President Barack Obama delivers remarks on the economy on Tuesday at Georgetown University in Washington.
(Gerald Herbert/AP)Photos (1 of 1)
Obama’s message on the economy: Trust me
The president appears to be trying to use his own popularity to push through a tough agenda.
By Peter Grier | Staff writer/ April 14, 2009 edition
Reporter Peter Grier discusses some of the reasons President Obama addressed the economy on Tuesday.
Reporter Peter Grier
Washington
Trust me, we’ve got a strategy. This whole thing fits together. Even the parts you don’t like.
In essence, that’s what President Obama appeared to be trying to convey to US voters in an unusually long and detailed address on the economic actions of his first 75 days in office, delivered at Georgetown University Tuesday.
“I want every American to know that each action we take and each policy we pursue is driven by a larger vision of America’s future,” said Mr. Obama, arguing for the coherence of his stimulus, budget, and financial bailout programs.
And the end result of this strategy will be something more durable than what came before, he argued, as the insubstantial foundation of the prosperity of the Bush years is replaced by a more stable, long-term oriented platform for growth.
“We cannot rebuild this economy on the same pile of sand. We must build our house upon a rock,” Obama told an audience of students and faculty members.
The address – billed as “major,” despite the fact that it contained no new policy prescription – comes at a crucial time for the new administration’s domestic agenda.
The looming deadline of Obama’s first 100 days will be treated by the press and Washington policy community as an important milestone at which to judge what has happened so far. And the economy remains in the grip of a vise-like recession – despite the fact that there are an increasing number of signs that the worst of the downturn now may be behind us.
This summer Congress will engage in a committee-by-committee battle over some of the defining proposals of the Obama presidency, including healthcare reform and a cap-and-trade system intended to curb the nation’s emission of greenhouse gases. The administration will also probably have to request some additional actions that could be deeply unpopular with the public, from a tripling of US contributions to the International Monetary Fund (IMF) to a possible further appropriation for the bailout of financial institutions.
Meanwhile, Obama is enjoying high popularity ratings. But the ratings are for him, personally – not for his administration at large.
A recent Gallup poll found that 71 percent of respondents had at least a fair amount of confidence that Obama would do the right thing for the economy. But the corresponding figure for Treasury Secretary Timothy Geithner was only 47 percent. Federal Reserve Chairman Ben Bernanke got a corresponding rating of 49 percent.
With his speech, Obama perhaps was attempting the feat of hitching all of his agenda, even the potentially unpopular bits, to his own rising star.
“Since the problems we face are all working off each other to feed a vicious economic downturn, we’ve had no choice but to attack all fronts of our economic crisis at once,” said Obama.
The stimulus package was necessary, said the president, to prop up spending flowing through the economy. He said that bailouts for banks and other financial institutions, however unpopular, are needed because history shows that unless credit markets are quickly stabilized, recessions can drag on for years.
“The truth is that a dollar of capital in a bank can actually result in $8 or $10 of loans to families and businesses, a multiplier effect that can ultimately lead to a faster pace of economic growth,” said Obama.
The US has not gone even further and nationalized banks, not because of some ideological hesitance, but because officials believe that such a move in the end would cost the taxpayers more money than the current strategy, said the president.
“We will do whatever is necessary to get credit flowing again, but we will do so in ways that minimize risks to taxpayers and to the broader economy,” said Obama.
Efforts to stem mortgage foreclosures, government guarantees for securitized consumer loans, more cash for the IMF – it all fits together, in Obama’s view.
“Taken together these actions are starting to generate signs of economic progress,” he said.
Obama then attempted to tie his longer-term efforts to reshape US domestic policies into the overall recovery effort. Healthcare reform, cap-and-trade, and increased spending for education are all “pillars” of the country’s new economic foundation, said the president.
To those who say that these efforts, combined with economic recovery stimulus, will burden generations to come with the debt incurred by their ancestors, Obama insisted that he was serious about reducing the nation’s long-term deficit.
“Let’s not kid ourselves and suggest that we can do it by trimming a few earmarks or cutting the budget for the National Endowment for the Arts,” said Obama.
The real cloud on the horizon, in terms of the debt, is that healthcare inflation and the retirement of the baby boomers will cause the burden of Medicare and Medicaid to explode, according to the president.
Obama claims his health-reform effort will address that problem, and that Social Security, another long-term worry, can be solved shortly thereafter in some way that he did not specify.
The economy remains in tough shape, he said.
“But from where we stand, for the very first time we are beginning to see glimmers of hope,” said the president.
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Comments
2. allison | 04.14.09
More and More American’s do not want “The Hill” to run over our unborn children’s Constitutional right to taxation with representation. I think overall American’s want their Constitution as written by the framers back and this current administration in the closet of history.
Mr Biden does seem the better man for the job, and can pen this wrong direction of bailing out banks and Companies who could have failed and had new ones rise by now. How can DC be so disloyal to the citizens of the USA?
Everyone clomours to close the border and certify allegiances here. I, as one victim of the open border practices, competing for work with a foreigner in labor lines find it disconcerting and un-American.
I am re-registering from Democrat to Independent.
Neither leading party seems to think the Constitution is important, but I do.
3. dom youngross | 04.14.09
It’s not that I don’t trust the guy — I don’t. More so, I think president Obama and his legion of doom are just plain wrong, with regard to spending. Already Obama is twice as bad and four times as expensive as the worst president in modern history: George Bush.
Remember, the bailouts were important so that AIG da bookie could cover bets on it’s derivative contracts. So $20 billion in taxpayer money was handed to AIG. AIG in turn handed that $20 bil over to Goldman Sachs and European banks. And everyone got their knickers bunched up over the $218 million in AIG bonuses.
What he is championing is the status quo: taxpayer-backstop socialistic security for the rich, dirt-scratching capitalism for the rest of us.
And how much did Obama have to spend campaigning to ‘convince’ you he should be president? What was it, $600 million, $700 million, more? You don’t have to spend that kind of money to ‘convince’ anyone of anything. You do have to spend that kind of money though when you’re selling the sizzle, not the steak.
“Let’s not kid ourselves and suggest that we can do it by trimming a few earmarks or cutting the budget for the National Endowment for the Arts,”
He doesn’t even want to make a start with reducing the deficit. He thinks saving a billion here, a few hundred million there isn’t worth his while.
Time to call that clown’s bluff when he threatens the economic boogeyman if we don’t agree with digging ourselves deeper into unrecoverable federal debt.
4. Kathy | 04.14.09
So the President gave a speech on the economy today and the Dow, Nasdaq and S&P are all down. Seems every time he speaks, the market drops but hey, he looks good and follows his teleprompter beautifully.
5. Arthur LEMAY | 04.14.09
Each one of Obama’s initiatives can be defended (poorly in most cases, especially the stimulus), but when taken together add up to a fiscal and economic disaster. Rationing health care for the aged and underwriting coverage for everyone, controlling salaries on Wall Street, firing executives who might be the most talented people in Detroit, demanding cars be designed by government, putting heavy taxes or other costs on energy use, expecting windmills to replace coal-fueled power, controlling industries to the extent of bankrupting the coal industry, taxing investors and business owners unfairly, doubling the capital gains tax, and the list goes on and on.
So, how can people and businesses plan? No one knows what the administration will do. So, the only decision a company owner can make is to take his business out of the US. He can’t invest because he does not know if it will be profitable because of energy, income taxes or some other confiscatory tax.
Some think the Obama program is so ridiculous that even the Democrats will say “stop,” this cannot possibly work. Could it be that people are thinking that none of this can possibly happen and that the recovery is caused not because of Obama but in spite of him?
There is not much room for current optimism because Obama has no restraint in spending money. Democrats in Congress need to say no or be voted out of office next year, and the enormous amount of guns and ammunition being bought and the “tea parties” suggest something is brewing in the country which is reason for optimism soon.
7. tim in sk | 04.15.09
Mr. Grier,
I viewed this speech not as arbitrary fluff, merely to garner “trust,” as you seem to suggest.
But as a recap of why reform in education, energy, health care and the financial sector are necessary. To communicate what’s been done, what still needs to be done and why, and continuing Obama’s trend in clear communication with his constituency.
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1. richard potter | 04.14.09
America must move forward!! I believe that we have made substancial progress in the stablization of the economy, however, the billions of bailout dollars must be INVESTED in a way that not only assures transparency and accountability but will provide a return for future generations.
Confidence needs to be restored the fact is that the US has been paralyzed since the 9/11 attack. WE must find ways to encourage capital formation, and allow free global markets to work by bringing together modern institutions like Lehman Brothers, Bear Stearns, and this means confidence in the American dollar, market regulatory reform, and rededication to American values. The departments of the Treasury, and the Federal Reserve, are moving in the right direction. President Obama deserves our continued support in balanced budget solutions that will not lead to inflation and devaluation of currency which has as its guiding light “in God We Trust.”