Stunning new figures underscored his challenge: an estimate that the federal budget deficit will reach $1.2 trillion this year, by far the biggest ever, even without the new stimulus spending.
With less than two weeks to go before taking the helm at the White House, Mr. Obama will deliver a speech today laying out why he wants Congress to quickly pass his still-evolving economic plan.
Last year's deficit set a record, but that $455 billion will be dwarfed by this year's. The new estimate by the nonpartisan Congressional Budget Office represents more than 8 percent of the entire national economy.
Still, Mr. Obama said "an economic situation that is dire" requires immediate and bold action with unprecedented tax cuts and federal programs. More bad news is expected today and Friday on U.S. layoffs, and stocks plummeted anew Wednesday, wiping out gains from the first week of the new year.
Mr. Obama gave his first ballpark estimate of the total amount of the stimulus package expected to emerge from negotiations between his team and Capitol Hill, saying it is likely to hover around $775 billion over two years. That's about $400 billion less than outside economists have said might be needed to jolt the economy but at the top of the range that Obama aides and congressional leaders have discussed publicly.
"We're going to have to jump-start this economy," Mr. Obama said. "That's going to cost some money."
He said concerns about increasing the deficit to unmanageable levels swayed him against the higher figures advocated by some.
House Speaker Nancy Pelosi also pressed for passage of a recovery bill, though the mid-February timeline she offered moved it even further from Mr. Obama's original goal. Initially, he wanted to have the bill finished by the time he takes office a week from next Tuesday.
Mr. Obama said Wednesday, without details, that his initial budget proposal will include "some very specific outlines" of how he plans to tackle spending.
That extends to the ballooning and so-far unsolvable fiscal problem presented by Social Security and Medicare, which Mr. Obama promised would be "a central part" of his deficit-reduction plan.
The stimulus package is expected to easily pass Congress, now controlled by solid Democratic majorities in both houses. But Mr. Obama doesn't want to see it approved on a party-line vote.
For all the talk of belt-tightening, Republican leaders sounded only cautiously optimistic.
"We cannot borrow and spend our way back to prosperity when we're already running an annual deficit of more than $1 trillion," House Republican leader John Boehner of Ohio said. "I was pleased to hear the president-elect say yesterday that we need to stop just talking about our national debt and actively confront it."