Jan. 8, 2009 -- President-elect Obama appealed today for Congress to quickly pass his economic rescue package, but almost immediately members of Congress -- particularly fellow Democrats -- raised objections to parts of the massive program of tax breaks and public spending.
In laying out his case for what he's dubbed the American Recovery and Reinvestment Plan, Obama warned during a speech at George Mason University in Virginia that failure to act now would mean a economic downturn that could "linger for years."
To read Obama's speech, click here.
It was a remarkable speech for someone who isn't president yet and hasn't revealed the details of his economic rescue plan.
But he put pressure on Congress to act quickly by describing the country's current fiscal situation as "a crisis unlike any we have seen in our lifetime."
"If nothing is done, this recession could linger for years," Obama warned. "The unemployment rate could reach double digits. 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."
Obama has made clear he is hoping to have Congress approve by mid-Frebruary a gigantic spending plan his advisers have indicated might cost between $675 billion and $775 billion. Others insist it may cost more.
Obama and his economic team have described it as a mix of tax breaks for businesses and the middle class, and robust spending for public works, energy, health care and education, which he estimates will save or create 3 million jobs over the next few years.
The most pointed criticism of the plan came from Democrats who objected to Obama's plans to cut taxes for businesses and for middle class families.
They were especially critical of a proposed $3,000 tax credit for companies that hire or retrain workers, according to the Associated Press.
"If I'm a business person, it's unlikely if you give me a several-thousand-dollar credit that I'm going to hire people if I can't sell the products they're producing," said Sen. Kent Conrad, D-N.D., a member of the Senate Finance Committee after a briefing on the Obama proposal. "That to me is just misdirected."
Sen John Kerry, D-Mass., said, "I'd rather spend the money on the infrastructure, on direct investment, on energy conversion, on other kinds of things that much more directly, much more rapidly and much more certainly create a real job."
Republican leaders surprisingly gave Obama's speech a warm reception.
"I think we are being listened to," said Senate Minority Leader Mitch McConnell. "I'm pleased with what the new president's had to say so far. I don't have any complaints about the communication at this stage."
McConnell said that Republicans have consulted with economists "who would be considered more conservative" and "each of them agreed with the president, the incoming president, that we need to do a stimulus."
McConnell said, however, the estimated $1.2 trillion deficit in the first year of Obama's administration is "eye popping," and that didn't include Obama's fiscal plan or spending for the Iraq and Afghanistan wars.
"We have to find the right balance," said House Minority Leader John Boehner. "How much debt are we going to pile on future generations?"
Sen. Judd Gregg, the top Republican on the Budget Committee, also warned about deficit spending, saying the country is facing "a fiscal tsunami."
Nevertheless, Gregg said he agreed that the economy needed a "robust stimulus," and added, "I want to work with the other side of the aisle and with the president-elect to accomplish it, because I don't think we can afford partisan politics at this time. We need to govern."
In his remarks at George Mason University, Obama said his plan would revive the economy and benefit the country's infrastructure.
"It is not just another public works program," he said. "There are millions of Americans trying to find work, even as, all around the country, there is so much work to be done."
Obama spelled out in broad terms today what much of the money would be spent on, including:
Doubling the production of alternative energy in the next three years.
Modernizing more than 75 percent of federal buildings and 2 million homes to make them more energy efficient.
Computerizing all of America's medical records within five years.
Equipping thousands of schools and colleges with modern classrooms, labs and libraries.
Expanding broadband across the United States.
Obama acknowledged that he was making his pitch after the Bush administration has spent trillions of dollars on bailouts, only to see the nation's fiscal prospects sour even more as critics worry that resulting deficits could last for generations.
"Our government has already spent a good deal of money, but we haven't yet seen that translate into more jobs or higher incomes or renewed confidence in our economy," Obama said.
When Obama takes office Jan. 20, he will inherit an economy that has been in recession for a year and has lost more than 2 million jobs, the most in any year since World War II.
What Obama is proposing, he said, is "not just a new policy, but a whole new approach" that includes a financial rescue and economic reform.
"This crisis did not happen solely by some accident of history or normal turn of the business cycle," he said. He blamed "an era of profound irresponsibility that stretched from coorporate boardrooms to the halls of power in Washington, D.C."
What is needed, he said, is to "trade old habits for a new spirit of responsibility."
What is also needed is a sense of urgency, Obama said.
"For every day we wait or point fingers or drag our feet, more Americans will lose their jobs. More families will lose their savings," he told his audience.
In a demonstration of support for Obama's plan, six governors and 14 mayors attended the speech. They included New York City Mayor Michael Bloomberg, who is an independent, and Virginia Gov. Tim Kaine, who has been designated the next chairman of the Democratic National Committee.
Obama conceded that the government can't simply spend itself out of the economic crisis that is a tangle of tight credit, spiraling bankruptcies, job losses and loss of faith by consumers.
But, he argued, "only government can break the vicious cycles that are crippling our economy."
Obama Argues It's 'Time to Act Boldly'
The soon-to-be-president admitted that the size of the rescue plan is massive.
"There is no doubt that the cost of this plan will be considerable. It will certainly add to the budget deficit in the short-term," he warned. The first year of his administration is expected to have a record-breaking budget deficit of $1.2 trillion, according to a projection released Wednesday by the Congressional Budget Office.
He argued, nonetheless, that it is time "to act boldly" and not be intimidated by the cost, because "the consequences of doing too little or nothing at all ... will lead to an even greater deficit of jobs, incomes, and confidence in our economy."
Obama's appeal for public support of his spending plan is coupled with a vow to bolster and reform Wall Street.
While promising to protect companies "whose collapse could endanger the entire economy," Obama said, "no longer can we allow Wall Street wrongdoers to slip through regulatory cracks. No longer can we allow special interests to put their thumbs on the economic scales."
ABC News has confirmed that Obama will name Harvard University law professor Cass Sunstein to be his regulatory czar. The appointment of Sunstein, who was friends with Obama while they were both faculty members at the University of Chicago Law School, indicates a more activist approach to regulation than was taken by the Bush administration.
If all goes according to plan, the economy can start showing some growth at the end of this year, he says.
Not everyone is confident that Obama's plan will work or work on his timetable.
"For something like this to really take hold, it could take several years," Andrew Ross Sorkin of the New York Times tells "Good Morning America" today.
Liz Ann Sonders, chief investment strategist for Charles Schwab & Co., tells "GMA" that "time as much as anything else" is the cure the economy.
"There's this confidence crisis that still hasn't been quite cracked, and I think we're starting to see that come undone a bit," Sonders says.
Important to Instill Confidence
Sorkin says it is important for Obama to "manage expectations."
"The political backlash if we do not see results and we don't see them quickly is going to be tough," Sorkin warns.
Dave Ramsey, of the "Dave Ramsey Radio Show," questioned the necessity of Obama's massive spending plan.
"What really drives the economy? Is it D.C.'s programs, or is it business people out here in the fruited plains?" Ramsey asks.
"This thing will begin to heal itself. Do we have to go $1 trillion in debt to that?" he asks.
Ramsey added that it's most important for Obama to instill confidence in the country's economic system.
"Whether you agree with the spending or not, my hope is that this president-elect will instill some confidence in people, not necessarily what he's doing is going to fix everybody everything. But just generally everything is going to be OK."
ABC News' Jonathan Karl contributed to this report