Barack Obama calling for drastic action to pull US out of recession

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President-elect Barack Obama, who takes over at the White House on January 20, is urging Congress to approve his $800 billion (£526 billion) stimulus package to avoid a prolonged recession.

In his first major policy speech at George Mason University in Fairfax, Virginia, Mr Obama said he believes the recession could last for years unless ‘drastic action’ is taken immediately.

Mr Obama said this is a crisis never seen before and said it is time for the Government to step in.

Interest rates are almost at the zero mark and lending is still shrinking in a country which is entering its worst recession in over 70 years.

Mr Obama’s plea came as US job losses for 2008 are expected to hit 2.5 million, however official figures are set to be released tomorrow. Mr Obama’s package is set to create 3 million jobs by 2011.

However, the multi-billion dollar package has met with scepticism among the US public since the US Government has already spent a huge amount of money in an effort to boost the economy.

Mr Obama said the focus is on tax cuts and Government spending that can provide an immediate boost to the economy.

Approximately 40% of the stimulus plan will comprise tax breaks, including rebates for people with an income of below $200,000 a year, as well as tax credits for companies taking on extra staff.

In related news, retailers in the US experienced a disappointing Christmas trading period and have cut their earnings forecasts as consumers cut back on spending amid the recession.

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