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.
(Page 2 of 2)
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.Skip to next paragraph
Subscribe Today to the Monitor
"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.