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WASHINGTON (AP) -- Pointing with concern to "red ink as far as the eye can see," President-elect Barack Obama pledged Wednesday to tackle out-of-control Social Security and Medicare spending and named a special watchdog to clamp down on other federal programs -- even as he campaigned anew to spend the largest pile of taxpayer money in history to revive the sinking economy.

The steepness of the fiscal mountain he'll face beginning Jan. 20 was underscored by stunning new figures: 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.

The incoming president has walked this same tightrope each day this week -- advocating fiscal discipline and taxpayer largesse together at nearly every turn, though in every case with little detail to back it up. With less than two weeks to go before taking the helm at the White House, he'll make the same pitch on Thursday, delivering a speech laying out why he wants Congress to quickly pass his still-evolving economic plan.

Last year's U.S. deficit set its own 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, 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 Thursday and Friday on U.S. layoffs, and stocks plummeted anew on Wednesday, wiping out gains from the first week of the new year.

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," Obama said. "That's going to cost some money."

The president-elect 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 represented another slip in the date by which the package would be ready for Obama's signature. Initially, the goal was to have it finished by the time he takes office a week from next Tuesday.

Obama's repeated emphasis amid the stimulus talk on a need for spending control is aimed in part at attracting more support from deficit hawks in Congress.

He said Wednesday, without details, that his initial budget proposal next month 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 the Social Security and Medicare programs, which Obama promised would be "a central part" of his deficit-reduction plan.

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