Obama predicts ‘significant recession’

/ Source: msnbc.com and NBC News

Democratic presidential nominee Barack Obama said Thursday that the economy would get worse before it got better no matter who was elected president, telling NBC News that the next administration was likely to inherit a “significant recession.”

In an interview on “NBC Nightly News,” Obama said, “I don’t think there’s any doubt” that the next president will have a tougher job than ever, because it is not possible to forecast how long the economic downturn could last.

“We know that the next president is likely to inherit a significant recession,” Obama told Brian Williams, anchor of “NBC Nightly News.” “We don’t know yet how long and how deep it is, and what actions we take over the next six to nine months could help determine how deep and how long.”

That means the first priority of the administration that takes office Jan. 20 will be to shepherd the $700 billion bailout of Wall Street that President Bush signed into law early this month, Obama said.

“We are going to have to spend a lot of time, whoever the next president is, focused on making sure that the financial rescue plan actually works the way it’s supposed to, that it shores up our housing market, the taxpayers are protected and getting their money back, that it’s not being used to enrich corporate CEOs,” he said.

In the meantime, the federal government could struggle with higher unemployment and greater demand on social services, Obama warned, which would complicate “dealing with our short-term deficit and our long-term debt.”

New financial regulations, support for auto industry
Obama’s use of the word “recession” indicated that he was deeply pessimistic about the state of the economy.

The National Bureau of Economic Research, whose analyses are used by the federal government, has not used the word to describe the downturn, saying the last U.S. recession ran from March to November 2001. But the government announced Thursday that the gross domestic product, the broadest measure of the nation’s economic output, contracted by three-tenths of 1 percent in the third quarter, the biggest drop in seven years, and that consumer spending fell by 3.1 percent, its biggest dive in 28 years.

Obama spoke with NBC News in Sarasota, where he was campaigning a day after he aired a multimillion-dollar 30-minute prime-time ad on seven television networks. The ad featured four families portrayed as being in financial difficulty, setting a theme for Obama’s campaign in the last week of the election.

At his rally Thursday morning in Sarasota, Obama called for imposing new “common-sense regulations” on the financial system “so that Wall Street can’t cause a crisis like this again.”

Obama also told Williams that reviving the auto industry was key to revitalizing Main Street. Noting that autos were “the core of our manufacturing base for decades,” he said his administration would support doubling federal loan guarantees for U.S. automakers, to $50 billion, but only if much of the money was invested in “high-efficiency cars of the future.”

“The government’s not going to help if you continue down a strategy that is entirely relying on building big gas guzzlers,” he said. “Those aren’t the cars of the future.”

Abortion a factor in judicial nominations
Obama, who supports abortion rights, also signaled that while he would not impose a so-called “litmus test” on abortion when considering appointments to the Supreme Court, he would be cognizant of how a nominee’s general beliefs played into the question.

“I think that what you can ask a judge is about their judicial philosophy,” said Obama, who was a constitutional law scholar at the University of Chicago before entering politics in the 1990s and said he “knows a lot of the potential candidates for Supreme Court on the right, as well as on the left, because I’ve taught with them or interacted with them in some way.”

“I can have those kinds of discussions with a justice without getting into the particulars of is Roe versus Wade, as currently outlined, exactly what you believe?” he said, giving the example of a potential nominee who “tells me that they only believe the strict letter of the Constitution.”

“That means that they possibly don’t believe in a right to privacy that may not be perfectly enumerated in the Constitution but, you know, that I think is there,” he said.

Obama’s Republican opponent, Sen. John McCain, has criticized Obama’s position on abortion. The issue led to one of the sharpest exchanges of their final debate this month in Hempstead, N.Y., when McCain charged that Obama had aligned himself with “the extreme aspect of the pro-abortion movement in America.”

NBC News aired excerpts of the interview Thursday on “NBC Nightly News.” The network said it would air more of the interview on Friday’s broadcast.