U.S. President Barack Obama, accompanied by Vice-President Joe Biden, delivers remarks on the economy on the one-year anniversary of the signing of the Recovery Act, Wednesday. Biden's forehead bears Ash Wednesday ashes. (Pablo Martinez Monsivais/Associated Press)

U.S. President Barack Obama lauded the successes of the one-year-old economic stimulus law in a speech on Wednesday, but warned of the possibility of layoffs in state governments as the $787-billion US stimulus funding runs out.

"We could potentially see layoffs taking place this year because we haven't re-upped in terms of providing some help to those states and local governments," said Obama. "That's something that we're watching and we're concerned about."

But Obama painted an optimistic future and hailed the successes since the implementation of the law.

"One year later, it is largely thanks to the Recovery Act that a second depression is no longer a possibility," claimed Obama. "So far, the Recovery Act is responsible for the jobs of about two million Americans who would otherwise be unemployed."

The president took aim at those originally opposed to the relief measures and the lawmakers who voted against it. He recalled his State of the Union address last month saying he watched Republican lawmakers fail to applaud after he talked of tax cuts from the stimulus plan.

"They weren't sure whether to clap or not because most of them had voted against all these tax cuts, which I thought was… it was interesting to watch," Obama said.

Preventing a depression

Obama made the argument he has made before that a third of the money went to tax cuts and a third to bring relief to those laid off, giving them added jobless benefits and help with health insurance.

"Our work is far from over, but we have rescued this economy," Obama said.

Republicans maintain that jobs continue to be lost, despite the passing of the law and claim the cost of creating new jobs was too high. They have also argued that the overall costs will hike debt and place a burden on future generations.

Vice-President Joe Biden, who heads implementation of the stimulus package for Obama, asserted that taxpayers have "gotten their money's worth" out of the stimulus program Congress passed during the depths of the recession.

Fighting opposition

In a broadcast interview, Biden defended the program against the Republican critics and said the program was designed to be implemented in two stages, saying "we've only been halfway through the act."

Christina Romer, who heads the White House Council of Economic Advisers, said in a separate interview that one component of the stimulus program had worked especially well. "State fiscal relief really has kept hundreds of thousands of teachers and firefighters and first responders on the job," she said.

Obama said the stimulus plan is on target to create or save 1.5 million more jobs, bringing the estimated total to 3.5 million.

"There has never been a program of this scale, moved at this speed, that has been enacted as effectively and as transparently as the recovery act," Obama added.

Referring to Vice-President Joe Biden and other top aides, Obama said, "This team has done an outstanding job."

With files from The Associated Press