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Obama's economic analysis questioned
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Published: January 11, 2009
WASHINGTON
President-elect Obama countered critics with an analysis yesterday by his economic team showing that a program of tax cuts and spending such as he has proposed would create up to 4.1 million jobs, far more than the 3 million that he has insisted are needed to lift the country out of recession.
Congressional Republicans reacted skeptically, just as Obama acknowledged that he would be forced to recant some of his campaign promises given the economic crisis facing the country. Even the president-elect's own economists acknowledged that their two-year estimates could be wrong.
The 14-page analysis, which was posted online, says that estimates are "subject to significant margins of error" -- because of the assumptions that went into the economic models and because it is not known what might pass Congress.
"These numbers are a stark reminder that we simply cannot continue on our current path," Obama said in his weekly radio speech and YouTube broadcast.
"If nothing is done, economists from across the spectrum tell us that this recession could linger for years and the unemployment rate could reach double digits -- and they warn that our nation could lose the competitive edge that has served as a foundation for our strength and standing in the world," he said.
Obama has provided few details of his $775 billion plan so far. This fresh report does not include the specific construction of his tax cuts, the amounts dedicated to state aid or public works -- key questions that Obama aides have closely held.
Yesterday, economic aides and advisers wouldn't lay out even rough estimates for the plan's components. They said they worked with broad instructions from Obama but didn't want to limit negotiations with congressional leaders by outlining their limits in public.
"I want to be realistic here. Not everything that we talked about during the campaign are we going to be able to do on the pace we had hoped," Obama told ABC's This Week for an interview set to be televised today.
For a second time since his election, Obama increased the number of jobs his jobs program would create, taking the number to as many as 4.1 million jobs saved or created -- a benchmark his critics charge cannot be measured. During the campaign, he promised only 1 million new jobs.
The analysis came out one day after news that the unemployment rate jumped to 7.2 percent, the highest in 16 years. The nation lost 524,000 jobs in December, bringing the total job loss for 2008 to 2.6 million, the most since World War II.
GOP congressmen have insisted on carefully targeting any aid and on a politically popular tax cut for the middle class, as well as loans to states.
"We want to make sure it's not just a trillion-dollar spending bill, but something that actually can reach the goal that he has suggested," said Sen. Mitch McConnell of Kentucky, the Senate's top Republican.
Obama's plan has met with lukewarm support from legislators in general, despite economic news that has dominated the new administration even before it begins.
In hopes of having the new president gain immediate access to bailout money already approved by Congress when he takes office Jan. 20, his economic team and the Bush administration have discussed the possibility that Treasury Secretary Henry Paulson would ask legislators soon for access to the $350 billion remaining in the Wall Street rescue fund.
The transition team also has asked the head of the rescue program at the Treasury Department to remain in that position for a short time after the inauguration to help assure a smooth transition, according to an Obama official.
If Congress fails to enact a big economic recovery plan, Obama's advisers estimate that an additional 3 million to 4 million jobs will disappear before the recession ends. Obama's team also noted that with or without the plan, the jobless rate by 2014 would be the same.
Obama agreed on Friday to modest changes in his proposed tax cuts.
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