Obama pledges to help states weather recession

By Jeff Mason

CHICAGO (Reuters) - President-elect Barack Obama pledged on Tuesday to help state governors cope with a deepening recession and asked for their help in crafting a huge stimulus package to create jobs and tackle the crumbling economy.

As governors petitioned the federal government for billions of dollars in aid, Obama planned to name one of their ranks, New Mexico Democrat Bill Richardson, as his commerce secretary, according to Democratic sources.

Unlike the federal government, states are required to balance their budgets even in times of recession, when tax revenues plunge and unemployment rolls rise. At least 41 of the 50 states are expected to face budget shortfalls next year.

At a meeting of the National Governors Association in Philadelphia, state leaders said they needed federal help for jobless benefits, food stamps and healthcare coverage for the poor, as well as an estimated $136 billion in repairs to bridges, airports and other infrastructure.

Obama, who takes over from President George W. Bush on January 20, pledged to involve states in his plans to tackle the U.S. recession and create or save 2.5 million jobs.

"I'm not simply asking the nation's governors to help implement our economic recovery plan, I'm going to be interested in having you help draft and shape that economic plan," Obama told a meeting that included Alaska Gov. Sarah Palin, the former Republican vice presidential candidate.

"To solve this crisis and to ease the burden on our states, we need action and we need action swiftly," he said.

Obama is expected to nominate Richardson, a former rival for the Democratic presidential nomination, at a news conference in Chicago on Wednesday -- his fifth such meeting in the last two weeks.

Richardson did not attend the meeting in Philadelphia.

Obama has already named most of his key economic and national security teams, including New York Sen. Hillary Clinton as his nominee for secretary of state.

U.S. Defense Secretary Robert Gates, whom Obama asked to stay in office, said on Tuesday his term in the new Democratic administration would be open-ended.

Richardson, a former U.N. ambassador and energy secretary, was also seen as a candidate for the top diplomatic job and among the likely choices as the first Hispanic to be named to Obama's Cabinet. As commerce secretary, he would play a key role in efforts to revive the faltering economy.

INFRASTRUCTURE, STIMULUS

Democrats in Congress hope to have a $500 billion stimulus package ready for Obama's signature when he takes office.

Governors at the meeting said more than $100 billion of that should go toward infrastructure like roads, school, mass transit, "green technology" and broadband lines, according to Rahm Emanuel, Obama's future White House chief of staff.