President Barack Obama, playing down recent talk of “glimmers of hope” for economic recovery, said Tuesday that sustained prosperity will come only if Congress moves quickly on a set of thorny issues that long have defied solution — health care, energy, education, financial regulation and curbing the deficit.
Already facing push-back in Congress as well as challenges from some liberals and others who question his economic strategy, Obama was effectively laying down a marker: He will fight for his ambitious agenda and argue that opponents are putting long-term recovery at risk.
“By no means are we out of the woods just yet,” Obama said in what amounted to an economic State of the Union address. The worst economic crisis since the Great Depression grew out of “a perfect storm of irresponsibility and poor decision-making,” he said, and “we cannot rebuild this economy on the same pile of sand.”
With Congress still away on a holiday recess, there was little immediate reaction. But Senate Budget Committee Chairman Kent Conrad (D-N.D.) offered a taste of just how uncertain many lawmakers — even Obama’s allies — are about accomplishing all he seeks.
“It is hard to do everything that needs to be done,” Conrad said. “You do have to prioritize.”
Obama’s 45-minute speech, delivered at Georgetown University, came at a critical moment for the White House. While most experts see more job losses and hardship ahead, and a long recovery even after the economy begins to mend, recent signs that the crisis could be bottoming out threaten to relieve the pressure on Congress to act on Obama’s agenda.
If the crisis atmosphere abates, White House strategists fear, Washington could drift back toward the partisan stalemate that has prevented action on these issues in the past. By linking these issues to the economic crisis and warning that prosperity is not just around the corner, Obama hopes to keep the pressure on.
“The economic crisis opens the door for the president to secure regulatory reforms that otherwise would be impossible politically to achieve,” said Jaret Seiberg, a financial policy analyst with the Washington Research Group. “I think the window is closing to make significant progress on these initiatives because once we start to recover there’s going to be less momentum to get it done quickly.”
Addressing his critics head-on, Obama defended his economic strategy as a prudent, middle-of-the-road course that focused on helping average Americans. But he acknowledged that bailouts of banks and financial institutions, such as insurance giant American International Group, appeared to be rewarding the people who helped cause the crisis.
“One of my most frequent questions in the letters that I get from constituents is, ‘Where’s my bailout?’ and I understand the sentiment,” he said. “It makes sense intuitively, and morally it makes sense, but the truth is that a dollar of capital in a bank can actually result in $8 or $10 of loans to families and businesses.
“So that’s a multiplier effect that can ultimately lead to a faster pace of economic growth. That’s why we have to fix the banks.”
The speech came as a CNN poll released Tuesday showed 58 percent of respondents think Obama has a clear plan for solving the country’s economic problems. At least some congressional leaders, including House Speaker Nancy Pelosi, share the president’s view that Democrats should seize the moment.
But House Minority Leader John Boehner (R-Ohio) said Tuesday that the enormous price tag for some of Obama’s initiatives will stifle economic growth, not foster it.
Obama tried to drive home his point about economic reforms by using a parable from Jesus’ Sermon on the Mount about a man who builds a house on sand only to see it destroyed by a storm. Another man’s house survives because it is build on a rock.
“We cannot rebuild this economy on the same pile of sand. We must build our house upon a rock,” Obama said. “We must lay a new foundation for growth and prosperity.”
– – –
OBAMA ‘PILLARS’
WASHINGTON — President Barack Obama said the key to a bright, sustainable future for the U.S. economy requires a “foundation built upon five pillars,” each of which represents a policy shift that is sure to set off a major political battle. They are:
New rules for Wall Street
A fundamental rewriting of financial regulations to “reward drive and innovation, not reckless risk-taking.” Obama wants to give government authority to monitor institutions that could pose “systemic” risk to the whole system if they got into trouble. Calls for legislation by year end.
Investment in education
Focus on early childhood education, improving test scores and tax credits to make college education more affordable. New emphasis on drawing more Americans into science and technology. Give the U.S. the world’s highest percentage of college graduates by 2020.
Investment in renewable energy and technology
The stimulus bill ratchets up spending on energy technology and “green” public works that will safeguard the environment and reduce dependence on foreign oil while generating thousands of new, upscale jobs for U.S. workers. But Obama said ultimate success will require a highly controversial system to put market-based caps on carbon pollution.
Health-care reform
Revamp health-care system to improve quality and make care more affordable for every American without increasing the deficit. Developing technology and stronger market incentives are seen as keys to curbing skyrocketing costs and aiding families and businesses while helping to trim the deficit.
Deficit reduction
Wants to pay for it by rooting out waste, as well as containing health-care and other entitlement costs. Obama cited his budget, which identifies savings of $2 trillion in areas such as defense, procurement and Medicare.
— Michael Oneal
———–
jpuzzanghera2@tribune.com
mdoneal@tribune.com
