Obama calls for ’dramatic action’

Agence France-Presse

U.S. President-elect Barack Obama on Thursday proposed tax cuts and a green energy push to avert economic disaster, but drew a skeptical reaction in Congress to aspects of his huge stimulus package.

"I don't believe it's too late to change course, but it will be if we don't take dramatic action as soon as possible," Obama said. "If nothing is done, this recession could linger for years," he said, in an appeal to both Congress and the public 12 days before his inauguration to back a stimulus bill expected to total $775 billion.

But top Democratic senators emerged from a meeting with Obama aides on Capitol Hill openly questioning whether a tax cut included in the plan would ignite growth.

And Republican lawmakers balked at the costs of the plan and worried about how much it would add to an already huge budget deficit, tipped to hit $1.2 trillion this year.

But without action, Obama warned, "the unemployment rate could reach double digits," and that an entire generation's potential might be thwarted and the United States could lose its global competitive edge.

"In short, a bad situation could become dramatically worse," he told a packed audience at George Mason University in Washington's Virginia suburbs.

New ’New Deal’
Obama has already vowed a nationwide program of repairs to ’crumbling’ roads, bridges and schools, a rollout of broadband Internet across rural America and federal aid to U.S. states.

In the speech, he pledged a $1,000 tax cut for 95 percent of working families as the "first stage" of a program of tax relief that would extend into the government's next budget.

Production of alternative energy would be doubled in the next three years, Obama said, and more than 75 percent of federal buildings and two million homes would be modernized to slash billions from power bills.

The president-elect promised a new "smart" electricity grid to cut blackouts and deliver new forms of energy to homes and businesses.

And he said all patients' medical records would be computerized within five years, saving lives and billions of dollars.

"I understand that some might be skeptical," Obama said. But what he calls the American Recovery and Reinvestment Plan "won't just throw money at our problems - we'll invest in what works."

Search for consensus
Despite expanded Democratic control of both the Senate and House of Representatives, Obama wants convincing majorities of lawmakers to sign on, and that means mollifying Republicans.

Republican leaders welcomed Obama's proposal for tax cuts, which he says will total 40 percent of a final package that some economists say could reach up to $1.2 trillion.

But House Republican leader John Boehner said "it is very important as we go ahead that we find the right balance.

"At the end of the day, how much debt are we going to pile on future generations?" he said. "We cannot buy prosperity with more government spending."

Some Democrats also criticized a planned $3,000 tax break for companies that hire new workers and a family tax cut as being insufficient.

The corporate tax break was "unlikely to be effective," said Kent Conrad, chairman of the Senate budget committee. "Businesspeople are not going to hire people to produce products that are not selling," he told reporters.