Obama Explains His Understanding of the Delicate Balance Between Stimulus and Deficit that Confronts Nation

JEFF ZELENY and EDMUND L. ANDREWS writing for the New York Times report that: "President-elect Barack Obama on Tuesday braced Americans for the unparalleled prospect of “trillion-dollar deficits for years to come,” a stark assessment of the budgetary outlook that he said would force his administration to impose tighter fiscal discipline on the government." The Times reporters suggest: "Mr. Obama sought to distinguish between the need to run what is likely to be record-setting deficits for several years and the necessity to begin bringing them down markedly in subsequent years. Even as he prepares a stimulus plan that is expected to total nearly $800 billion in new spending and tax cuts over the next two years, he said he would make sure the money was wisely spent, and he pledged to work with Congress to enact spending controls and efficiency measures throughout the federal budget." Mr Obama voiced his understanding that: “We’re not going to be able to expect the American people to support this critical effort unless we take extraordinary steps to ensure that the investments are made wisely and managed well.” After he had concluded a second day of discussions with his economic advisers. Obama sought to reassure Americans that he has a detailed understanding, the Times reporters explain; "of the long-term dangers of running huge deficits and would take steps to limit and eventually reduce them. Big deficits force the government to borrow more money, saddling future generations with large financial burdens and leaving the nation reliant on foreign governments and other big investors to lend cash. The problem is even more acute now because credit markets, which in recent months have made it much harder and more expensive for businesses and individuals to borrow, could be further strained by financing a huge government deficit... Mr. Obama has made the economy virtually the sole public focus of his first full week in Washington since winning the election. He called on Tuesday for the creation of an economic recovery oversight board that would include outside advisers to monitor spending — and find abuses — of the economic stimulus plan. He also said earmarks for lawmakers’ special projects would be banned from the bill." Speaking to reporters Mr Obama remarked: "When the American people spoke last November, they were demanding change — change in policies that helped deliver the worst economic crisis that we’ve see since the Great Depression,.. They were demanding that we restore a sense of responsibility and prudence to how we run our government.” Zeleny and Andrews report: "Mr. Obama has so far not backed away from any of the big initiatives he ran on, including his plan to expand health insurance. On that issue, as on others, he has begun making a case that the economically prudent course is to invest now in addressing the nation’s big challenges rather than avoiding them in the name of saving money in the short run." But, the Times reporters continue: "Mr. Obama was not specific about the size of the deficit he expects, beyond his reference to “a trillion-dollar deficit or close to a trillion-dollar deficit” for the fiscal year that ends Sept. 30. Aides said later that the estimate — in line with what economists have been anticipating given the economy’s rapid deterioration — did not include the costs of the proposed stimulus package, which could add hundreds of billions of dollars more to the red ink." Mr Obama explained his deficit strategy: “I’m going to be willing to make some very difficult choices in how we get a handle on his deficit,.. That’s what the American people are looking for and, you know, what we intended to do this year.” Obama and his economic team have consistently tried to demonstrate their comprehensive understanding of the dire conditions that now exist and which can easily get worse. The task ahead for Obama is to keep the American people aware of his understanding of the condition of the economy and the consequences of seeking relief before the current recession deepens into a depression. Obama realizes that many dark days lie ahead and he needs the American people as allies in his fight to right the economy and somehow bring about a recovery before he loses the trust of the nation.