterans injured during
the war.
“When I reflect
on the sacrifices that have been made by our veterans and I think about
how so many veterans around the country are struggling even more than
those who have not served — higher unemployment rates, higher homeless
rates, higher substance abuse rates, medical care that is inadequate —
it breaks my heart,” Obama said.
As head of of the government’s second largest agency, Shinseki, 66, would be the first Asian American in Obama’s cabinet.