US president-elect Barack Obama sought to rally support today for a massive fiscal stimulus package by warning that the United States could remain mired in recession for years without bold action.
Mr Obama, who will take office on January 20th, promised to set a new course for the economy and move quickly to toughen the financial regulatory system.
"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," Mr Obama said in speech on the economy at George Mason University.
"If nothing is done, this recession could linger for years. The unemployment rate could reach double digits."
He asked the US Congress to work "day and night" to swiftly pass a plan for tax cuts and public works spending that could total nearly $800 billion. But skyrocketing deficits may make the proposal a tough sell with some lawmakers.
As he prepares to take over from Republican president George Bush, Mr Obama is about to inherit an economy that has been in recession for more than a year.
Mr Obama and his advisers have been talking with lawmakers in the Democratic-led Congress to craft the two-year stimulus plan and is seeking bipartisan support for the plan.
The package will include tax cuts for families and business and money for the building of new roads, bridges and schools. It would also pay for renewable energy projects, aid to cash-strapped state governments and enhanced unemployment benefits.
Mr Obama and his aides have previously said they are discussing a price tag for the plan of $775 billion or more but he did not give a dollar figure in the speech.
He listed $1,000 tax cuts for middle-class families as one element of the package.
Mr Obama hopes to secure passage of the economic plan by mid-February.
"For every day we wait or point fingers or drag our feet, more Americans will lose their jobs," he said. "More families will lose their savings."
Private economists advising both Democratic and Republican lawmakers have joined calls for a big fiscal stimulus plan.
But yesterday a bleak report on the US budget outlook added to Mr Obama's challenges in passing the plan quickly.
The budget deficit for the current 2009 fiscal year ending September 30th is expected to nearly triple to around $1.2 trillion, according to the Congressional Budget Office.
A deficit in that range would be about 8.3 per cent of gross domestic product, shattering the previous post-World War Two record of 6 per cent hit in 1983.
Mr Obama acknowledged this week the country could face trillion-dollar deficits for years to come. He has pledged to try to rid government of wasteful spending and to look at ways to address costly entitlement programs such as Social Security and Medicare.
But the $1.2 trillion forecast for the budget deficit this year could be a low estimate. The CBO number does not factor in the cost of Obama's proposed stimulus plan.
Some Republicans and conservative Democrats have expressed concern that the stimulus package could bust the federal budget with new programs that will require funding for years to come.
Mr Obama said the cost of the package of tax cuts and spending measures he is proposing would be "considerable" but that it was needed to keep the economy from sinking into a vicious cycle of weak consumer spending, job losses and a further tightening of credit markets.
In addition to the fiscal package, Mr Obama urged further measures to shore up confidence in the financial system and restore smooth functioning of the frozen credit markets.
He vowed to move quickly to overhaul the Wall Street regulatory system and to crack down on "wrongdoers" who slip through regulatory cracks, in an apparent reference to the alleged $50 billion fraud scandal involving financier Bernard Madoff.
Mr Obama said his administration would use the "full arsenal of tools to get credit flowing again."
He also called for a stepped-up effort to prevent home foreclosures.
Reuters