Obama: Economy to get worse before it improves

US President-elect Barack Obama said yesterday the economy will get worse before it gets better, pledged a recovery plan "equal to the task" and warned lawmakers that the days of pork barrel spending are over.

Less than six weeks before his inauguration, Obama declined to say how large an economic stimulus plan he envisions. He said his blueprint for recovery will include help for homeowners facing foreclosure on their mortgages if President George W. Bush has not acted by Inauguration Day, Jan 20.

"We've got to provide a blood infusion to the patient right now to make sure that the patient is stabilised. And that means that we can't worry short term about the deficit. We've got to make sure that the economic stimulus plan is large enough to get the economy moving," he said.

Obama made his comments on NBC's "Meet the Press," in his most extensive interview since winning the White House more than a month ago, and later at a news conference in Chicago.

The president-elect said it is important that domestic carmakers survive the current crisis, although he accused the industry's executives of taking a "head in the sand approach" that has prevented their companies from becoming more competitive.

"Congress is doing the exact right thing by asking for a conditions-based assistance package that holds the industry's feet to the fire and gives the industry some short-term assistance," he said.

In addition to the policy issues, Obama avoided a direct answer when asked whether he has quit cigarettes as he prepares to move into a no-smoking White House.

"I have done a terrific job, under the circumstances, of making myself much healthier. And I think that you will not see any violations of these rules in the White House," he said.

Obama called the news conference to introduce retired Gen Eric Shinseki as his choice to head the Veterans Affairs Department. Shinseki, who was a four-star general, was forced into retirement five years ago by the Bush administration after saying the president's plans to invade Iraq required more troops.

Shinseki pledged to build a "smooth, error-free, no-fail benefits-assured transition" back to civilian life for veterans.

Twice in the opening moments of the NBC interview, the president-elect said the economic situation "is going to get worse before it gets better," an unspoken plea with voters to have patience as the incoming administration tries to grapple with the issue.

He announced plans on Saturday for the largest public works spending programme since the creation of the interstate highway system a half-century ago, although he said aides are still debating among themselves how much it should cost.

"What we need to do is examine, what are the projects where we're going to get the most bang for the buck? How are we going to make sure taxpayers are protected? You know, the days of just pork coming out of Congress as a strategy, those days are over," he said.

Some lawmakers have mentioned an economic aid plan in the range of US$500 billion (RM1.8 trillion) or higher, and Democratic leaders say they hope to have legislation ready soon after Jan 20.

The economic indicators have darkened since Obama's election, and Friday's report that 533,000 jobs were lost in November was the worst performance in more than 30 years. Unemployment stands at 6.7 per cent, retailers are reporting weak holiday sales and the credit markets have yet to recover from the freeze that led Congress to approve a US$700 billion bailout before the election.

Turning to foreign policy, the president-elect sidestepped a question about the pace of a troop withdrawal from Iraq, saying he would direct US generals to come up with a plan "for a responsible drawdown." He said in the campaign he wanted most US troops withdrawn within 16 months, but did not say then, nor has he now, how large a deployment should be left behind.

"We are going to maintain a large enough force in the region to assure that our civilian troops or our civilian personnel and our embassies are protected, to make sure that we can ferret out any remaining terrorist activity in the region" and providing training support for Iraqi personnel.

He did not respond directly when asked whether he believes India should have the right to pursue terrorist targets inside Pakistan in the wake of the deadly attacks in Mumbai. He also said he wants to "reset US-Russian relations" following the Bush era.

"They are increasingly assertive and when it comes to Georgia and their threats against their neighbouring countries I think they've been acting in a way that's contrary to international norms," he said of Kremlin leaders.

The president-elect declined to comment on the possible appointment of Caroline Kennedy to New York Sen. Hillary Rodham Clinton's seat in the Senate. Obama tapped Clinton recently as his secretary of state. — AP