Obama speech issues dire warning on economy

Hopefully something will be done to bring us out of this recession before we head into a full blown depression. Which is what I think it going to happen. This just isn't one presidents fault either. Sure some added more than others, but this is a trend that has been going on for awhlie now. Both sides of the aisle are responsible for this too.

By Michael McAuliff

Barack Obama gave his most dire warning yet on the economy, saying if we don't act now, things will get much worse. He spoke Thurs. at George Mason University in Fairfax, Va.

Barack Obama is warning in his starkest language yet that America is headed for an economic disaster if the country doesn't act quickly.

In a speech set for early this afternoon, Obama is warning that the nation risks spawning an entire generation of despair in an abysmal depression that lingers for years with double-digit unemployment and plummeting family incomes.

"I don't believe it's too late to change course, but it will be if we don't take dramatic action as soon as possible," Obama warns in excerpts of his speech.

"If nothing is done, this recession could linger for years," he says. "A bad situation could become dramatically worse."

The dire forecast is at least in part a sales job that seems aimed at priming the nation to accept one of the largest government interventions in the country's history, as Obama and Democrats in Congress craft a massive economic recovery plan that will cost $770 billion at a minimum, and could reach $1.3 trillion in tax breaks and spending.

That means blasting an even larger hole in the already massive deficit — and getting Congress and the public to go along with it.

"There is no doubt that the cost of this plan will be considerable," Obama says. "It will certainly add to the budget deficit in the short-term. But equally certain are the consequences of doing too little or nothing at all, for that will lead to an even greater deficit of jobs, incomes, and confidence in our economy."

Private businesses will be vital to the effort, Obama says, but only Uncle Sam can haul them out of the ditch first.

"At this particular moment, only government can provide the short-term boost necessary to lift us from a recession this deep and severe," he says. "Only government can break the vicious cycles that are crippling our economy - where a lack of spending leads to lost jobs which leads to even less spending; where an inability to lend and borrow stops growth and leads to even less credit."

Obama's prescription is to spend lavishly on things like alternative energy and infrastructure to create private sector jobs, while funneling cash to states and cities to keep teachers, cops and firefighters on the job.

On top of that he wants to renovate regulations governing Wall Street and craft fixes for the "bubble or bust" mortgage markets.

And if folks don't listen, Obama warns: "More families will lose their savings. More dreams will be deferred and denied. And our nation will sink deeper into a crisis that, at some point, we may not be able to reverse."

Putting the case that starkly throws a sharp challenge to Republicans and conservatives who don't like the growing intervention or the ballooning price tag, and leaves them in the tough spot of either trying to downplay the severity of the crisis, or arguing that using the government so comprehensively will actually hurt.

Excerpts of the speech (to be given at George Mason University in Virginia) are after the jump.