Democrats revolt over Obama rescue plan

PRESIDENT-ELECT Barack Obama is facing opposition to his financial rescue package - from his own party.

Despite his warning that the US will slip into a deep depression unless his £600 billion rescue plan is approved, Democrats have voiced opposition.

In a passionate speech last night he said failure by Congress to swiftly pass his plan to pump billions into the economy would have disastrous consequences for the American people.

Warning of unemployment of more than 10 per cent, Mr Obama said that only massive government spending could revive the ailing economy.

"I don't believe it's too late to change course, but it will be if we don't take dramatic action as soon as possible," he said. "A bad situation could become dramatically worse."

Mr Obama urged Congress not to drag their heels, as they did over President Bush's bail-out for banks.

He 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. More dreams will be deferred and denied.

"And our nation will sink deeper into a crisis that, at some point, we may not be able to reverse.

"That is not the country I know, and it is not a future I will accept as President of the United States. A world that depends on the strength of our economy is now watching and waiting for America to lead once more. And that is what we will do."

But his biggest speech since his election victory in November, and just 12 days before his inauguration, failed to impress senior politicians within his own party.

Democratic senators emerging from a private meeting of the Senate Finance Committee criticised his proposed tax cuts.

Some were particularly disapproving of a proposed £2,000 tax credit for companies which hire or retrain workers.

Massachusetts Senator John Kerry, a former presidential candidate, 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."

And Oregon Senator Ron Wyden doubted that the tax cuts would persuade consumers to spend.

"In tough times people don't respond all that well to marginal changes, such as a small amount of money added per pay cheque," he said.

Mr Obama's rescue plan includes £200 billion in tax cuts. The average American couple would get approximately £600 from the package.