Barack Obama-We Must Spend Our Way Out Of Recession-2009!

Barack Obama-We Must Spend Our Way Out Of Recession-2009!

Tom Baldwin in Washington and Philip Webster, Political Editor

Barack Obama declared yesterday that only unprecedented and urgent government spending could prevent the deepening recession stretching for years into the future.

Eleven days before taking office, the US President-elect said that he was entering his presidency "in the midst of a crisis unlike any we have seen in our lifetime". The "day of reckoning" had arrived, he said, and the risks of "doing too little or nothing at all" were even greater than those of allowing a federal deficit – already projected to reach the record figure of $1.2 trillion – to spiral on into the years to come. Mr Obama used his first major policy speech since his election to call on Congress to act quickly on his request to pump hundreds of billions of dollars into the American economy. He said that figures to be released today would reveal that the United States lost more jobs last year than at any time since the Second World War.

"At this particular moment, only government can provide the short-term boost necessary to lift us from a recession this deep and severe," Mr Obama said. "Only government can break the vicious cycles that are crippling our economy." Mr Obama’s speech was his most outspoken public pitch so far for his massive spending plan. It was the frankest recognition of his belief in the role of government to save the economy.

The President-elect’s words were strongly welcomed by Gordon Brown and Alistair Darling as clear evidence of a growing world consensus that governments must support their economies with fiscal injections.

A Downing Street official said: "We agree with every word of his call for action. You need to take action and you need to take action now to avoid a much deeper and longer recession." Mr Obama’s pledge came as British interest rates were cut to 1.5 per cent, their lowest level in history. But only around half of borrowers will benefit and savers will be hit by another cut in returns on their investments. Nissan yesterday announced the loss of 1,200 jobs at its Sunderland plant, the worst day for the car industry in its present crisis. The factory was once the most productive car plant in Europe.

Mr Brown travels to Berlin for talks with Angela Merkel, the Chancellor of Germany, next week as she appears ready to announce another €50 billion (£45 billion) stimulus for its economy. The Prime Minister, who chaired a Cabinet meeting in Liverpool yesterday and pledged fresh measures to bolster the British economy, is also due to meet Ben Bernanke, the head of the US Federal Reserve, next week.

The Prime Minister believes that Mr Obama’s action will boost public confidence in his own package of spending and tax cuts and improve the chances of the British initiatives bearing fruit.

---------------------------------------