Text of President Obama’s address
OBAMA: Good evening. Now, before I take questions from the correspondents, I want to give everyone who’s watching tonight an update on the steps we’re taking to move this economy from recession to recovery, and ultimately to prosperity.
Now, it’s important to remember that this crisis didn’t happen overnight and it didn’t result from any one action or decision. It took many years and many failures to lead us here. And it will take many months and many different solutions to lead us out. There are no quick fixes, and there are no silver bullets.
That’s why we’ve put in place a comprehensive strategy designed to attack this crisis on all fronts. It’s a strategy to create jobs, to help responsible homeowners, to restart lending and to grow our economy over the long term. And we’re beginning to see signs of progress.
The first step we took was to pass a recovery plan to jump-start job creation and put money in people’s pockets. This plan’s already saved the jobs of teachers and police officers. It’s creating construction jobs to rebuild roads and bridges.
And yesterday I met with a man whose company is reopening a factory outside of Pittsburgh that’s rehiring workers to build some of the most energy-efficient windows in the world.
And this plan will provide a tax cut to 95 percent of all working families that will appear in people’s paychecks by April 1.
The second step we took was to launch a plan to stabilize the housing market and help responsible homeowners stay in their homes. This plan’s one reason that mortgage interest rates are now at near historic lows.
We’ve already seen a jump in refinancing of some mortgages, as homeowners take advantage of lower rates. And every American should know that up to 40 percent of all mortgages are now eligible for refinancing.
This is the equivalent of another tax cut, and we’re also beginning to see signs of increased sales and stabilizing home prices for the first time in a very long time.
The third part of our strategy is to restart the flow of credit to families and businesses. To that end, we’ve launched a program designed to support the markets for more affordable auto loans, student loans and small-business loans, a program that’s already securitized more of this lending in the last week than in the last four months combined.
Yesterday, Secretary Geithner announced a new plan that will partner government resources with private investment to buy up the assets that are preventing our banks from lending money.
And we will continue to do whatever is necessary in the weeks ahead to ensure the banks Americans depend on have the money they need to lend, even if the economy gets worse.
Finally, the most critical part of our strategy is to ensure that we do not return to an economic cycle of bubble and bust in this country. We know that an economy built on reckless speculation, inflated home prices, and maxed-out credit cards does not create lasting wealth. It creates the illusion of prosperity, and it’s endangered us all.
The budget I submitted to Congress will build our economic recovery on a stronger foundation so that we don’t face another crisis like this 10 or 20 years from now.
We invest in the renewable sources of energy that will lead to new jobs, new businesses and less dependence on foreign oil. We invest in our schools and our teachers, so that our children have the skills they need to compete with any workers in the world.
We invest in reform that will bring down the cost of health care for families, businesses and our government.
And in this budget, we have — we have to make the tough choices necessary to cut our deficit in half by the end of my first term, even under the most pessimistic estimates.
At the end of the day, the best way to bring our deficit down in the long run is not with a budget that continues the very same policies that have led us to a narrow prosperity and massive debt. It’s with a budget that leads to broad economic growth by moving from an era of borrow and spend to one where we save and invest.
And that’s what clean energy jobs and businesses will do all across America. That’s what a highly skilled workforce can do all across America. That’s what an efficient health care system that controls costs and entitlements like Medicare and Medicaid will do.
That’s why this budget is inseparable from this recovery — because it is what lays the foundation for a secure and lasting prosperity.
The road to that prosperity is still long, and we will hit our share of bumps and setbacks before it ends. But we must remember that we can get there if we travel that road as one nation, as one people.
You know, there was a lot of outrage and finger-pointing last week, and much of it is understandable. I’m as angry as anybody about those bonuses that went to some of the very same individuals who brought our financial system to its knees, partly because it’s yet another symptom of the culture that led us to this point.
But one of the most important lessons to learn from this crisis is that our economy only works if we recognize that we’re all in this together, that we all have responsibilities to each other and to our country.
Bankers and executives on Wall Street need to realize that enriching themselves on the taxpayers’ dime is inexcusable, that the days of outsized rewards and reckless speculation that puts us all at risk have to be over.
At the same time, the rest of us can’t afford to demonize every investor or entrepreneur who seeks to make a profit. That drive is what has always fueled our prosperity, and it is what will ultimately get these banks lending and our economy moving once more.
We’ll recover from this recession, but it will take time, it will take patience and it will take an understanding that, when we all work together, when each of us looks beyond our own short-term interest to the wider set of obligations we have towards each other, that’s when we succeed, that’s when we prosper and that’s what is needed right now.
OBAMA: So let’s look towards the future with a renewed sense of common purpose, a renewed determination, and most importantly, renewed confidence that a better day will come.
All right. With that, let me take some questions. And I’ve got a list here.
Let’s start off with Jennifer Loven, AP.
Q: Thank you, Mr. President. Your treasury secretary and the Fed chairman were on Capitol Hill today asking for this new authority that you want to regulate big, complex financial institutions.
But given the problems that the financial bailout program has had so far — banks not wanting to talk about how they’re spending the money, the AIG bonuses that you mentioned — why do you think the public should sign on for another new sweeping authority for the government to take over companies, essentially?
OBAMA: Well, keep in mind that it is precisely because of the lack of this authority that the AIG situation has gotten worse.
Now, understand that AIG is not a bank. It’s an insurance company. If it were a bank and it had effectively collapsed, then the FDIC could step in, as it does with a whole host of banks, as it did with IndyMac, and in a structured way renegotiate contracts, get rid of bad assets, strengthen capital requirements, resell it on the private marketplace.
So we’ve got a regular mechanism whereby we deal with FDIC-insured banks. We don’t have that same capacity with an institution like AIG. And that’s part of the reason why it has proved so problematic.
I think a lot of people understandably say, Well, if we’re putting all this money in there, and if it’s such a big systemic risk to allow AIG to liquidate, why is it that we can’t restructure some of these contracts? Why can’t we do some of the things that need to be done in a more orderly way?
And the reason is, is because we have not obtained this authority. We should have obtained it much earlier so that any institution that poses a systemic risk that could bring down the financial system we can handle and we can do it in an orderly fashion that quarantines it from other institutions.
We don’t have that power right now; that’s what Secretary Geithner was talking about. And I think that there’s going to be strong support from the American people and from Congress to provide that authority, so that we don’t find ourselves in a situation where we’ve got to choose between either allowing an enormous institution like AIG, which is not just insuring other banks, but is also insuring pension funds and potentially putting people’s 401(k)s at risk if it goes under, that’s one choice, and then the other choice is just to allow them to take taxpayer money without the kind of conditions that we’d like to see on it.
So that’s — that’s why I think the authority is so important.
Q: Why should the public trust the government to handle that authority well?
OBAMA: Well, as I said before, if you look at how the FDIC has handled a situation like Indy bank, for example, it actually does these kinds of resolutions effectively when it’s got the tools to do it. We don’t have the tools right now.
OK. Chuck Todd?
Q: Thank you, Mr. President. Some have compared this financial crisis to a war. And in times of war, past presidents have called for some form of sacrifice.
Some of your programs, whether for Main Street or Wall Street, have actually cushioned the blow for those that were irresponsible during this — during this economic period of prosperity or supposed prosperity that you were talking about.
Why, given this new era of responsibility that you’re asking for, why haven’t you asked for something specific that the public should be sacrificing to participate in this economic recovery?
OBAMA: Well, let me — let me take that question in a couple — couple of phases.
First of all, it’s not true that we have not asked sacrifice from people who are getting taxpayer money. We have imposed some very stiff conditions. The only problem that we’ve had so far are contracts that were put in place before we took over.
But moving forward, anybody — any bank, for example — that is receiving capital from the taxpayers is going to have to have some very strict conditions in terms of how it pays out its executives, how it pays out dividends, how it’s reporting its lending practices, so we want to make sure that there’s some stiff conditions in place.
With respect to the American people, I think folks are sacrificing left and right. I mean, you’ve got a lot of parents who are cutting back on everything to make sure that their kids can still go to college. You’ve got workers who are deciding to cut an entire day — an entire day’s worth of pay so that their fellow co-workers aren’t laid off.
I think that, across the board, people are making adjustments large and small to accommodate the fact that we’re in very difficult times right now.
What I’ve said here in Washington is that we’ve got to make some tough choices. We’ve got to make some tough budgetary choices. What we can’t do, though, is sacrifice long-term growth, investments that are critical to the future, and that’s why my budget focuses on health care, energy, education, the kinds of things that can build a foundation for long-term economic growth, as opposed to the fleeting prosperity that we’ve seen over the last several years.
I mean, when you have an economy in which the majority of growth is coming from the financial sector, when AIG selling a derivative is counted as an increase in the gross domestic product, then that’s not a model for sustainable economic growth.
And what we have to do is invest in those things that will allow the Americans’ capacity for ingenuity and innovation, their ability to take risks, but make sure that those risks are grounded in good products and good services that they believe they can market to the rest of the country, that those models of economic growth are what we’re promoting, and that’s what I think our budget does.
Q: (OFF-MIKE) you’ve described this as — as an economic crisis like nothing we have seen since the Great Depression.
OBAMA: Well, as — as I said, the American people are making a host of sacrifices in their individual lives. We are going through an extraordinary crisis, but we believe that, taken — if you take the steps that we’ve already taken, with respect to housing, with respect to small businesses, if you look at what we’re doing in terms of increasing liquidity in the financial system, that the steps that we’re taking can actually stabilize the economy and get it moving again.
What I’m looking from the American people to do is that they are going to be doing what they’ve always done, which is working hard, looking after their families, making sure that, despite the economic hard times, that they’re still contributing to their community, that they’re still participating in volunteer activities, that they are paying attention to the debates that are going on in Washington.
And the budgets that we’re putting forward and some of the decisions that we’re having to make are going to be tough decisions, and we’re going to need the support of the American people. And that’s part of why what I’ve tried to do is to be out front as much as possible explaining in very clear terms exactly what we’re doing.
Q: Thank you, Mr. President.
Right now on Capitol Hill, Senate Democrats are writing a budget. And according to press accounts and their own statements, they’re not including the middle-class tax cut that you include in the stimulus — they’re talking about phasing that out — they’re not including the cap-and-trade that you have in your budget and they’re not including other measures.
I know when you outlined your four priorities over the weekend, a number of these things were not in there. Will you sign a budget if it does not contain a middle-class tax cut, does not contain cap-and-trade?
OBAMA: Well, I’ve emphasized repeatedly what I expect out of this budget. I expect that there’s serious efforts at health care reform and that we are driving down costs for families and businesses, and ultimately for the federal and state governments that are going to be broke if we continue on the current path.
I’ve said that we’ve got to have a serious energy policy that frees ourselves from dependence on foreign oil and makes clean energy the profitable kind of energy.
We’ve got to invest in education, K through 12 and beyond, to upgrade the skills of the American worker so we can compete in, in the international economy.
And I’ve said that we’ve got to start driving our deficit numbers down.
Now, we never expected, when we printed out our budget, that they would simply Xerox it and vote on it. We assume that it has to go through the legislative process. I have not yet seen the final product coming out of the Senate or the House, and we’re in constant conversations with them.
I am confident that the budget we put forward will have those principles in place.
When it comes to the middle-class tax cut, we already had that in the recovery. We know that that’s going to be in place for at least the next two years. We had identified a specific way to pay for it. If Congress has better ideas in terms of how to pay for it, then we’re happy to listen.
When it comes to cap-and-trade, the broader principle is that we’ve got to move to a new energy era, and that means moving away from polluting energy sources towards cleaner energy sources. That is a potential engine for economic growth.
I think cap-and-trade is the best way, from my perspective, to achieve some of those gains, because what it does is it starts pricing the pollution that’s being sent into the atmosphere.
The way it’s structured has to take into account regional differences. It has to protect consumers from huge spikes in electricity prices. So there are a lot of technical issues that are going to have to be sorted through.
Our point in the budget is: Let’s get started now. We can’t wait. And my expectation is that the Energy Committees or other relevant committees in both the House and the Senate are going to be moving forward a strong energy package. It will be authorized. We’ll get it done. And I will sign it.
Q: (OFF-MIKE) willing to sign a budget that doesn’t have those two provisions?
OBAMA: No, I — what I said was that I haven’t seen yet what provisions are in there. The bottom line is, is that I want to see health care, energy, education and serious efforts to reduce our budget deficit.
And there are going to be a lot of details that are still being worked out, but I have confidence that we’re going to be able to get a budget done that’s reflective of what needs to happen in order to make sure that America grows.
OK, Chip Reid?
Q: Thank you, Mr. President. At both of your town hall meetings in California last week, you said, quote, I didn’t run for president to pass on our problems to the next generation.
But under your budget, the debt will increase $7 trillion over the next 10 years. The Congressional Budget Office says $9.3 trillion. And today on Capitol Hill, some Republicans called your budget, with all the spending on health care, education and environment, the most irresponsible budget in American history.
Q: Isn’t that kind of debt exactly what you were talking about when you said passing on our problems to the next generation?
OBAMA: First of all, I suspect that some of those Republican critics have a short memory, because, as I recall, I’m inheriting a $1.3 trillion deficit, annual deficit, from them. That would be point number one.
Point number two. Both under our estimates and under the CBO estimates, both — the most conservative estimates out there, we drive down the deficit over the first five years of our budget. The deficit is cut in half. And folks aren’t disputing that.
Where the dispute comes in is what happens in a whole bunch of out-years. And the main difference between the budget that we presented and the budget that came out of the Congressional Budget Office is assumptions about growth.
They’re assuming a growth rate of 2.2 percent; we’re assuming a growth rate of 2.6 percent. Those small differences end up adding up to a lot of money. Our assumptions are perfectly consistent with what blue chip forecasters out there are saying.
Now, none of us knows exactly what’s going to happen 6 or 8 or 10 years from now. Here’s what I do know: If we don’t tackle energy, if we don’t improve our education system, if we don’t drive down the costs of health care, if we’re not making serious investments in science and technology and our infrastructure, then we won’t grow 2.6 percent, we won’t grow 2.2 percent. We won’t grow.
And so what we’ve said is, let’s make the investments that ensure that we meet our growth targets that put us on a pathway to growth as opposed to a situation in which we’re not making those investments and we still have trillion-dollar deficits.
And there’s an interesting reason why some of these critics haven’t put out their own budget. I mean, we haven’t seen an alternative budget out of them.
And the reason is because they know that, in fact, the biggest driver of long-term deficits are the huge health care costs that we’ve got out here that we’re going to have to tackle and we — that if we don’t deal with some of the structural problems in our deficit, ones that were here long before I got here, then we’re going to continue to see some of the problems in those out-years.
And — and so what we’re trying to emphasize is, let’s make sure that we’re making the investments that we need to grow to meet those growth targets, at the same time we’re still reducing the deficit by a couple of trillion dollars, we are cutting out wasteful spending in areas like Medicare, we’re changing procurement practices when it comes to the Pentagon budget, we are looking at social service programs and education programs that don’t work and eliminate them.
And we will continue to go line-by-line through this budget, and where we find programs that don’t work, we will eliminate them.
Updated as of 6 p.m.
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