Obama Advocates Swift Action on Economy

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WASHINGTON - The latest government figures show the economy is still in recession. And that makes the economy the top issue for President-elect Barack Obama.

In his first speech since winning the election, Obama made the case for urgent action - lobbying for a $775 billion spending bill as an essential part of a plan to pull the economy out of recession.

Is America in for a huge battle with deflation? Click play for more insight on Obama's economic rescue plan from Anne Force, with the New America Foundation, following this report.

"I understand that some might be skeptical of this plan," he said Thursday.  "Our government has already spent a good deal of money, but we haven't yet seen that translate into more jobs or higher incomes or renewed confidence in our economy."

"[This plan] won't just throw money at our problems," Obama added.  "We'll invest in what works."

On top of an already weak economy, there's more bad news.

Companies scrambling to stay afloat and cut costs are laying off workers, driving even more to the unemployment lines.

"Our problem is not just a deficit of dollars. It's a deficit of accountability, a deficit of trust," Obama said.

Budget Deficit to Skyrocket

But the price tag will only add to a growing deficit.

In a report released this week, the federal budget deficit will soar to a record $1.2 trillion this year.

And to make matters worse, the Congressional Budget Office predicts the economy will contract more than 2 percent this year - the worst since at least 1982.

When he takes office just 12 days from now, Obama will inherit problems that were years in the making.

"The Congress and the current administration have not shown leadership in the fiscal area," former Comptroller General David Walker charged. "Washington has been totally out of control and now it is catching up with us."

Walking a Tightrope

Obama - aiming to build support for his plan - is attempting a difficult balancing act, advocating spending while preaching fiscal discipline over taxpayer money.

Making good on a campaign pledge, Obama named Nancy Killefer to a newly created post - to serve as a watchdog of government spending. He says his administration will work to weed out inefficient and bloated programs.

While Obama has yet to detail the specifics of his plan, he has indicated that overhauling Social Security and Medicare would be "a central part" of his administration's attempt to contain spending.

But that won't likely come until much later. Transition officials and economists say the key is to act quickly to stem the tide of more job losses and deepening economic pain.

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