Obama Cites Grim Economy At Start, as Past Presidents Have

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Obama Warns of Consequences Without Stimulus

President-elect Barack Obama warned of dire and lasting consequences if Congress doesn't pump unprecedented dollars into the economy, making an urgent pitch Thursday for his mammoth spending proposal in his first speech since his election.

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The president-elect offered some hopeful words for a nation already growing weary from months of bad economic news. "The very fact that this crisis is largely of our own making means that it is not beyond our ability to solve," he said. "Our problems are rooted in past mistakes, not our capacity for future greatness."

But his comments were punctuated by gloomy reports from the nation's retailers, which said the holiday shopping season was even worse than they had anticipated. Macy's said its sales in December had dropped 7.5 percent from the previous year.

New unemployment claims for the week declined a bit, but economists braced for another spike in job losses when monthly employment numbers are released today.

Analysts expect the jobless rate to increase to 7 percent, from 6.7 percent, and for employers to have cut half a million more jobs. There were 3.2 million more unemployed Americans in November than a year earlier.

Yesterday's speech marked the start of the formal campaign to move through Congress a stimulus package that Obama portrayed as an effort to "retrofit America" -- rebuilding infrastructure while also investing in alternative energy, modernizing schools and extending broadband Internet service to rural areas.

While some details remain vague -- including the total cost of the plan, which could reach $800 billion -- Obama offered some goals that he hopes to achieve: a doubling in the production of alternative energy, modernizing 75 percent of federal buildings, computerizing health records in five years and providing an immediate tax cut of up to $1,000 for Americans.

"I understand that some might be skeptical of this plan," he said. "Our government has already spent a good deal of money, but we haven't yet seen that translate into more jobs or higher incomes or renewed confidence in our economy. That's why the American Recovery and Reinvestment Plan won't just throw money at our problems -- we'll invest in what works."

At a news conference after Obama's speech, Senate Minority Leader Mitch McConnell (R-Ky.) and House Minority Leader John A. Boehner (R-Ohio) said they agreed with the president-elect's diagnosis of the perils presented by the economic recession, but continued to voice doubts about the spending side of the emerging plan.

"The question is, how will the money be spent?" McConnell said, calling the $1.2 trillion estimate of the deficit "eyepopping."

Boehner said the deficit makes it imperative to root out spending in the plan that does not serve the immediate purpose of stimulating the economy, warning that too much spending would wreak long-term havoc. "We can't do one without the other," he said.

In his speech, Obama blamed the current situation on "profound irresponsibility" -- from financial centers such as Wall Street and power centers such as Washington -- and directly confronted the critics of his plan.

He acknowledged the staggering cost of his proposals and the enormous debt it would impose on future generations. To assuage those concerns, Obama pledged "an unprecedented effort to eliminate unwise and unnecessary spending."