Governors urge Obama to help the poor

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By Jeff Mason and Jon Hurdle

PHILADELPHIA (Reuters) - U.S. state governors urged President-elect Barack Obama on Tuesday to pump money into infrastructure and help support the poor as a sinking economy hits state budgets hard.

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.

The president-elect has spent much of the time since his November 4 victory over Republican John McCain forming his economic team and advocating a massive new stimulus package.

"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.

"I'm going to listen to you, especially when we disagree because one of the things that has served me well in my career is discovering that I don't know everything," Obama said.

The meeting came the day after the National Bureau of Economic Research confirmed that the United States had entered recession in December 2007. The downturn, which many economists expect to persist through the middle of the next year, is already third-longest since the Great Depression.

Pennsylvania Gov. Ed Rendell, touted as a possible energy secretary in the Obama administration, opened the meeting by pressing for Congress to extend unemployment benefits and increase food stamp availability.

"Those are things that don't go to us as governors, don't go to our budgets but help our citizens," he said.

Rendell said on Monday governors would ask for $136 billion (91 billion pounds) in infrastructure funds to stimulate the economy immediately and cover health care for the poor.

Obama acknowledged that, unlike the federal government, U.S. states had to balance their budgets. He said immediate measures were needed to help deal with the crisis.

"Forty-one of the states that are represented here are likely to face budget shortfalls this year or next, forcing you to choose between reining in spending and raising taxes," Obama said. "To solve this crisis and to ease the burden on our states, we need action and we need action swiftly."

Nearly all 50 governors attended, including California's Arnold Schwarzenegger, who on Monday declared a fiscal emergency and called lawmakers into a special session to tackle a widening budget gap.

(Editing by Alan Elsner)

(additional reporting by Deborah Charles and Lisa Lambert)

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