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Obama Warns Of Depression-Like Conditions Without Stimulus


President-elect Barack Obama's full-court press to boost his plan for economic stimulus will continue Thursday, when he will warn that without drastic government action "a bad situation could become dramatically worse."

According to excerpts of the speech released by the Obama transition team, the president-elect will warn that "If nothing is done, this recession could linger for years." The economic stimulus needs to be passed swiftly Obama said, painting his pleas with a sense of deep urgency.

"For every day we wait or point fingers or drag our feet, more Americans will lose their jobs. More families will lose their savings. More dreams will be deferred and denied" he warned.

"And our nation will sink deeper into a crisis that, at some point, we may not be able to reverse," Obama added.

Such a dire outcome includes unemployment above 10 percent, a GDP over $1 trillion below its full capacity, the inability of Americans to afford college, and the loss of the U.S. economy's "competitive edge" and global standing.

Obama has said the cost of the plan could be upwards of $800 billion. The increased spending comes at a time when the president-elect will inherit a record $1.2 trillion deficit, a deficit Obama said he expects to see for years to come.

However, the president-elect will make his case that without the hefty government spending now the nation will remain mired in recession for years.

The stimulus "will certainly add to the budget deficit in the short-term," Obama recognized.

"But equally certain are the consequences of doing too little or nothing at all, for that will lead to an even greater deficit of jobs, incomes, and confidence in our economy," he said, making his case for the increased government spending.

The cycle which is currently gripping the economy, where lost jobs and household wealth is leading consumers to cut back on spending, throwing the economy deeper into recession.

"Only government can break the vicious cycles that are crippling our economy - where a lack of spending leads to lost jobs which leads to even less spending; where an inability to lend and borrow stops growth and leads to even less credit," Obama said.

The president-elect added that he is "confident" that his plan will save or create 3 million jobs during the first few years of his presidency. He defended his job creation plan, stating that it is "not just another public works program."

Rather, Obama said the investment will be in areas of the country that need attention, adding that the "overwhelming majority of the jobs created will be in the private sector, while our plan will save the public sector jobs of teachers, cops, firefighters and others who provide vital services."

While Obama expressed his faith in the recovery plan, he made sure to note that it is not a fix-all for the current crisis. Stabilizing financial markets will require the use of the "full arsenal of tools" to restore the flow in frozen credit markets. In addition, he said that launching a "sweeping effort" to stem the foreclosure crisis is necessary, as well as ""reforming a weak and outdated regulatory system" to increase investor protection.

"No longer can we allow Wall Street wrongdoers to slip through regulatory cracks. No longer can we allow special interests to put their thumbs on the economic scales," Obama said. "No longer can we allow the unscrupulous lending and borrowing that leads only to destructive cycles of bubble and bust."

The speech comes with less than 2 weeks before his inauguration. Obama moved to Washington, D.C., earlier than scheduled and has held meetings with congressional leaders as well as past and present presidents in an effort to prepare himself to face the enormous challenges that he will inherit on January 20th.

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