Against the backdrop of a deepening recession and increasing questions about the government's response, President Barack Obama underlined his plan for economic recovery this morning and emphasized that while "times are still tough," for the first time, "we are beginning to see glimmers of hope."
The speech at Georgetown University in Washington, touted as "major" by presidential aides, didn't unveil any new policy initiatives. But it did point out his struggle in steering the country out of recession: how to engender optimism and prove that he has been taking the right steps but not sound out of touch with a downtrodden and increasingly out-of-work public.
The administration has taken a variety of steps to deal with the fiscal crisis, ranging from bank bailouts to the $787 billion stimulus package to diplomacy at the Group of 20 summit. Those steps have prompted plenty of criticism, which Obama sought to refute. "Some have accused us of taking on too much at once. Others believe we haven't done enough," Obama said. Referring to complaints that the American Recovery and Reinvestment Act represents shortsighted spending, for example, Obama reiterated that economists on both side of the aisle agree that a recession is the wrong time for the government to cut back on spending. Meanwhile, the president said, the package's price tag "represents only a tiny fraction" of the long-term deficit.
Obama also addressed anger over the Troubled Asset Relief Program, which has been lambasted by some as a bailout for those responsible for the crisis. Bailing out banks can help everyone, Obama argued, because a "dollar of capital in a bank can actually result in 8 or 10 dollars of loans to families and businesses." The program wasn't always managed as he would like, Obama said. But, he said, "whether we like it or not, history has repeatedly shown that when nations do not take early and aggressive action to get credit flowing again, they have crises that last years and years instead of months and months."
Despite criticisms from Republican legislators and members of the public, many Americans seem to agree that Obama is taking the right steps. One Gallup Poll released today showed that 71 percent of respondents said they had a "great deal or a fair amount" of confidence in President Obama's ability to lead the country to recovery, while 51 percent said the same of Democratic leadership. And Gallup's Consumer Mood Index, which is based on answers to questions about current economic conditions and about the economy's direction, is much less negative than it was in early March, with 32 percent of respondents saying the economy is getting better.
But pessimism has hardly vanished, and neither have signs of economic stress. The Gallup Poll shows that consumer spending is down from what it was just last week, while employees' perceptions of the hiring conditions at their companies are the worst Gallup has recorded in 14 months. Meanwhile, the economy shed 663,000 jobs in March, bringing the unemployment rate up to 8.5 percent—the highest it has been in 25 years. Some economists predict it could reach nearly 10 percent in a year. And a report released today showed that retail sales dropped 1.1 percent in March, a sharper fall than expected. "We know the economy's still sick," aide Christina Romer told NBC this morning. "We are likely to bottom out this year."
Still, some promising signs have appeared. Federal Reserve Chairman Ben Bernanke says that there are "tentative signs that the sharp decline in economic activity may be slowing," according to prepared remarks for a speech in Atlanta later today. In February, sales of new homes rose for the first time in seven months, while home construction increased by 22 percent from the previous month. Meanwhile, consumer spending rose for the second month in a row.
Although the challenges will continue, therefore, the government's efforts are starting to show, Obama said. And, he said, those efforts won't let up for the reasons they have in the past, whether partisan bickering or putting off making decisions. "The challenges are too great. The stakes are too high," Obama said. "We have been called to govern in extraordinary times, and that requires an extraordinary sense of responsibility."