Obama Team Sees Deteriorating Economy

Washington, DC, Dec. 29, 2008--Top advisers to President-elect Barack Obama said Sunday that the short term economic situation is likely to deteriorate more than previously forecast, with double-digit unemployment likely.

"Today, many experts believe that unemployment could reach 10% by the end of next year, and our economy could fall $1 trillion short of its full capacity -- which translates into more than $12,000 in lost income for a family of four," Lawrence Summers, who has been named to head Obama's National Economic Council, said in an editorial published Sunday in the Washington Post.

Summers repeated Obama's plans for government works spending, including funds for infrastructure upgrades and environmental technology, but he played down the importance of direct stimulus to consumers.

"Some argue that instead of attempting to both create jobs and invest in our long-run growth, we should focus exclusively on short-term policies that generate consumer spending," he said.

"But that approach led to some of the challenges we face today -- and it is that approach that we must reject if we are going to strengthen our middle class and our economy over the long run."

Obama adviser David Axelrod said that while Obama intends to reduce taxes for the middle class, the incoming president has yet to decide what to do about those tax cuts implemented early in the Bush administration, which some Democrats have criticized as favoring the wealthiest Americans.