Obama Warns Economy Will 'Get Worse'
President-Elect Also Pushes Administration for Urgent Action on Housing Front

By Anne E. Kornblut
Washington Post Staff Writer
Monday, December 8, 2008

President-elect Barack Obama warned yesterday that "things are going to get worse before they get better" with the economy, and he pressed the Bush administration to act more urgently to help homeowners struggling with mortgage payments.

"We have not seen the kind of aggressive steps in the housing market to stem foreclosures that I would like to see," Obama said at a news conference in Chicago, where he announced his choice to lead the Department of Veterans Affairs. "My team has had some conversations with the administration about that. If it is not done during the transition, it will be done by me."

And he said in a taped interview broadcast yesterday that it is more important to stem the tide of foreclosures than to worry about whether undeserving homeowners would take advantage of a recovery program.

"If my neighbor's house is on fire, even if they were smoking in the bedroom or leaving the stove on, right now my main incentive is to put out that fire so that it doesn't spread to my house," Obama said on NBC's "Meet the Press."

Obama is considering a moratorium on home foreclosures, and he has urged the administration to figure out a way for banks and mortgage holders to renegotiate the terms of their existing deals, to bring payments down.

Obama has been careful not to overstep his authority before his swearing-in Jan. 20, but his comments, made two days after the government announced that more than half a million jobs were lost last month, suggested that he is willing to play a somewhat larger role in managing the economy in the interim.

In the news conference, two of the three questions Obama addressed dealt with economic matters.

He said he supports a rescue package for Detroit's automakers, adding that any auto industry leader who "doesn't understand the urgency of the situation and is not willing to make the tough choices and adapt to these new circumstances . . . should go." Still, he stopped short of echoing a call by Sen. Christopher J. Dodd (D-Conn.) for General Motors chief executive G. Richard Wagoner Jr. to resign.

Stimulating the economy was also a prime topic on NBC, where he was questioned about his intention, announced Saturday, to implement the largest public works program in decades. The mammoth program of infrastructure projects, such as bridge and road repairs, is intended to create 2.5 million jobs by 2011.

Obama did not specify how much the program will cost; outside experts have said it could run at about $500 billion. The president-elect did, however, acknowledge that the costs will be substantial, and he directly addressed the mounting federal budget deficit, saying that now is not the time to worry about it.

"We are inheriting an enormous budget deficit, you know -- by some estimates, over a trillion dollars. That's before we do anything," Obama said. "And so we understand that we've got to provide a blood infusion into the patient right now, to make sure that the patient is stabilized, and that means that we can't worry short-term about the deficit. We've got to make sure that the economic stimulus plan is large enough to get the economy moving."

Obama continued to portray the economic crisis as an opportunity to rebuild the country, structurally and culturally, and he said the situation today is not as grave as that facing Franklin D. Roosevelt before he took office in 1933, in part because of "social safety nets" created by Roosevelt's administration.

In a transition that has emphasized continuity and harmony with the outgoing president, there were glimmers of tension yesterday, as Obama not only criticized the administration's efforts on mortgages but also tapped for his Cabinet retired Army Gen. Eric K. Shinseki, who had sparred with President Bush's top Pentagon officials over the Iraq war strategy.

Obama, appearing with Shinseki in Chicago, said veterans would be in safe hands with the general as VA secretary. "No one will ever doubt that this former Army chief of staff has the courage to stand up for our troops and our veterans. No one will ever question whether he will fight hard enough to make sure they have the support they need," he said.

Obama was also asked in Chicago about reports of Americans purchasing firearms at a more rapid pace since his election. He answered that no one should worry that he will curb gun rights as president. "Lawful gun owners have nothing to fear," he said.

"Meet the Press" host Tom Brokaw pressed Obama on a particularly personal matter: whether he had really quit cigarettes, in keeping with a promise he made to his wife at the outset of his presidential bid. Obama admitted that he had "fallen off the wagon" at times but pledged to honor the White House's no-smoking rules.

He declined to discuss whether Caroline Kennedy, daughter of the late president John F. Kennedy, should be appointed to the Senate seat that would open once Hillary Rodham Clinton is confirmed as secretary of state. "The last thing I want to do is get involved in New York politics," Obama said.

But he mentioned that he and his wife, Michelle, have discussed opening up the White House to musicians, artists, scientists and poets.

"Historically, what has always brought us through hard times is that national character, that sense of optimism, that willingness to look forward, that sense that better days are ahead," Obama said. "I think that our art and our culture, our science, that's the essence of what makes America special. And we want to project that as much as possible in the White House."

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