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Video: Obama: Economy will get worse

msnbc.com
updated 12/7/2008 12:25:19 PM ET 2008-12-07T17:25:19

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.

By Alex Johnson of msnbc.com

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