Obama Sees ‘Glimmers of Hope’ on Economic Horizon
April 14, 2009 - 1:25 PMAiming 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 or overly rosy in the face of stubborn problems that linger. He wrapped a summary of actions his administration has taken to steady the limping economy around a fresh overview of his domestic goals.
Key Obama aides said in advance of his talk that it would not bring major new announcements. The speech came as Obama nears his symbolic 100-day mark in office, important because that has become a traditional marker by which to judge new administrations.
"There is no doubt that times are still tough," 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."
Obama's message was enveloped in contradictory signals about economic health but buttressed by Federal Reserve Chairman Ben Bernanke's suggestion that the recession may at last be bottoming out.
It was hard to tell from the economic indicators released by the government Tuesday; 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, talked of 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.
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.
He said the rules governing the financial system must be brought into the Digital Age - and told Congress "I expect a bill to arrive on my desk for signature before the year is out."
He also said 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."
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," Obama said.
With the university students and faculty as well as labor, grass roots and political leaders, Obama was 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.
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.
"Taken together, these actions are starting to generate signs of economic progress," he said, citing canceled government-sector layoffs, new clean-energy industry hires, a spate of refinancings, and signs of increased credit flows.
But, the president said, "2009 will continue to be a difficult year." He predicted more job losses, foreclosures, and gyrating stock markets.
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, 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," Obama said.
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