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.
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.