Obama doubles commitment to jobs

President-elect Obama, who had promised while campaigning to save 1 million jobs, committed himself Saturday morning to an expanded "Economic Recovery Plan" that will save or create 2.5 million jobs during his first two years in office through such measures as road and bridge repair and investments in clean energy.



Delivering the weekly Democratic radio address, Obama signaled that he envisions a bigger plan than he has discussed before, saying he has directed his economic team to come up with "a plan big enough to meet the challenges we face that I intend to sign soon after taking office."

Along with his expanded jobs plan, the president-elect gave his most pessimistic assessment of the economy to date, warning for the first time of "a deflationary spiral," which occurs when falling prices cause cutbacks in jobs, spending and production.

"The news this week has only reinforced the fact that we are facing an economic crisis of historic proportions," he said. "Financial markets faced more turmoil. ... And we now risk falling into a deflationary spiral that could increase our massive debt even further."

The warning follows a Friday stock market rally that followed the leak of the news that Obama's choice for Treasury secretary is Timothy F. Geithner, president of the Federal Reserve Bank of New York. The announcement is planned for Monday in Chicago.

Obama's remarks on Saturday were designed to prepare Americans for the reality that although he plans immediate action, the economy probably will not immediately get better.

Private forecasts see steep job losses next year, with continued losses in 2010. So the Obama plan would reduce the losses, not mean a net increase in jobs, at least in the first year of the plan. Advisers think it could lead to net job creation after two years.

"There are no quick or easy fixes to this crisis, which has been many years in the making, and it's likely to get worse before it gets better," Obama says. "But January 20th is our chance to begin anew - with a new direction, new ideas and new reforms that will create jobs and fuel long-term economic growth."

Two years is an unusually long time for a stimulus plan. But such plans typically are designed as a jumpstart until monetary policy - typically interest-rate cuts - can kick in and the economy can recovery. But this economy looks like it's due for a prolonged slump, with interest rates already low.

Obama did not specify a cost for his more ambitious plan. "I have already directed my economic team to come up with an Economic Recovery Plan that will mean 2.5 million more jobs by January of 2011 - a plan big enough to meet the challenges we face that I intend to sign soon after taking office," he said. "We'll be working out the details in the weeks ahead, but it will be a two-year, nationwide effort to jumpstart job creation in America and lay the foundation for a strong and growing economy. We'll put people back to work rebuilding our crumbling roads and bridges, modernizing schools that are failing our children, and building wind farms and solar panels; fuel-efficient cars and the alternative energy technologies that can free us from our dependence on foreign oil and keep our economy competitive in the years ahead."