Obama: Economy 'a big problem, and it's going to get worse'

President-elect Barack Obama braced the country for more tough times Sunday, saying twice in an interview that the nation’s already dismal economy would continue to worsen in the months ahead.

Obama, speaking to Tom Brokaw on NBC’s “Meet the Press,” used some of his starkest language yet to underscore the severity of the challenge he’ll face upon taking office next month.

“If you look at the unemployment numbers that came out yesterday, if you think about almost 2 million jobs lost so far, if you think about the fragility of the financial system and the fact that it is now a global financial system so that what happens in Thailand or Russia can have an impact here, and obviously what happens on Wall Street has an impact worldwide, when you think about the structural problems that we already had in the economy before the financial crisis, this is a big problem, and it's going to get worse,” he said in the interview taped Saturday.

Later in the interview Obama reiterated his downbeat projection, saying, “Things are going to get worse before they get better.”

Obama’s assessment, offered with an eye toward lowering the already considerable expectations on his shoulders, comes two days after the worst monthly job losses in over three decades, and a day after he proposed a series of ways to marry job-creation with infrastructure improvements in the forthcoming economic stimulus package.

In the wide-ranging appearance, Obama once again gave strong indications that he’s backing off his stance on two key campaign pledges – whether to repeal President George W. Bush’s tax cuts for the rich, and his call for bringing U.S. combat troops home from Iraq in 16 months. On a lighter note, he sketched a vision of an Obama White House alive with cultural and musical events, saying he hoped to include children from local Washington, D.C., schools.

But the economy dominated the discussion. Obama, who has been largely restrained from leveling political criticism during the transition period, took shots at Congress and the current administration for their handling of the crisis.

He told Brokaw that decisions based on where to focus infrastructure improvements would be based on merit, and “not in the old, traditional politics-first way.”

In an unambiguous brush-back to his former colleagues Obama said, “You know, the days of just pork coming out of Congress as a strategy, those days are over.”

And after weeks of public magnanimity toward the Bush administration and much cooperation between the outgoing and incoming economic teams, Obama expressed irritation at what he described as a lack of urgency on the part of the incumbent about offering mortgage assistance to struggling homeowners.

“I'm disappointed that we haven't seen quicker movement on this issue by the administration,” Obama said. “We have said publicly and privately that we want to see a package that helps homeowners not just because it's good for that particular homeowner; it's good for the community.’

But pressed by Brokaw if he or his advisers had conveyed their unhappiness on the mortgage question to the Bush administration, Obama dodged. “We have specifically said that moving forward we have to have a housing component to any actions that we take. If we are only dealing with Wall Street and we're not dealing with Main Street, then we're only handling one half of the problem,” he said.

Obama also wouldn’t delve too deeply into the woes of the automakers, or answer specifically if they should be given government oversight, but did make clear he wanted to see financial assistance to the Big Three tied to reforms.

“They're going to have to restructure, and all their stakeholders are going to have to restructure—labor, management, shareholders, creditors—everybody is going to recognize that they have—they do not have a sustainable business model right now,” Obama said. “And if they expect taxpayers to help in that adjustment process, then they can't keep on putting off the kinds of changes that they frankly should have made 20 or 30 years ago. If they want to survive, then they better start building a fuel-efficient car. And if they want to survive, they've got to recognize that the auto market is not going to be as large as some of their rosy scenarios that they put forward over the last several years.”

On taxes, the president-elect suggested he would avoid any increases in the near term. He rejected the prospect of putting a fuel surcharge on falling gas prices to fund alternative energy, saying that “putting additional burdens on American families right now, I think, is a mistake.”

And he signaled that his campaign pledge to raise taxes on the rich may be put off, something his economic advisers have been saying quietly for weeks.

“My economic team right now is examining -- do we repeal that through legislation?” Obama said of the Bush tax cuts for those Americans making over $250,000 per year. “Do we let it lapse so that, when the Bush tax cuts expire, they're not renewed when it comes to wealthiest Americans?”