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Obama backs auto rescue, finishes Cabinet picks

US President-elect Barack Obama offered embattled US automakers a promise and a warning, saying he hoped to create more autoworker jobs but only if carmakers do not squander the opportunity to reform.

After the outgoing administration of President George W. Bush offered $17.4 billion in emergency loans to Detroit's beleaguered “Big Three” car giants, Obama said he would work with both carmaker unions and management to rebuild the industry.

“My top priority in this administration is to create 2.5 million new jobs and I want some of those jobs to be in the auto industry,” Obama told a news conference.

He declined to say what, if any, changes he would make to the auto rescue plan announced by the White House after he takes office on January 20, or whether he would entertain calls by the United Auto Workers union to remove what it called “unfair” conditions in the Bush bailout plan.

But he said his economic team would discuss with workers and management ways to ensure their collective survival, saying the chance to end bad management practices and reform the industry “must not be squandered.”

“I do want to emphasize to the Big Three auto makers and their executives that that the American people's patience is running out,” he said, adding that the auto executives must come up with a restructuring plan that is sustainable.

Obama said it was clear that any plan to put the car industry back on track would involve “painful steps.”

“I just want to make sure that when we see a final restructuring package, that it's not just workers who are bearing the brunt of that restructuring,” he added. “All shareholders are going to have to play a part in this process.”

Obama finished naming candidates for his Cabinet-in-waiting, choosing picks to head the Transportation and Labor departments and to lead trade negotiations.

Obama tapped California Democratic Rep. Hilda Solis to be labor secretary and retiring Illinois Republican Rep. Ray LaHood to head the Transportation Department - making him the second Republican in the Cabinet. Former Dallas Mayor Ron Kirk was named to be US trade representative.

The announcements round out Obama's prospective Cabinet, which includes his former rival for the Democratic presidential nomination Hillary Clinton as secretary of state and current Defense Secretary Robert Gates, who will keep his job under the new president.

Obama has also chosen New York Federal Reserve President Timothy Geithner as Treasury secretary and former Treasury chief and Harvard University president Lawrence Summers to head the National Economic Council.

Obama, who is scheduled to leave for Hawaii on Saturday for a vacation with his family, has consistently given conditional support to proposals to help US automakers, who have been pushed to the brink by collapsing auto sales and the global financial crisis.

An Obama transition official said the White House kept the president-elect informed of its auto plan deliberations but Obama was not part of the decision.

“The administration did not ask for our opinion or approval on the package or any of its specifics,” a transition official told Reuters on condition of anonymity."

The auto industry blowout is one of a plateful of economic crises awaiting Obama. He is also trying to craft a major economic stimulus plan likely to cost upward of $600 billion in an effort to pull the country out of a deepening recession.

Pressed on the dollar figure for his proposed package, Obama declined to give a number but said the proposal would need to be “bold” given the magnitude of the economic crisis.

On the other hand, he emphasized that he would be mindful of burgeoning US budget deficits and said he would ensure that the money was spent wisely in the package, which will include billions for projects like repairs of roads and bridges and subsidies for renewable energy initiatives.

“We're not intending to spend money lightly,” he said. “We are going to be inheriting a deficit that is probably above a trillion dollars. And so, look, I'm a taxpayer like everybody else, and I don't want to see money wasted.” (Reuters)