Former Federal Reserve Chairman Paul Volcker, chairman-designate of the Economic Recovery Advisory Board, left, looks on as President-elect Barack Obama speaks during a news conference in Chicago, Wednesday, Nov. 26, 2008. (AP Photo/Charles Dharapak)
CHICAGO – Citing an "economic crisis of historic proportions," President-elect Barack Obama urged Congress to pass a costly, job-creating stimulus bill as quickly as possible, a rare pre-inaugural call to action delivered as the outgoing Bush administration approved fresh billions to bail out one of the nation's largest banks.
Stock prices surged — the biggest two-day percentage gain for the Dow Jones industrials in 21 years — as investors took heart Monday from the actions and words of the incoming and departing chief executives.
"If we do not act swiftly and boldly, most experts now believe that we could lose millions of jobs next year," said Obama, 57 days shy of taking office in the shadow of the worst economic crisis since the Great Depression.
He blended criticism of Detroit's beleaguered Big Three automakers — General Motors Corp., Ford Motor Co. and Chrysler LLC — with a pledge of support for government aid to help them survive. "We can't allow the auto industry to ... vanish," he said, although he added that a blank check for an industry resistant to change was not the solution to its long-term decline.
At a news conference in which he introduced New York Federal Reserve President Timothy Geithner as his treasury secretary and named other top economic officials, Obama said restoring the economy to health took priority over deficit concerns. Still, he said he would be looking for "meaningful cuts and sacrifices" to restrain federal spending.
The president-elect was expected to stress that pledge at a second news conference on Tuesday. Democratic officials said he intended to name Peter Orszag, currently the head of the Congressional Budget Office, to be his budget director.
Obama and President George W. Bush spoke by telephone during the day, their first disclosed conversation since a visit at the White House more than a week ago, and each man appeared eager to show a transition proceeding smoothly.
At the same time, the juxtaposition of the outgoing and incoming chief executives grappling — publicly and simultaneously — with the economy underscored the severity of a crisis that has sent joblessness rising, caused a large spike in mortgage foreclosures and crippled the credit markets.
Bush said his administration's dramatic overnight rescue of Citigroup Inc. was necessary to safeguard the nation's financial system and help the economy recover. He said more such moves might follow if other institutions need help. Officials said the government might invest $20 billion in the firm, and guarantee $306 billion in risky assets.
Encouraged by the action, investors sent the Dow Jones industrials up 397 points. Coupled with Friday's gain, that mean an 891 point increase over two trading days, the biggest percentage rise since October 1987.
Obama made a point of saying his administration "will honor the public commitments made by the current administration to address this crisis," words of reassurance to the financial markets.
Remarkably for a president-elect, he said he wanted Congress to act "right away" on a stimulus measure that would blend spending and tax cuts. Asked for details, he said without elaboration that he wanted a measure "of a size and scope that is necessary to get this economy back on track."
Democratic officials in Congress said the stimulus plan could include aid to cash-strapped states to provide health care to the poor, along with road and bridge funding. More money for food stamps is also likely, they said.
Obama renewed his campaign-long call for middle class tax cuts but said he would let his advisers make a recommendation on whether to roll back Bush-era tax cuts for the wealthy.
He offered few details about the economic stimulus measure he wants from the new Congress, saying he would ask his new team of advisers to consult with lawmakers.
As a candidate, he supported a $175 billion measure, but the economy has worsened since then, and many lawmakers and economists argue for a more robust jolt. Obama said his goal is to create 2.5 million jobs by "rebuilding our infrastructure, our roads, our bridges, modernizing our schools and creating the clean energy infrastructure of the 21st century."
His forecast was sober. He said there are neither shortcuts nor quick fixes.
"The economy is likely to get worse before it gets better. Full recovery will not happen immediately," he said. At the same time, he coupled those sentiments with optimism. "I know we can work our way out of this crisis because we have done it before."
The new Congress comes into session on Jan. 6, two weeks before Obama takes the oath of office as the nation's 44th president.
Democratic leaders have said they are eager to spend the time before then working on the legislation he wants, and Obama had scarcely made his remarks when political jockeying broke out over the details.
Senate Majority Leader Harry Reid, D-Nev., issued a challenge to Republicans to join Democrats in sending legislation to the White House as soon as possible.
House Republican Leader John Boehner of Ohio said he hoped the new administration would listen to those "who do not believe increasing government spending is the best way to put our economy back on track."
Nominally, Obama called the news conference to introduce the top members of the economic circle of advisers who will join his administration.
In recent months, the 47-year-old Geithner has worked closely with the Bush administration on the bailout of the financial industry, and earlier in his career was involved in responding to international financial crises overseas.
Obama named Christina Romer, an economics professor, as chair of his Council of Economic Advisers. Melody Barnes, a former aide to Sen. Edward M. Kennedy, was named director of the White House Domestic Policy Council.
The appointment of Geithner was the first Cabinet selection Obama has announced, a distinction meant to underscore the economy's importance as he prepares to take office.
Democratic officials have said previously the president-elect is on track to name former rival Hillary Rodham Clinton, the New York senator, as secretary of state, and former Clinton administration Justice Department official Eric Holder as attorney general.
Robert Gates, defense secretary during Bush's last two years in office, is a possible holdover, at least for several months, aides to Obama have said.