Obama: U.S. Not "Out Of The Woods"
Aiming to assert control over the nation's economic debate, President Barack Obama on Tuesday warned Americans eager for good news that "by no means are we out of the woods" and argued his broad domestic agenda is the path to recovery.
In a speech at Georgetown University, Obama aimed to juggle his recent glass-half-full takes on the economy with a determination to not be stamped as naive in the face lingering problems. He summarized actions his administration has taken to steady the limping economy and coupled that with a fresh overview of his domestic goals.
"The Recovery Act, the bank capitalization program, the housing plan, the strengthening of the non-bank credit market, the auto plan, and our work at the G20 - have been necessary pieces of the recovery puzzle," Mr. Obama will say according to the excerpts. "They have been designed to increase aggregate demand, get credit flowing again to families and businesses, and help them ride out the storm. And taken together, these actions are starting to generate signs of economic progress."
The speech, which key aides had signaled in advance would not contain any major announcements, came as Mr. Obama nears his symbolic 100-day mark in office, important because that has become a traditional marker by which to judge new administrations. (Click here for full coverage of Mr. Obama's first 100 days.)
"There is no doubt that times are still tough," Mr. Obama said. "But from where we stand… for the very first time, we are beginning to see glimmers of hope. And beyond that, way off in the distance, we can see a vision of an America's future that is far different than our troubled economic past." (Click here to read Mr. Obama's prepared remarks)
The president added that a full recovery is some time off and there is more work to be done.
"The severity of this recession will cause more job loss, more foreclosures, and more pain before it ends. The market will continue to rise and fall. Credit is still not flowing nearly as easily as it should. The process for restructuring AIG and the auto companies will involve difficult and sometimes unpopular choices," he said. "All of this means that there is much more work to be done. And all of this means that you can continue to expect an unrelenting, unyielding, day-by-day effort from this administration to fight for economic recovery on all fronts."
Mr. Obama's message was enveloped in contradictory signals Tuesday about the economy's health, but also buttressed by a contention by Federal Reserve Chairman Ben Bernanke that the recession may be bottoming out.
Retail sales fell unexpectedly in March, decreasing by 1.1 percent. At the same time, wholesale prices dropped sharply as the cost of gasoline and other energy plummeted, fresh evidence that inflation appears to pose little threat to the economy.
In a speech prepared for students and faculty at Morehouse College in Atlanta, Bernanke, like Obama, said there have been flickering signs of improvement, citing recent data on home and auto sales, home building and consumer spending.
But the broader message that a full turnaround might be a long time coming may not be welcome to a weary U.S. public.
Mr. Obama said a complete recovery depends on two things: building a new foundation for the U.S. economy and making changes in the political landscape. And he was avoiding any significant policy announcements, endeavoring instead to paint a broad picture of what his administration has already done to right the situation.
Mr. Obama said the rules governing the financial system must be brought into the Digital Age and that the economy must be transformed from one less dependent on a risk-obsessed financial sector and more on clean energy, good education and health care costs brought under control.
"We cannot rebuild this economy on the same pile of sand," he said, invoking a Biblical reference to Jesus' Sermon on the Mount. "We must build our house upon a rock. We must lay a new foundation for growth and prosperity a foundation that will move us from an era of borrow and spend to one where we save and invest, where we consume less at home and send more exports abroad."
Mr. Obama also said the problem is exacerbated by politicians with an outsized interest in scoring points and an impatient media.
"When a crisis hits," he said, "there's all too often a lurch from shock to trance, with everyone responding to the tempest of the moment until the furor has died away and the media coverage has moved on, instead of confronting the major challenges that will shape our future in a sustained and focused way."
"This can't be one of those times," Mr. Obama said.
With the university students and faculty as well as labor, grass roots and political leaders, Mr. Obama is trying to show he is focused on the economy after two weeks that, both by design and circumstance, have been dominated primarily by foreign affairs.
Mr. Obama put his fledgling presidency on the line when he advocated sweeping new government intervention and spending to right the troubled economic conditions. Shortly after taking office he signed a $787 billion package intended to boost the economy and his administration also has unveiled a slew of other programs aimed to right the troubled home, banking and auto sectors.
The president devoted a significant portion of his speech to defending actions he has taken in the face of criticism he has heard mainly from Republicans - but also from some of the more conservative members of own Democratic Party - that he has "been spending with reckless abandon, pushing a liberal social agenda while mortgaging our children's future."
Not so, Mr. Obama said.
"The last thing a government should do in the middle of a recession is to cut back on spending," the president said.
As for the long-term, increasingly dire federal budget deficit picture, he said that investments in new industries and economic foundations is crucial to future success and even to reducing the deficit. "Chronically slow growth will not help our long-term budget situation," he said.
The president also defended the massive and unpopular government programs enacted under the Bush administration and expanded under Obama to bail out banks and other financial institutions. He acknowledged that sending money directly to taxpayers might be more palatable - but said it wouldn't be as effective.
"The truth is that a dollar of capital in a bank can actually result in eight or ten dollars of loans to families and businesses, a multiplier effect that can ultimately lead to a faster pace of economic growth," he said.
More Coverage Of Obama's Speech:
Daniel Farber: Obama's Sermon At Georgetown