Obama Warns of Long Recession Without Action

February 05, 2009

WASHINGTON (AP) -- President Barack Obama warned on Thursday that
failure to act on an economic recovery package could plunge the
nation into a long-lasting recession that might prove irreversible,
a fresh call to a recalcitrant Congress to move quickly.
In an op-ed in The Washington Post, the president argued that
each day without his stimulus package, now exceeding $900 billion
in the Senate, Americans lose more jobs, savings and homes. He
painted a bleak picture if lawmakers do nothing.
"This recession might linger for years. Our economy will lose 5
million more jobs. Unemployment will approach double digits. Our
nation will sink deeper into a crisis that, at some point, we may
not be able to reverse," Obama wrote in the op-ed titled, "The
Action Americans Need."
Senate Democratic leaders hope for passage of the legislation by
Friday at the latest, although prospects appear to hinge on
crafting a series of spending reductions that would make the bill
more palatable to centrists in both parties.
Obama rejected the argument that more tax cuts are needed in the
plan and that piecemeal measures would be sufficient, arguing that
Americans made their intentions clear in the election.
"I reject these theories, and so did the American people when
they went to the polls in November and voted resoundingly for
change," he wrote.
Historically huge to begin with, economic stimulus legislation
is growing larger by the day in the Senate, where the addition of a
new tax break for homebuyers sent the price tag well past $900
billion.
"It is time to fix housing first," Sen. Johnny Isakson, R-Ga.,
said Wednesday night as the Senate agreed without controversy to
add the new tax break to the stimulus measure, at an estimated cost
of nearly $19 billion.
The tax break was the most notable attempt to date to add help
for the crippled housing industry and gave Republicans a victory as
they work to remake the legislation more to their liking.
Three swing-vote senators met with Obama at the White House on
Wednesday to discuss possible cutbacks, but they declined to
discuss details of their talks. Obama has made the legislation a
cornerstone of his recovery plan.
For their part, Senate Republicans signaled they would persist
in their efforts to reduce spending in the measure, to add tax cuts
and reduce the cost of mortgages for millions of homeowners.
Officials figures were unavailable, but it appeared that the
measure carried a price tag of more than $920 billion, making it
bigger than the financial industry bailout that passed last year
and as large as any measure in memory.
Despite bipartisan concerns about the cost, Republicans failed
in a series of attempts on Wednesday to cut back the bill's size.
The most sweeping proposal, advanced by Sen. Jim DeMint, R-S.C.,
would have eliminated all the spending and replaced it with a
series of tax cuts. It was defeated 61-36.
Democrats also upheld a so-called Buy American provision that
requires projects financed by the measure to be built with
domestically produced iron and steel.
But with Obama voicing concern about the provision, the
requirement was changed to specify that U.S. international trade
agreements not to be violated.
Additionally, Democrats turned back an attempt to strip out a
provision that Obama has said was essential. It would provide a tax
cut of up to $1,000 for working couples, including those who do not
make enough to pay income taxes.
Isakson said the new tax break for homebuyers was intended to
help revive the housing industry, which has virtually collapsed in
the wake of a credit crisis that began last fall.
The proposal would allow a tax credit of 10 percent of the value
of new or existing residences, up to a $15,000 limit. Current law
provides for a $7,500 tax break but only for first-time homebuyers.
Isakson's office said the proposal would cost the government an
estimated $19 billion.
The provision was the second tax cut approved in as many days
targeted to individual industries. On Tuesday, the Senate voted to
give a break to consumers who buy new cars.
The House approved its own version of the bill last week.