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WORLD> America
Obama warns of dire consequences without stimulus
(Agencies)
Updated: 2009-01-08 23:54

For all of 2008, employers probably slashed payrolls by at least 2.4 million. That's based on economists' forecasts for a net loss of 500,000 additional jobs in December, as well as the job losses previously reported. Some, however, think the number of jobs cut last month will be higher, around 600,000 or 700,000. The Labor Department will release that report Friday.

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A day after the release of a stunning new estimate - that the federal budget deficit will reach an unprecedented $1.2 trillion this year, nearly three times last year's record. Obama acknowledged some sympathy with those who "might be skeptical of this plan" because so much federal money has already been spent or committed in an attempt - largely unsuccessful so far - to get credit, the lifeblood of the American economy, flowing freely once again.

Such statements are coded to appeal to budget hawks in both parties, whom Obama wants to win over so that approval of a package draws wide, bipartisan support in the Democratic-led Congress.

To answer their concerns, he promised to allow funding only for what works. He also pledged a new level of transparency about where the money is going. A day earlier, he promised to tackle the out-of-control fiscal problem posed by Social Security and Medicare entitlement programs and named a special watchdog to clamp down on all federal programs.

Obama made broader arguments, too, saying that the private sector, typically the answer, cannot do what is needed now.

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

Obama's transition team and Democratic congressional leaders are working daily to hammer out the still-evolving package, expected to total nearly $800 billion. The initial hope had been to have a new stimulus package approved by Congress in time for Obama to sign it upon taking office on Jan. 20. That timeline has slipped considerably, into at least mid-February if not later.

The package is expected to include tax cuts for businesses and middle-class workers, money to help cash-starved states with Medicaid programs and other operating costs, and a huge share for infrastructure building, investments in energy efficiency and a rebuilding of the information technology system for health care. Much of the latter portions of the plan are aimed at what Obama likes to talk about as the need for "reinvestment" and not just "recovery."

Obama also promised action to address the economy's ills beyond the package, such as tackling the massive wave of home foreclosures many experts expect, preventing the failure of financial institutions, rewriting financial regulations and keeping accountable the "Wall Street wrongdoers" who engage in risky investing.

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