Face economic reality, Obama tells Democrats

US President-elect Barack Obama highlighted alarming new US unemployment figures to urge the passage of his nearly $800bn (€595bn) economic recovery plan through Congress amid resistance from within his own party.

Mr Obama sought to patch disagreements with senior Democrats over key features of the still-emerging plan, which he vowed to “hone and refine” with help from both Republican and Democratic members.

The need for a plan grew more pressing last night with the release of a Labour Department report showing job losses of 524,000 in December and a 7.2% unemployment rate, the highest in 16 years.

Democratic congressional officials said Obama aides came under pressure in closed-door talks to jettison or significantly alter a proposed tax credit for creating jobs.

Democrats also wanted the inclusion of relief for upper middle-class families hit by the alternative minimum tax.

The so-called AMT was originally designed to make sure the very wealthy did not escape taxes, but it now hits many more people because inflation has pushed up average incomes. Every year Congress tries to prevent it from reaching tens of millions of middle-income families.

Mr Obama’s economic package is getting off to a rocky start, with top Democrats openly complaining about key provisions, especially the design of his tax cuts.

“If members of Congress have good ideas, if they can identify a project for me that will create jobs in an efficient way that does not hamper our ability over the long term to get control of our deficit, that is good for the economy, then I’m going to accept it,” the president-elect said at a news conference during which he also announced his choices to lead America’s intelligence agencies.

“What we can’t do is drag this out when we just saw a half-million jobs lost.”

Mr Obama noted that jobs were lost in all 12 months of 2008 and said it was it the worst year since the Second World War.

Congressional leaders have said they will finish work on Mr Obama’s economic recovery plan by mid-February.

“All of their priorities are ones that we share,” said House of Representatives speaker Nancy Pelosi. “We just want to make sure that those functions, when they’re written in the Bill, are ones that can be used immediately and can create jobs.”

Mr Obama’s aides and congressional Democrats have been at work for weeks on legislation to create new jobs, help the unemployed, cut taxes and aid cash-strapped states.

There are also subsidies to help the newly-unemployed afford their health care, a big new effort to improve the energy efficiency of federal buildings, and tax credits for business investment in plants and equipment.

During yesterday’s news conference, Mr Obama spelled out an unequivocal message ending controversial Bush administration policies approving harsh interrogations, waterboarding, warrantless wiretapping and the secret transfer of prisoners to other governments with a history of torture.

Announcing his choice for CIA director, former Clinton White House chief of staff Leon Panetta, and director of national intelligence, retired Admiral Dennis Blair, Mr Obama said he had told both that he expected the Geneva Conventions to be honoured.

Mr Obama has criticised interrogation practices he says amount to torture and also has promised to close the US detention centre at Guantanamo Bay, Cuba.

The president-elect, who takes office on January 20, said he had given the men the clear charge to restore the United States’ record on human rights.

“I was clear throughout this campaign and was clear throughout this transition that under my administration the US does not torture,” he said.

“We will abide by the Geneva Conventions. We will uphold our highest ideals.”