Obama Sits Down with State Guvs to Stem Economic Slowdown

ABC News’ Matt Jaffe reports from Philadelphia: After unveiling his economic team last week in Chicago, President-elect Barack Obama arrived in Philadelphia Monday for discussions with the nation’s governors on how to fix the country’s ongoing financial crisis.

Obama met Monday evening with Democratic governors at a private reception near Independence Hall to hear what federal help the states want from the incoming administration, the night before a Tuesday morning meeting with governors from both sides of the aisle.

"The main focus is the bipartisan meeting Tuesday," a senior Obama official told ABC News. "The President-elect genuinely wants to hear the governors' concerns and act on that."

Accompanied by Vice President-elect Joe Biden, Obama will speak to a summit of the National Governors Association hosted by Pennsylvania Gov. Ed Rendell (D), chair of the NGA, and Vermont Gov. Jim Douglas (R), the vice chair, just a day after the National Bureau of Economic Research formally announced that the nation had entered a recession in December 2007.

For the governors, help for their states cannot come soon enough: 20 states have already cut over $7 billion from their 2009 budgets and 30 states expect additional short-falls totaling more than $30 billion.

“The slowing economy is resulting in growing unemployment, increased demand for state services and significant declines in state revenues,” Douglas said Monday.

“As governors work to reduce budget shortfalls and plan for the coming fiscal year, we need to be partners in an economic recovery strategy that includes additional funding for Medicaid and investments in infrastructure,” he added.

Rendell, who will host the economic summit in the city where he used to be mayor, also emphasized the importance of infrastructure investments.

“These immediate solutions will drive economic recovery,” he said. “Investments in ready-to-go infrastructure projects are a cost-effective creator of high-paying jobs.”

“These investments should include a broad array of infrastructure projects including airports, bridges, highways, transit systems, ports, rails, clean water, sewers and broadband,” continued the Keystone State governor. “We should target high-priority projects so funds can be obligated and invested so that we will see the effects quickly.”

Only 10 days ago, Obama introduced a plan to save or create 2.5 million jobs in his first two years in office, in part by focusing on infrastructure projects such as rebuilding roads and bridges and modernizing schools.

The Illinois lawmaker has also urged Congress to have a massive economic stimulus package ready for him “right away” when he takes office January 20.

Among the many governors scheduled to attend Tuesday’s summit is one who Obama and Biden know all too well: Alaska’s Sarah Palin, the Republican vice presidential candidate.

But with Palin defeated, now the country’s financial crisis is Obama's to solve, aided by his Treasury Secretary pick Tim Geithner and National Economic Council director Larry Summers.

“People should –- should understand that help is on the way,” the President-elect said last Wednesday.

With their states suffering, the governors sure hope he’s right.

In Tuesday's meeting, Obama is expected to discuss his commitment to work with the governors.

"[T]he partnership we begin here must not –- and will not –- end here," An excerpt from his speech stated. "As President, I will not simply ask our nation's governors to help implement our economic recovery plan. I will ask you to help design that plan. Because if we're listening to our governors, we'll not only be doing what's right for our states, we'll be doing what's right for our country. That's how we'll grow our economy –- from the bottom-up. And that's how we'll put America on the path to long-term prosperity."

The President-elect is also expected to reach out to Republican governors and pledge to work together.

- Matt Jaffe

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