Obama Delivers Economic Progress Report

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On this tax deadline day, President Obama plans to highlight some of the tax cuts included in the economic stimulus plan. Yesterday, the president delivered a lengthy speech about how the U.S. got into the recession, where the economy is now and his plans to encourage a more prosperous future.


It's MORNING EDITION from NPR News. Renee Montagne is on assignment. I'm Steve Inskeep. Good morning.

You can expect President Obama to use this tax day, April 15th, to highlight some tax cuts in his economic stimulus plan. It's just about as likely that Republicans will highlight tax increases that they say are coming. This week the president is also offering a wider look at his economic plans. He delivered a lengthy speech about how the United States got into this recession, where the economy is now, and his plans for the future. NPR's Scott Horsley reports.

SCOTT HORSLEY: It has been 12 weeks since President Obama took office, and during that time he has been in nearly constant motion, cajoling lawmakers, scolding bankers, and consoling workers who've lost their jobs. Yesterday the president paused for about 45 minutes, just long enough to deliver a progress report on his economic agenda.

President BARACK OBAMA: I want to talk about what we've done, why we've done it, and what we've left to do.

HORSLEY: Mr. Obama began by reminding listeners about the roots of the recession - an overheated housing market and unsupervised financial bubble. Once home prices started falling and foreclosures started rising, he said, banks stopped lending and employers started laying off workers.

Pres. OBAMA: And since the problems we face are all working off each other to feed a vicious economic downturn, we had no choice but to attack all fronts of our economic crisis simultaneously.

HORSLEY: The president said some of his efforts have begun to pay off. The tax cuts in the stimulus package are now showing up in workers' pay checks and mortgage rates have fallen, so many home owners can save money by refinancing. But Mr. Obama said many families and businesses still find it hard to borrow the money they need, and the nation is still hemorrhaging hundreds of thousands of jobs every month. Mr. Obama has tried repeatedly to highlight some hopeful signs while still acknowledging the serious challenges ahead. Rutgers political scientist Ross Baker says it's a fine line the president has to walk.

Professor ROSS BAKER (Rutgers University): Everything he says now has to achieve a proper balance between candor, realism and hopefulness. And it's an interesting set of ingredients.

HORSLEY: But yesterday's speech was less Psychology 101 than Economics 101. The president methodically work through his arguments of why the government has taken the steps it has, even when those steps are unpopular, such as propping up the banking industry.

Pres. OBAMA: And one of my most frequent questions in the letters that I get from constituents is - where is my bailout? And I understand the sentiment. 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 eight 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.

HORSLEY: The speech reminded Baker of the fireside chats that Franklin Roosevelt gave during the Great Depression to explain his economic proposals. Of course Roosevelt didn't have to contend with the rapid-fire pacing of a 24 hours news cycle. Even in our era, when political debate is often reduced to bumper sticker brevity, Mr. Obama has put his faith in the persuasive power of a detailed paragraph, and Baker thinks it's working for him.

Prof. BAKER: Not only does he get it, he has the ability to break it down into common parlance and get people to understand where we've been, where we are now and where we need to go.

HORSLEY: Mr. Obama said where we need to go is a new economy, one that's less dependent on an over-leveraged financial system and one in which wealth is more evenly shared.

Pres. OBAMA: We cannot rebuild this economy on the same pile of sand. 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.

HORSLEY: Mr. Obama renewed his call for investments in health care, education and clean energy, programs that will be debated long after his first three months in office.

Scott Horsley, NPR News, Washington.

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Obama Says Economy Not 'Out Of The Woods'

President Obama speaks Tuesday on the economy at Georgetown University in Washington. i

President Obama speaks Tuesday on the economy at Georgetown University in Washington. Saul Loeb/AFP/Getty Images hide caption

toggle caption Saul Loeb/AFP/Getty Images
President Obama speaks Tuesday on the economy at Georgetown University in Washington.

President Obama speaks Tuesday on the economy at Georgetown University in Washington.

Saul Loeb/AFP/Getty Images

The President's Speech

President Obama warned Tuesday that times are "still tough" despite some signs of improvement, saying the U.S. economy must be rebuilt from the ground up to avoid the mistakes of the past.

In a speech at Georgetown University, the president sought to reassure those critics who said his administration was trying to do too much, and those who complained it was not doing enough. He said it was important that the economy be rebuilt not "on the same pile of sand", but on "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."

"There is no doubt that times are still tough," he said, but "for the very first time, we are beginning to see glimmers of hope."

The president's message came on the same day the economic data seemed to contradict his recent hopeful talk that the economy may be in the first stages of a turnaround.

Retail sales fell again in March after increasing the previous two months. Sales dropped 1.1 percent, the Commerce Department said in a report released Tuesday — far weaker than the 0.3 percent increase expected by analysts. In a separate report, the Commerce Department said business inventories fell for a sixth straight month in February. The 1.3 percent decline matched the January drop.

Obama acknowledged that his administration had been assailed from both the left and the right about the handling of the economic crisis. Increased spending in the short term was necessary to keep the economy from plummeting further, he said.

"I absolutely agree that our long-term deficit is a major problem that we have to fix," he said, adding that "the key to dealing with our deficit and debt is to get a handle on out-of-control health care costs — not to stand idly by as the economy goes into free-fall."

But the president also tried to answer critics, many in his own party, who have called for the government to preemptively take over failing banks and financial institutions.

"We believe that preemptive government takeovers are likely to end up costing taxpayers even more in the end ... and [are] more likely to undermine than to create confidence," he said.

The 21st century economy must be built on a new foundation that includes reform of outdated financial regulations, a highly educated work force and renewable energy, the president said.

He called for "rules that protect typical American families when they buy a home, get a credit card or invest in a 401(k)," adding that Congress had already begun to work on such regulations, which he hoped would reach his desk before the end of the year.

"In this new economy, we trail the world's leaders in graduation rates and achievement," Obama said, pledging that "by 2020, America will once more have the highest proportion of college graduates in the world."

The president also said the U.S. needs to lead the world in renewable energy technologies that will create millions of new jobs and result in a nation "humming with new energy and discoveries that light the world once more."

Obama's comments came on the same day Federal Reserve Chairman Ben Bernanke said there have been "tentative signs" that the recession may be easing. But he also warned that any hope for a lasting recovery hinges on the government's success in stabilizing shaky financial markets and getting credit to flow more freely again.

In remarks prepared for students and faculty at Morehouse College in Atlanta, Bernanke mentioned improvements in recent data on home and auto sales, home building and consumer spending as flickering signs of encouragement. But his speech was prepared before the retail sales and other data were released.

"Recently we have seen tentative signs that the sharp decline in economic activity may be slowing," Bernanke said. "A leveling out of economic activity is the first step toward recovery. To be sure, we will not have a sustainable recovery without a stabilization of our financial system and credit markets."

Seasonal adjustments could partly explain the unexpectedly weak showing for retail sales. The March 2008 performance was boosted by an early Easter, while the holiday this year did not occur until April, delaying some shopping.

Contributing: The Associated Press



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