In his weekly address, Pres. Obama criticizes Republicans in the United States Senate who are obstructing passage of an emergency extension of unemployment and efforts designed to help steer capital to small business. “When storms strike Main Street, we don’t play politics with emergency aid,” he says. “We don’t desert our fellow Americans when they fall on hard times. We come together and do what we can to help. We rebuild stronger and we move forward.”

Obama said of the Senate Republicans that “after years of championing policies that turned a record surplus into a massive deficit, including a tax cut for the wealthiest Americans, they’ve finally decided to make their stand on the backs of the unemployed.” He explained that unemployment insurance is not “welfare” and that no one looking for work “would rather have a welfare check than a meaningful job that allows you to provide for your family”.

Seeking to distinguish between nearly a decade of economic policy, under the Bush administration, which was designed to change the way the American economy worked, and which led to the credit crisis of 2008 and the recession, Obama explained that “We can’t afford to back to the same misguided policies that led us into this mess,” adding that “most economists agree that extending unemployment insurance is one of the single most cost-effective ways to help jumpstart the economy.”

Why? Because, he explained, unemployment insurance “puts money into the pockets of folks who not only need it most but who are also most likely to spend it quickly. That boosts local economies. And that means jobs.” And when the dynamics of a local marketplace are more vibrant, because local consumer spending does not evaporate in the midst of a jobs crisis, lending to small businesses, expansion and job-creation, can all resume more readily than if spending were to grind to a halt.

What follows is an official transcript of Pres. Obama’s weekly address, for 12 December 2009, on the subject of sweeping new financial regulatory reforms…

Over the past two years, more than seven million Americans have lost their jobs, and factories and businesses across our country have been shuttered. In one way or another, we’ve all been touched by the worst economic downturn since the Great Depression.

The difficult steps we’ve taken since January have helped to break our fall, and begin to get us back on our feet. Our economy is growing again. The flood of job loss we saw at the beginning of this year slowed to a relative trickle last month. These are good signs for the future, but little comfort to all of our neighbors who remain out of a job. And my solemn commitment is to work every day, in every way I can, to push this recovery forward and build a new foundation for our lasting growth and prosperity.

That’s why I announced some additional steps this week to spur private sector hiring. We’ll give an added boost to small businesses across our nation through additional tax cuts and access to lending they desperately need to grow. We’ll rebuild more of our vital infrastructure and promote advanced manufacturing in clean energy to put Americans to work doing the work we need done. And I have called for the extension of unemployment insurance and health benefits to help those who have lost their jobs weather these storms until we reach that brighter day.

But even as we dig our way out of this deep hole, it’s important that we address the irresponsibility and recklessness that got us into this mess in the first place.

Some of it was the result of an era of easy credit, when millions of Americans borrowed beyond their means, bought homes they couldn’t afford, and assumed that housing prices would always rise and the day of reckoning would never come.

But much of it was due to the irresponsibility of large financial institutions on Wall Street that gambled on risky loans and complex financial products, seeking short-term profits and big bonuses with little regard for long-term consequences. It was, as some have put it, risk management without the management. And their actions, in the absence of strong oversight, intensified the cycle of bubble-and-bust and led to a financial crisis that threatened to bring down the entire economy.

It was a disaster that could have been avoided if we’d had clearer rules of the road for Wall Street and actually enforced them.

We can’t change that history. But we have an absolute responsibility to learn from it, and take steps to prevent a repeat of the crisis from which we are still recovering.

That’s why I’ve proposed a series of financial reforms that would target the abuses we have seen and leave us less exposed to the kind of breakdown we just experienced.

They would bring new transparency and accountability to the financial markets, so that the kind of risky dealings that sparked the crisis would be fully disclosed and properly regulated.

They would give us the tools to ensure that the failure of one large bank or financial institution won’t spread like a virus through the entire financial system. Because we should never again find ourselves in the position in which our only choices are bailing out banks or letting our economy collapse.

And they would consolidate the consumer protection functions currently spread across half a dozen agencies and vest them in a new Consumer Financial Protection Agency. This agency would have the authority to put an end to misleading and dishonest practices of banks and institutions that market financial products like credit and debit cards; mortgage, auto and payday loans.

These are commonsense reforms that respond to the obvious problems exposed by the financial crisis.

But, as we’ve learned so many times before, common sense doesn’t always prevail in Washington.

Just last week, Republican leaders in the House summoned more than 100 key lobbyists for the financial industry to a “pep rally,” and urged them to redouble their efforts to block meaningful financial reform. Not that they needed the encouragement. These industry lobbyists have already spent more than $300 million on lobbying the debate this year.

The special interests and their agents in Congress claim that reforms like the Consumer Financial Protection Agency will stifle consumer choice and that updated rules and oversight will frustrate innovation in the financial markets. But Americans don’t choose to be victimized by mysterious fees, changing terms, and pages and pages of fine print. And while innovation should be encouraged, risky schemes that threaten our entire economy should not.

We can’t afford to let the same phony arguments and bad habits of Washington kill financial reform and leave American consumers and our economy vulnerable to another meltdown.

Yesterday, the House passed comprehensive reform legislation that incorporates some of the essential changes we need, and the Senate Banking Committee is working on its own package of reforms. I urge both houses to act as quickly as possible to pass real reform that restores free and fair markets in which recklessness and greed are thwarted; and hard work, responsibility, and competition are rewarded – reform that works for businesses, investors, and consumers alike.

That’s how we’ll keep our economy and our institutions strong. That’s how we’ll restore a sense of responsibility and accountability to both Wall Street and Washington. And that’s how we’ll safeguard everything the American people are working so hard to build – a broad-based recovery; lasting prosperity; and a renewed American Dream. Thank you.

The following is an official White House transcript of Pres. Obama’s weekly address for Sat., 5 December 2009

Every month since January, when I became your President, I’ve spoken to you about the periodic reports of the Labor Department on the number of jobs created or lost during the previous month; numbers that tell a story about how America’s economy is faring overall.

In those first months, the numbers were nothing short of devastating. The worst recession since the 1930s had wreaked havoc on the lives of so many of our fellow Americans. Yesterday, the numbers released by the Labor Department reflected a continuing positive trend of diminishing job loss.

But for those who were laid off last month and the millions of Americans who have lost their jobs in this recession, a good trend isn’t good enough. Trends don’t buy the groceries. Trends don’t pay the rent or a college tuition. Trends don’t fulfill the need within each of us to be productive, to provide for our families, to make the most of our lives, to reach for our dreams.

So, it is true that we, as a country, are in a very different place than we were when 2009 began. Because of the Recovery Act and a number of other steps we’ve taken, we’re no longer facing the potential collapse of our financial system or a second Great Depression. We’re no longer losing jobs at a rate of 700,000 a month. And our economy’s growing for the first time in a year.

But too many of our neighbors are still out of work because the growth we’ve seen hasn’t yet translated into all the jobs we need. Stung by this brutal recession, businesses that have kept their doors open are still wary about adding workers. Instead of hiring, many are simply asking their employees to work more hours, or they’re adding temporary help.

History tells us this is usually what happens with recessions – even as the economy grows, it takes time for jobs to follow. But the folks who have been looking for work without any luck for months and, in some cases, years, can’t wait any longer. For them, I’m determined to do everything I can to accelerate our progress so we’re actually adding jobs again.

That’s why, this week, I invited a group of business owners from across the country to the White House to talk about additional steps we can take to help jumpstart hiring. We brought together unions and universities to talk about what we can do to support our workers today and prepare our students to outcompete workers around the world tomorrow. We brought together mayors and community leaders to talk about how we can open up new opportunities in our cities and towns.

On Friday, I spent the day in Allentown, Pennsylvania, and met with workers and small business owners there. I stopped by a steel company called Allentown Metal Works, and spoke at Lehigh Community College. I visited folks at a job placement center, and stopped by a shift change at Alpo. The stories and concerns I heard mirrored the countless letters I receive every single day. And they speak louder than any statistic or government report. The folks in Allentown – and in all the Allentowns across our country – are the most dedicated, productive workers in the world. All they’re asking for is a chance, and a fair shake.

And that’s exactly what I’m working to give them. In the coming days, I’ll be unveiling additional ideas aimed at accelerating job growth and hiring as we emerge from this economic storm.

And so that we don’t face another crisis like this again, I’m determined to meet our responsibility to do what we know will strengthen our economy in the long-run. That’s why I’m not going to let up in my efforts to reform our health care system; to give our children the best education in the world; to promote the jobs of tomorrow and energy independence by investing in a clean energy economy; and to deal with the mounting federal debt.

From the moment I was sworn into office, we have taken a number of difficult steps to end this economic crisis. We didn’t take them because they were popular or gratifying. They weren’t. We took these steps because they were necessary.

But I didn’t run for President to pass emergency recovery programs, or to bail out banks or to shore up auto companies. I didn’t run for President simply to manage the crisis of the moment, while kicking our most pressing problems down the road. I ran for President to help hardworking families succeed and to stand up for the embattled middle class. I ran to fight for a country where responsibility is still rewarded, and hard-working people can get ahead. I ran to keep faith with the sacred American principle that we will deliver to our children a future of even greater possibility.

And my commitment to you, the American people, is that I will focus every single day on how we can get people back to work, and how we can build an economy that continues to make real the promise of America for generations to come.

The Federal Housing Authority (FHA) used to insure one in fifty US mortgages; now FHA insures one in four. The financial crisis allowed the most reckless banks to shift their losses to the American taxpayer. Rep. Marcy Kaptur, a Democrat of Toledo, Ohio, serving her 14th term in the House of Representatives, called the 2008 financial crisis and ensuing bailouts the biggest transfer of wealth in history from the American people to the nation’s biggest banks.

Kaptur also recently told PBS’ Bill Moyers Journal that the FBI is suffering from a major lack of funding and staffing for serious financial fraud investigation. Part of what allowed for such massive misbehavior and even outright predatory lending is tat, beyond a lack of regulatory oversight, federal banking and insurance criminal fraud investigators were marginalized in recent years as Bureau funding was directed increasingly toward terrorism investigation and domestic intellience operations.

The failure to aggressively regulate financial markets, especially to assess the specific unique qualities of “innovative” financial instruments —like adjustable-rate-mortgage derivatives, credit default swaps, reliant on often non-existent wealth, intramural lending schemes and the subversion of required cash-in-reserve holdings—, created a climate of “lawlessness” according to many economists and banking industry watchers in which top executives, leading regulators and Congressional watchdogs alike were unable to understand the nature of the holdings being traded or adequately measure their impact on long-term bank solvency.

Now, with the economy still limping, and millions out of work and/or facing bankruptcy, with hundreds of billions of dollars in consumer debt unpayable, foreclosures are still hitting new all-time highs, and the FHA is being forced to back up loans that neither lender nor borrower can afford to keep up. The vast expansion of FHA’s mortgage portfolio is a sign of weakness in the banking sector and in sustainable household wealth or consumer-spending potential.

Housing recovery, with it’s attendant generation of new credit and expanding wealth, drives the return of the broader economy to growth and generalized prosperity. With states like Kaptur’s own state of Ohio experiencing a 94% increase in foreclosures, the process of recovery is being directly and severely threatened. Incidentally, Republican House minority leader John Boehne is also from Ohio, and his opposition to some key components of Pres. Obama’s financial regulatory reforms, that would help rescue and protect consumers from failing loans could pit off his state’s recovery.

Bailouts have focused on major banks and Wall Street firms as the “engines of economic growth”, because the freedom of consumers to spend had come to rely so heavily on those firms’ investment strategies. But baikout lending is not stimulative, because the main focus is to simply avoid the collapse of banking institutions, some of which were so deeply imperiled by their involvement in questionable lending practices and the derivatives that emerged from them that we’re really talking about a process aimed at reversing many years’ worth of flawed accounting and unsustainable corrosive practices.

The last payment for the bailout of the banks that were affected by the 1980s savings and loan crisis will be paid in 2013. Massive lending to private financial interests costs money over time, as interest accumulates, but some would argue this is good for the taxpayer, whose fund —the federal budget— actually expands its revenues through loan repayment. Will that happen thus time around? Maybe, but first comes the trick of dealing with what happens when the bailed-out banks refuse to lend the money they’ve drawn from the taxpayer. Essentially, money is taken out of circulation in order for banks to restore their capital reserves, but in the meantime, everything dependent on credit —in the US economy if the 2000s, everything— stagnates, until the cash economy re-emerges.

Financial regulatory reform depends on recuperating the fundamental constraints of Glass-Stiegel, which was repealed in 1998, and which kept investment banking and commercial banking separate, to prevent conflicts of interest and wild experimentation with unjustifiable claims of windfall investment potential.

As White House chief of staff Rahm Emanuel told CNN’s John King, incomes are at an 18-year low and healthcare costs are projected to increase by at least 10% next year if meaningful reforms are not quickly implemented. While Wall Street’s firms are clearly enjoying a substantial upsurge in revenues and have repaid much of their bailout borrowing, life on Main Street, USA, is tight, and capital, real or imagined, is hard to come by.

The best way to reverse that trend is to make it possible to base relationships between banks and consumers on real wealth calculations and the principle that credit relationships need to be beneficial to and sustainable for BOTH parties. FHA is making very clear where the weak spots remain, illustrating that falling property values, job losses and near punitive “corrective” actions taken by many banks are driving previously non-risky mortgages into foreclosure. Banking reform means financial regulatory reform, and the housing crisis means it must come soon.

Pres. Obama’s weekly address for Saturday 8 August 2009, highlighting the urgent need for healthcare reform, decrying “absurd attacks” as baseless, designed to kill reform

On Friday, we received better news than we expected about the state of our economy. We learned that we lost 247,000 jobs in July – some 200,000 fewer jobs lost than in June, and far fewer than the nearly 700,000 a month we were losing at the beginning of the year. Of course, this is little comfort to anyone who saw their job disappear in July, and to the millions of Americans who are looking for work. And I will not rest until anyone who’s looking for work can find a job.

Still, this month’s jobs numbers are a sign that we’ve begun to put the brakes on this recession and that the worst may be behind us. But we must do more than rescue our economy from this immediate crisis; we must rebuild it stronger than before. We must lay a new foundation for future growth and prosperity, and a key pillar of a new foundation is health insurance reform – reform that we are now closer to achieving than ever before.

There are still details to be hammered out. There are still differences to be reconciled. But we are moving toward a broad consensus on reform. Four committees in Congress have produced legislation – an unprecedented level of agreement on a difficult and complex challenge. In addition to the ongoing work in Congress, providers have agreed to bring down costs. Drug companies have agreed to make prescription drugs more affordable for seniors. The AARP supports reform because of the better care it will offer seniors. And the American Nurses Association and the American Medical Association, which represent the millions of nurses and doctors who know our health care system best, support reform, as well.

As we draw close to finalizing – and passing – real health insurance reform, the defenders of the status quo and political point-scorers in Washington are growing fiercer in their opposition. In recent days and weeks, some have been using misleading information to defeat what they know is the best chance of reform we have ever had. That is why it is important, especially now, as Senators and Representatives head home and meet with their constituents, for you, the American people, to have all the facts.

So, let me explain what reform will mean for you.  And let me start by dispelling the outlandish rumors that reform will promote euthanasia, cut Medicaid, or bring about a government takeover of health care. That’s simply not true. This isn’t about putting government in charge of your health insurance; it’s about putting you in charge of your health insurance. Under the reforms we seek, if you like your doctor, you can keep your doctor. If you like your health care plan, you can keep your health care plan.

And while reform is obviously essential for the 46 million Americans who don’t have health insurance, it will also provide more stability and security to the hundreds of millions who do. Right now, we have a system that works well for the insurance industry, but that doesn’t always work well for you.  What we need, and what we will have when we pass health insurance reform, are consumer protections to make sure that those who have insurance are treated fairly and that insurance companies are held accountable.

We will require insurance companies to cover routine checkups and preventive care, like mammograms, colonoscopies, or eye and foot exams for diabetics, so we can avoid chronic illnesses that cost too many lives and too much money.

We will stop insurance companies from denying coverage because of a person’s medical history.  I will never forget watching my own mother, as she fought cancer in her final days, worrying about whether her insurer would claim her illness was a preexisting condition. I have met so many Americans who worry about the same thing. That’s why, under these reforms, insurance companies will no longer be able to deny coverage because of a previous illness or injury. And insurance companies will no longer be allowed to drop or water down coverage for someone who has become seriously ill. Your health insurance ought to be there for you when it counts – and reform will make sure it is.

With reform, insurance companies will also have to limit how much you can be charged for out-of-pocket expenses.  And we will stop insurance companies from placing arbitrary caps on the amount of coverage you can receive in a given year or a lifetime because no one in America should go broke because of illness.

In the end, the debate about health insurance reform boils down to a choice between two approaches. The first is almost guaranteed to double health costs over the next decade, make millions more Americans uninsured, leave those with insurance vulnerable to arbitrary denials of coverage, and bankrupt state and federal governments. That’s the status quo. That’s the health care system we have right now.

So, we can either continue this approach, or we can choose another one – one that will protect people against unfair insurance practices; provide quality, affordable insurance to every American; and bring down rising costs that are swamping families, businesses, and our budgets. That’s the health care system we can bring about with reform.

There are those who are focused on the so-called politics of health care; who are trying to exploit differences or concerns for political gain.  That’s to be expected. That’s Washington. But let’s never forget that this isn’t about politics. This is about people’s lives. This is about people’s businesses. This is about America’s future. That’s what is at stake. That’s why health insurance reform is so important. And that’s why we must get this done – and why we will get this done – by the end of this year.

Thank you.

Pres. Barack Obama has proposed a national high-speed rail program that would develop eight to ten regions for high-speed rail (currently, only the so-called northeast corridor, running from Washington, DC, to Boston, through Baltimore, Philadelphia and New York, has a regular high-speed service), as part of a phased-in long-term economic recovery plan. The rail project comes into play also as part of Obama’s plans for a comprehensive energy-sector overhaul, aimed at reducing carbon emissions.

The high-speed rail project is perhaps one of the least adequately reported components of both economic recovery and energy infrastructure overhaul plans, but one of the most vital and thoughtful. A successful implementation of 10 high-speed rail “regions”, in the most densely populated areas of the country, would provide a platform for major innovations in transport and energy sourcing.

A rail service, by nature, allows for the use of a wide variety of power-sourcing, and could provide the most immediate opportunity for making the shift to clean energy resources. An electric rail system would permit any new electricity sourcing strategy to be linked into the railway infrastructure, as soon as it is ready and operational. This could put millions of passengers in a clean-energy transport system within just a few years’ time.

But rail infrastructure is also vital to getting automobiles off the road. The current standard for automobile production is carbon-intensive and greenhouse heavy. Reliance on carbon-based fuels, especially petroleum-based gasoline and diesel, means the average automobile, be it car, bus or tractor-trailer, is constantly emitting carbon dioxide (CO2) and contributing to global climate destabilization.

There are “green shoots” in the energy economy, the beginnings of a new spring of innovation, namely the California-based all-electric car company Tesla Motors, the worldwide network of battery switch-out stations being developed by Shai Agassi’s Better Place, and the amazing Swiss-based Solar Impulse, a company which has developed the world’s first 100% solar-powered airplane.

The development of zero-combustion energy technologies promises to revolutionize the future of energy production and of transport. Ideally, most people will not have to make much of a change in the way they get around; they will just use the new technologies and infrastructure made available to them by visionary enterprises and responsible governments. But intelligent planning for how to implement each new advance as it comes to be operational, like a national high-speed rail system, is vital to keeping the innovation coming, wave after wave.

They say the railroads made Chicago the city that it is, and with Obama and his chief of staff, and various other top advisers, coming from Chicago, maybe this White House knows the history and is particularly well-positioned to understand the role of rail in the dawning of a new transport era. It is also true that Obama’s campaign for the presidency was more advanced than any before it at gathering information from the grass-roots, rewarding supporters (with a rating system) for contributing blog posts, creating discussions, or spreading new ideas.

Whatever the case, Obama came to office with a powerful commitment to the idea that infrastructure in America needed investment: 1) just to get up to code and 2) to prevent a dangerous energy-sourcing lag as the nation rallies to combat climate destabilization. The American Recovery and Reinvestment Act (ARRA / “stimulus package” / “recovery plan”) devotes $8 billion to high-speed rail, “a sum that far surpasses anything before attempted in the United States”, according to Politico.

Obama’s plan will devote another $1 billion to high-speed rail in each of the next 5 years. Some believe much more is in fact needed. Much of the underlying infrastructure cost could come from other areas of the recovery strategy or federal public works funding. Over $2 trillion is needed just to address lack of adequate maintenance in existing infrastructure. Obama’s plan aims to achieve both maintenance and major upgrades with the same funding, with careful planning and an eye to the new energy economy.

Absolutely key to the effectiveness of current plans for energy innovation is understanding the role of rail transport in effecting that change. With enough development of wind and solar technologies, the high-speed rail system could be powered through clean energy within just a few years, certainly by the end of a 2nd Obama term, if there is one. Pricing models and efforts to help back up Amtrak’s budget could make the service affordable to millions more people, accelerating the shift from carbon fuels to clean electric, and taking the pressure off private industry to cut emissions.

The Northern New England, Empire, and Keystone high-speed rail regions will expand the reach of the Northeast Corridor high-speed lines. The Southeast, Florida, Gulf Coast and South Central high-speed rail regions will deliver ultra-modern potentially clean-energy transport to the deep south. The Chicago Hub Network will reach out from Chicago to a total of between 7 and 9 states in the region.

Out west, the California and Pacific Northwest regions aim to increase mobility along the Pacific coast, providing better transport links between major cities and the industry-diverse work environments concentrated in the LA, Bay area Silicon Valley or Seattle regions. There are reports the funding will be concentrated in the midwest and far west, where infrastructure spending shortfalls could block the project altogether and where, unlike the northeast, there is no existing service.

In a tremendous and welcome boost to the high-speed rail plans, the House of Representatives provided $4 billion in new funding for the project, in its recently passed transportation spending bill. That’s $4 billion in addition to the $8 billion from the ARRA, instead of the $1 billion requested by Obama. The bill’s expanded funding shows Congress sees the value of such infrastructure investment and could be expected to implement bold energy-sourcing innovations for the rail system, if legislation can be used to do this, speeding the green revolution.

This week, we’ve made important progress toward the goal of bringing about change abroad and change at home.  During my visit to Russia, we began the process of resetting relations so that we can address key national priorities like the threat of nuclear weapons and extremism.  At the G8 summit, leaders from nearly thirty nations met to discuss how we will collectively confront the urgent challenges of our time, from managing the global recession to fighting global warming to addressing global hunger and poverty.  And in Ghana, I laid out my agenda for supporting democracy and development in Africa and around the world.

But even as we make progress on these challenges abroad, my thoughts are on the state of our economy at home.  And that’s what I want to talk to you about today.

We came into office facing the most severe economic downturn since the Great Depression.  At the time, we were losing, on average 700,000 jobs a month.  And many feared that our financial system was on the verge of collapse.

As a result of the swift and aggressive action we took in the first few months of this year, we’ve been able to pull our financial system and our economy back from the brink.  We took steps to re-start lending to families and businesses, stabilize our major financial institutions, and help homeowners stay in their homes and pay their mortgages.  We also passed the largest and most sweeping economic recovery plan in our nation’s history.

The Recovery Act wasn’t designed to restore the economy to full health on its own, but to provide the boost necessary to stop the free fall.  It was designed to spur demand and get people spending again and cushion those who had borne the brunt of the crisis.  And it was designed to save jobs and create new ones.

In a little over one hundred days, this Recovery Act has worked as intended. It has already extended unemployment insurance and health insurance to those who have lost their jobs in this recession.  It has delivered $43 billion in tax relief to American working families and businesses.  Without the help the Recovery Act has provided to struggling states, its estimated that state deficits would be nearly twice as large as they are now, resulting in tens of thousands of additional layoffs – layoffs that would affect police officers, teachers, and firefighters.

The Recovery Act has allowed small businesses and clean energy companies to hire new workers or scrap their plans for eliminating current jobs.  And it’s led to new jobs building roads, bridges and other infrastructure projects, thousands of which are only beginning now.  In the months to come, thousands more projects will begin, leading to additional jobs.

Now, I realize that when we passed this Recovery Act, there were those who felt that doing nothing was somehow an answer.  Today, some of those same critics are already judging the effort a failure although they have yet to offer a plausible alternative.  Others believed that the recovery plan should have been even larger, and are already calling for a second recovery plan.

But, as I made clear at the time it was passed, the Recovery Act was not designed to work in four months – it was designed to work over two years.  We also knew that it would take some time for the money to get out the door, because we are committed to spending it in a way that is effective and transparent.  Crucially, this is a plan that will also accelerate greatly throughout the summer and the fall.  We must let it work the way it’s supposed to, with the understanding that in any recession, unemployment tends to recover more slowly than other measures of economic activity.

I am confident that the United States of America will weather this economic storm.  But once we clear away the wreckage, the real question is what we will build in its place.  Even as we rescue this economy from a full blown crisis, I have insisted that we must rebuild it better than before.

Without serious reforms, we are destined to either see more crises, or suffer stagnant growth rates for the foreseeable future, or a combination of the two. That’s a future I absolutely reject. And that’s why we’re laying a new foundation that’s not only strong enough to withstand the challenges of the 21st century, but one that will allow us to thrive and compete in a global economy.  That means investing in the jobs of the future, training our workers to compete for those jobs, and controlling the health care costs that are driving us into debt.

Through the clean energy investments we’ve made in the Recovery Act, we’re already seeing start-ups and small businesses make plans to create thousands of new jobs.  In California, 3000 people will be employed to build a new solar plant.  In Michigan, investment in wind turbines and wind technology is expected to create over 2,600 jobs.  And a few weeks ago, the House of Representatives passed historic legislation that would finally make clean energy the profitable kind of energy, leading to whole new industries and jobs that can’t be outsourced.

To give our workers the skills and education they need to compete for the high-tech, high-wage jobs of the future, we’re working on reforms that will close achievement gaps, ensure that our schools meet high standards, reward our teachers for performance and give them new pathways to advancement.

Finally, we have made important progress in the last few weeks on health care reform that will finally control the costs that are driving our families, our businesses, and our government into debt.  Both the Senate and the House have now produced legislation that will bring down costs, provide better care for patients, and curb the worst practices of insurance companies, so that they can no longer deny Americans coverage based on a pre-existing medical condition.  It’s a plan that would also allow Americans to keep their health insurance if they lose their job or if they change their job.  And it would set up a health insurance exchange – a marketplace that will allow families and small businesses to access one-stop-shopping for quality, affordable coverage, and help them compare prices and choose the plan that best suits their needs.  One such choice would be a public option that would make health care more affordable through competition that keeps the insurance companies honest.

One other point. Part of what makes our current economic situation so challenging is that we already had massive deficits as the recession gathered force. And although the Recovery Act represents just a small fraction of our long term debt, people have legitimate questions as to whether we can afford reform without making our deficits much worse.

So let me be clear; I have been firm in insisting that both health care reform and clean energy legislation cannot add to our deficit. And I intend to continue the work of reducing waste, eliminating programs that don’t work, and reforming our entitlement programs to ensure that our long term deficits are brought under control.

I said when I took office that it would take many months to move our economy from recession to recovery and ultimately to prosperity.  We are not there yet, and I continue to believe that even one American out of work is one too many.  But we are moving in the right direction.  We are cleaning up the wreckage of this storm.  And we are laying a firmer, stronger foundation so that we may better weather whatever future storms may come.  This year has been and will continue to be a year of rescuing our economy from disaster.

But just as important will be the work of rebuilding a long term engine for economic growth. It won’t be easy, and there will continue to be those who argue that we have to put off hard decisions that we have already deferred for far too long. But earlier generations of Americans didn’t build this great country by fearing the future and shrinking our dreams.

This generation – our generation – has to show that same courage and determination. I believe we will.

Thanks for listening.

TheHotSpring.com :: The US economy has faced serious challenges on a number of fronts, over the last few years, contributing to a complex downturn with little easy salvation in sight. In order to transition to this new era of recovery and slower growth, the US consumer will have to cut back drastically on luxury spending, and the market will have to rely less on the easy flow of consumer credit.

Part of what has left so many analysts confounded by the current recession is a series of government actions and “bubbles” in the private sector that have masked the long-term weaknesses that were converging to bring this crisis about. Since 2001, we have had a consistent pattern of government inflation of economic statistics, with rosier outlooks presented, only to be recast in a more negative light, weeks later in low-visibility “updates”.

Changes to consumer bankruptcy laws made it harder for individuals to access the bankruptcy process, which —as we are seeing with Chrysler at the moment— is intended to help clean up unsustainable debt and restore economic viability. This lack of access to bankruptcy led borrowers in trouble to either seek more credit, which would only raise their repayment burden, or go longer and longer stretches into delinquency, bringing down debt relationships (i.e. creditors’ books) along with them.

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The result has been mass foreclosure, mass credit-card default, higher unemployment, and the ripple effect of less access to healthcare, escalating costs for those paying and a basic rift between the consumer and the consumer markets in terms of provision of healthcare insurance, financial products, industrial goods, energy production and basic foodstuffs.

The consumerist-oriented culture has proven to be something other than a consumer-oriented culture. That market dynamic, in which the continual expansion of consumption as primary economic driver came to dominate calculations about product, service and regulation, did not enable the creation of market dynamics friendly to the interests of actual consumers.

It is this dynamic which is now under historic pressures, and which will, inevitably, at least to some degree, change. While “saving a little for a rainy day” has always been considered wise and level-headed, the recent economic boom cycle saw the active championing of over-spending. Not only businesses and banks, but even the government, got involved in pushing for the unsustainable expansion of consumer over-extension.

Cutting back on spending, tightening the belt, is something consumers have begun doing, starting in 2007, not necessarily due to caution or preference, but to necessity. Now, as massive amounts of economic stimulus have been needed to prevent the banking freeze from driving the long-term outlook into a prolonged tailspin and the certain disaster of depression economics, spending-within-reason and pay-as-you-go are becoming valued new paradigms for economic activity.

The market as a whole, however, needs to adjust, and it will take time. Financial services and product offerings, interest rates and the pitfall particulars of fine print, insurance business models and property ownership, must all be re-situated within this new economic matrix, in which infinitely expanding consumption cannot be taken for granted.

From summer of 2008 through spring 2009, we have seen an astonishing reluctance on the part of major financial institutions to adjust to the new reality. They are, for lack of a better description, clinging to the idea of fixed profits that depended on inflated —and likely irrecoverable— property and stock valuations. Debt holdings are still continuing to approach default at historic levels.

That reluctance is understandable, because it is what individuals do: make major psychological adjustments slowly and grudgingly, clinging to hope that a preferred circumstance will return. In some cases, such behavior is justified; in others, it is not. In major financial institutions facing the Great Recession, it is a short-sighted behavior, motivated by the fear-reflex, which has real-world negative impact on a potentially massive scale.

This is why we are seeing a renewed passion for serious regulation of the financial sector, not just from and impassioned and populist Main Street, but from government and from within the financial sector itself. The law of no law became too vast and too risky to keep track of. Too many variables came into play. Too many manipulations. And now, there is an urge to find something more credible, more stable, more sustainable, which can return to hold a prominent place in overall economic output.

Pres. Obama announced in his inaugural address that he saw this as a new “era of responsibility”, and by this he meant not only individuals, but also major institutions: that responsibility is not only owning up to your failures but also acting with responsible long-term vision, for the benefit of future generations and the sustainability of a vibrant capitalist democracy under the US Constitution.

He also has said he does not wish to see the financial sector return to accounting for 40% of all American corporate profits, though it should return to its rightful place among major factors in overall economic prosperity. The overdependence on profits from the financial sector implicitly suggests that the huge amounts of financial activity are actually backing less of the rest of the economy’s activity across the board, meaning the financial activity itself is getting to be overextended, riskier and unsustainable.

Economists are saying a lot about the risks of inflation or the risks of deflation, either that costs will spiral upward or revenues will spiral downward, in either case creating an untenable level of over-stress on the flow of capital, undermining businesses, forcing the cutting of personnel and prolonging or deepening the general economic malaise. But: prices, and valuations, have to come down; this whole recession is to a large extent a natural correction of market dynamics, stemming from abusive and irrational ideas of infinite expansion of total wealth.

So, the public, the government, and the private sector, need to plan for price adjustments and the scaling back of the major costs for the average person to sustain life, both biologically and socio-economically. The costs of staple nutrients, of basic healthcare, of clothing, shelter and education, must be brought within reason, without a free society having to relinquish the laudable and necessary goal of broad-based middle-class prosperity.

Less reliance on automatic profit formulations, 30-fold manufacturing mark-ups, extortionate medical expenses, and the commodification of water, clean air and basic nutrients, is fundamental to long-term sustainable economic recovery. That basic paradigm reformulation —spending less, or having to spend less, is an economic plus, perhaps even an ‘asset’— must begin to take root, if we are to optimize the time-frame of our return to reliable broad-based prosperity.

TheHotSpring.com :: We are witnessing the systematic implosion of the American auto industry. The situation is so grave that instead of seeking to reinvent, or spin off or sell off its Pontiac division, GM is simply closing it down and laying people off. No attempt to fix problems or to take advantage of the opportunity to comprehensively reinvent a company already fitted with major industrial manufacturing capacity, just the unilateral shuttering of major plants and an entire company.

But Pres. Obama has pledged to spend $150 billion over 5 years to promote the greening of American industry. Why is GM not taking more decisive and aggressive action to court some of that investment? Pontiac, if it is found to be a failed company by its parent, GM, affords a brilliant opportunity to reinvent the American auto industry. Scale it back to one model, the Pontiac, and use the Pontiac infrastructure to build an unprecedented “green muscle car”. It could be an advanced plug-in hybrid or a green diesel capable of 100 mpg.

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Volkswagen has said for a few years now it is producing a future diesel car that will get over 100 mpg. But electric affords the best hope for real innovation. By the account of Shai Agassi, an American-Israeli entrepreneur building a global infrastructure for regular battery switch-out “re-fueling” of electric cars —his firm is called Better Place—, the electricity to move a car costs 1/16 as much as the gasoline it takes to go the same distance.

What is needed is the technology (batteries, energy re-cycling, self-recharging, and battery switch-out points) to enable existing electric car technology to expand both range and drive power. Pontiac’s history as a company that makes “muscle cars”, fast, heavy roadsters and no-nonsense sports cars, could allow it to be positioned as the model for green car power.

GM’s restructuring plan is, of necessity, focused on saving money. But it may be a grave and historic miscalculation to put saving money (i.e. not spending) ahead of the smartest possible investment (i.e. spending) of available capital. It might be said that closing Pontiac is less costly in the short-term than selling it, but GM will retain contractual obligations for severance, benefits and pensions for Pontiac workers that it might be able to reduce the cost of, were it to successfully spin off or sell off the brand.

At the very least, it is clear that winning substantial green subsidies for the defunct brand would be preferable to winning government financing conditions related to the rest of GM with no fiscal improvement emerging from the Pontiac closure / reinvention. It would be instructive if GM would publish information about why it chose not to seek aggressive reinvention of the brand, due to its name-recognition and existing infrastructure, including a workforce GM cannot so easily disown.

What would a green muscle-car look like? Well, the the real “muscle” is in performance, not necessarily in noise pollution or high emissions, so GM could re-engineer Pontiac’s manufacturing facilities to fit the goal of high fuel-efficiency, high-performance sporty cars. These could be lightweight or not, and could rely on a range of innovative fuel technologies, such as multi-hybridization (supplementing plug-in hybrids with bio-flex fueling and solar-voltaic “in-flight” recharging) or “green diesel” — “green” because of low emissions and high fuel efficiency.

We don’t know if GM has attempted to adopt any of these bolder, more complex strategies for navigating the volatility of a comprehensive energy-infrastructure paradigm shift, but we know this is coming. It would be wisest for GM to look at greening subsidies as the necessary funding for a comprehensive restructuring, retooling and rebranding, which are necessary anyway even before ecological considerations are taken into account.

Eventually, the goal of major auto manufacturers will have to be the achievement of highly efficient, lower-cost state of the art vehicles that require zero combustion and emit zero harmful gases —whether those gases are toxic contaminants or greenhouse-inducing accumulants—, so starting down that road is the smartest way to plan for the shift in profit strategy from the planned obsolescence of internal-combustion-reliant vehicles (worn by years of combustion and exhaust strain) to the zero combustion era.

Pontiac is inviable in its present form, under its present management and with GM’s present contractual infrastructure. But that can all be changed if an intelligent plan of action is implemented, oriented toward producing the best-quality, high-performance clean energy vehicles, eligible for the best incentives in terms of government research spending and tax credits. At least, it’s worth considering, before consigning a major industrial operation to the scrap-heap.

As delivered by Pres. Barack Obama, 24 April 2009, in the White House Diplomatic Reception Room

1:46 P.M. EDT, THE PRESIDENT:  Thank you.  That was excellent — we might have to run her for something some day.  (Laughter.)  That was terrific.  Thank you, Stephanie.  I want to also introduce Yvonne Thomas, who is Stephanie’s proud mother.  And we appreciate everything that you’ve done.  And Stephanie’s father, Albert, is around here as well.

There are few things as fundamental to the American Dream or as essential for America’s success as a good education.  This has never been more true than it is today.  At a time when our children are competing with kids in China and India, the best job qualification you can have is a college degree or advanced training.  If you do have that kind of education, then you’re well prepared for the future — because half of the fastest growing jobs in America require a Bachelor’s degree or more.  And if you don’t have a college degree, you’re more than twice as likely to be unemployed as somebody who does.  So the stakes could not be higher for young people like Stephanie.

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And yet, in a paradox of American life, at the very moment it’s never been more important to have a quality higher education, the cost of that kind of that kind of education has never been higher.  Over the past few decades, the cost of tuition at private colleges has more than doubled, while costs at public institutions have nearly tripled.  Compounding the problem, tuition has grown ten times faster than a typical family’s income, putting new pressure on families that are already strained and pricing far too many students out of college altogether.  Yet, we have a student loan system where we’re giving lenders billions of dollars in wasteful subsidies that could be used to make college more affordable for all Americans.

This trend — a trend where a quality higher education slips out of reach for ordinary Americans — threatens the dream of opportunity that is America’s promise to all its citizens.  It threatens to widen the gap between the haves and the have-nots.  And it threatens to undercut America’s competitiveness — because America cannot lead in the 21st century unless we have the best educated, most competitive workforce in the world.  And that’s the kind of workforce — and the kind of citizenry — to which we should be committed.

And that’s why we have taken and proposed a number of sweeping steps over our first few months in office — steps that amount to the most significant efforts to open the doors of college to middle-class Americans since the GI Bill.  Millions of working families are now eligible for a $2,500 annual tax credit that will help them pay the cost of tuition; a tax credit that will cover the full cost of tuition at most of the two-year community colleges that are some of the great and undervalued assets of our education system.

We’re also bringing much needed reform to the Pell Grants that roughly 30 percent of students rely on to put themselves through college.  Today’s Pell Grants cover less than half as much tuition at a four-year public institution as they did a few decades ago.  And that’s why we are adding $500 to the grants for this academic year, and raising the maximum Pell Grant to $5,550 next year, easing the financial burden on students and families.

And we are also changing the way the value of a Pell Grant is determined.  Today, that value is set by Congress on an annual basis, making it vulnerable to Washington politics.  What we are doing is pegging Pell Grants to a fixed rate above inflation so that these grants don’t cover less and less as families’ costs go up and up.  And this will help prevent a projected shortfall in Pell Grant funding in a few years that could rob many of our poorest students of their dream of attending college.  It will help ensure that Pell Grants are a source of funding that students can count on each and every year.

Now, while our nation has a responsibility to make college more affordable, colleges and universities have a responsibility to control spiraling costs.  And that will require hard choices about where to save and where to spend.  So I challenge state, college and university leaders to put affordability front and center as they chart a path forward.  I challenge them to follow the example of the University of Maryland, where they’re streamlining administrative costs, cutting energy costs, using faculty more effectively, making it possible for them to freeze tuition for students and for families.

At the same time, we’re also working to modernize and expand the Perkins Loan Program by changing a system where colleges are rewarded for raising tuition, and instead, rewarding them for making college more affordable.

Now just as we’ve opened the doors of college to every American, we also have to ensure that more students can walk through them.  And that’s why I’ve challenged every American to commit to at least one year of higher education or advanced training — because by the end of the next decade, I want to see America have the highest proportion of college graduates in the world.  We used to have that; we no longer do.  We are going to get that lead back.

And to help us achieve that goal, we are investing $2.5 billion to identify and support innovative initiatives that have a record of success in boosting enrollment and graduation rates — initiatives like the IBEST program in Washington state that combines basic and career skills classes to ensure that students not only complete college, but are competitive in the workforce from the moment they graduate.

And to help cover the cost of all this, we’re going to eliminate waste, reduce inefficiency, and cut what we don’t need to pay for what we do.  And that includes reforming our student loan system so that it better serves the people it’s supposed to serve — our students.

Right now, there are two main kinds of federal loans.  First, there are Direct Loans.  These are loans where tax dollars go directly to help students pay for tuition, not to pad the profits of private lenders.  The other kinds of loans are Federal Family Education Loans.  These loans, known as FFEL loans, make up the majority of all college loans.  Under the FFEL program, lenders get a big government subsidy with every loan they make.  And these loans are then guaranteed with taxpayer money, which means that if a student defaults, a lender can get back almost all of its money from our government.

And there’s only one real difference between Direct Loans and private FFEL loans.  It’s that under the FFEL program, taxpayers are paying banks a premium to act as middlemen — a premium that costs the American people billions of dollars each year.  Well, that’s a premium we cannot afford — not when we could be reinvesting that same money in our students, in our economy, and in our country.

And that’s why I’ve called for ending the FFEL program and shifting entirely over to Direct Loans.  It’s a step that even a conservative estimate predicts will save tens of billions of tax dollars over the next ten years.  According to the Congressional Budget Office, the money we could save by cutting out the middleman would pay for 95 percent of our plan to guarantee growing Pell Grants.  This would help ensure that every American, everywhere in this country, can out-compete any worker, anywhere in the world.

In the end, this is not about growing the size of government or relying on the free market — because it’s not a free market when we have a student loan system that’s rigged to reward private lenders without any risk.  It’s about whether we want to give tens of billions of tax dollars to special interests or whether we want to make college more affordable for eight and a half million more students.  I think most of us would agree on what the right answer is.

Now, some of you have probably seen how this proposal was greeted by the special interests.  The banks and the lenders who have reaped a windfall from these subsidies have mobilized an army of lobbyists to try to keep things the way they are.  They are gearing up for battle.  So am I.  They will fight for their special interests.  I will fight for Stephanie, and other American students and their families.  And for those who care about America’s future, this is a battle we can’t afford to lose.

So I am looking forward to having this debate in the days and weeks ahead.  And I am confident that if all of us here in Washington do what’s in the best interests of the people we represent, and reinvest not only in opening the doors of college but making sure students can walk through them, then we will help deliver the change that the American people sent us here to make.  We will help Americans fulfill their promise as individuals.  And we will help America fulfill its promise as a nation.

So thank you very much.  And thank you, Stephanie.  And thank you, Stephanie’s mom.

All right.  Thanks, guys.

END                   
1:56 P.M. EDT

Pres. Obama today gave an address at Georgetown University, in which he explained his economic policies and how his budget and recovery plan will achieve not only better healthcare for more Americans and a green energy agenda, but real substantive entitlement reform, new financial regulations intended to both curb abuses and spur sustainable investments in future prosperity, and protect against long-term decline stemming from mass under-education.

He named “five pillars” of long-term economic recovery:

1. new rules for Wall Street that will reward drive, innovation and the creation of value, not reckless speculation and abuse;
2. new education initiatives to make our workforce more skilled and competitive;
3. new investment in energy innovation;
4. new investment in healthcare that will save small businesses money;
5. new measures to keep federal budget deficits low over long-term…

Obama explained that:

… most of all, I want every American to know that each action we take and each policy we pursue is driven by a larger vision of America’s future – a future where sustained economic growth creates good jobs and rising incomes; a future where prosperity is fueled not by excessive debt, or reckless speculation, or fleeting profit, but is instead built by skilled, productive workers; by sound investments that will spread opportunity at home and allow this nation to lead the world in the technologies, innovations, and discoveries that will shape the 21st century.  That is the America I see.  That is the America that Georgetown University is preparing you for. That is the future I know we can have.

1. Tough New Rules of the Road for Wall Street

Just as after the Great Depression, new rules were created to prevent a repeat of economic disaster rooted in “shortcuts and abuse”, we need to do the same, so our economic growth is rooted in something more sustainable and real. Obama expects bill with comprehensive new financial regulatory framework “to arrive on my desk before the year is through”.

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2. Education

When the US led the world in education performance and breadth of public education at high levels, it came to lead the world in economic growth, innovation and long-term stability. By 2020, the US will lead the world in highest rates of college-graduates. Efforts will begin now with early childhood education, incentives for good teachers, assistance so that all Americans can engage at least one year of higher education.

Obama education vision includes focus on “making things”, promoting education in science and engineering. Obama said awkwardly that too long have we prioritized talents directed toward those who can “innovate” in the use of financial instruments and markets.

3. Energy innovation to spur clean-energy economy

Recovery act will double US supply of renewable energy in just three years. The aim of creating a home-grown, localized sustainable clean-energy economy, is part of crafting, through the opportunity of this moment of crisis and over the medium-term, the infrastructure and market framework for a viable, affordable clean-energy economy over the long-term, a basic root element of truly sustainable economic growth.

Closing the “carbon loophole” will spur investment in clean-energy technologies, resources and infrastructure. This shift is necessary to curb the impact of human-induced global climate destabilization, reduce reliance on foreign oil, which jeopardizes national security, and create a new energy infrastructure that requires and sustains local employment on a massive scale.

4. Healthcare reform to create affordable market for all Americans

Over one million American homes may be lost due to the crippling costs of a broken healthcare system. The aim of reform is to make “quality healthcare affordable for every American”. Bringing everyone into the system is the first step to reducing costs to market-sensible levels that don’t generate personal bankruptcies.

5. Restoring fiscal discipline

“Already, we’ve identified $2 trillion in deficit reductions over the next decade”, said Obama, adding that just by examining the elimination of no-bid contracts, over $40 billion will be saved. The new budget will reduce discretionary spending as a share of the total economy by 10% over 10 years, the lowest level seen in decades.

Answering the criticism that his administration has been “spending with reckless abandon”, pushing a high-cost social agenda while mortaging future generations’ fiscal wellbeing for momentary gains, Obama said “we cannot sacrifice the long-term investments we need to make” in order to line our pockets in the short term.

“We as a country have to make current choices with an eye to the future; if we don’t invest now in renewable energy, if we don’t invest now in a skilled workforce, if we don’t invest now in renewable energy, this economy will not grow as it should”, Obama intoned, calling on all in his audience to adopt a more responsible long-term vision for economic investment and prosperity.

Obama noted the deep “structural gap” in the federal budget that stems from the government taking in too little revenue as baby-boomers retire in large numbers to cover the entitlements for those same individuals. He also said the nation must remain committed to serious reforms that will work to mend that gap, citing the fallacy that cutting funding for the National Endowment for the Arts would somehow fix the problem.

Obama explained that his complex broad-view reform plan for economic recovery is designed to actually make it possible to “solve real problems” by “rolling up sleeves” and doing the hard work needed. He warned that there is in Washington too often a transition “from shock to trance” when facing serious problems, leading to a shortening of attention spans and a political unwillingness to deal with anything serious.

Addressing members of Congress, he said “We have been called to govern in extraordinary times”, noting that the multiple crises of the moment assign to those in office at present an historic range of responsibilities to ensure that the economic house the US seeks to build be “built upon a rock”, not “the same pile of sand” that led to the current collapse.

Pres. Obama tonight held his second prime time press conference, in the East Room of the White House, at 8pm, EDT. The main topic of the evening was the president’s budget proposal and the process of economic recovery. Obama opened with a prepared statement, before taking questions from the press corps. He praised efforts being made around the nation to implement projects that are creating new jobs, and defended his plan for a tax cut for 95% of working families.

Democrats in Congress are writing a budget, and there is word they are planning to exclude key provisions that were instrumental to both Obama’s campaign platform and his economic recovery plan. The middle-class tax cut meant to provide financial relief for 95% of working families is one of those provisions the Congressional budget plan is said not to include. Pres. Obama boldly said his tax plan would begin appearing “in people’s paychecks by April 1″.

He also said that efforts to reform banking and mortgage institutions means as much as 40% of mortgages are now eligible for refinancing, part of a national effort to stave off foreclosures and restore order to credit markets. The Treasury Dept. and Federal Reserve are coordinating to restore liquidity to financial institutions and get credit flowing to consumers and businesses, via a massive public-private partnership to invest in “toxic” financial holdings.

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Obama also defended his plans for comprehensive energy, healthcare and education reform, saying spending plans were designed to invest in strategies that will increase revenue over the long term, reducing costs for consumers and taxpayers, and spurring growth. He said his budget plan, as written, is “inseparable from this recovery”, an apparent warning to Congress he’s willing to fight in the court of public opinion for his budget priorities.

Clearly addressing the attitude spreading through Congress that the budget deficit could be an insurmountable hurdle, the president said his plan would cut the budget deficit by half by the end of his first term “even by the most pessimistic estimates”. Addressing mounting outrage over bonuses paid by AIG and other firms that received taxpayer funds, he said the nation “can’t afford to demonize every investor or entrepreneur” aiming to turn a profit.

Questions were varied and wide-ranging. The first was about authority the administration is seeking to be able to act more aggressively to restructure firms it owns a controlling interest in, like AIG, that are not banks and to not fall under the FDIC’s authority. Obama said without that authority, the government cannot adequately act to deal with bad debt or “quarantine” such troubled institutions from others that could be brought down if it unravels.

NBC’s Chuck Todd asked the president whether the American people should be asked to make wartime sacrifices to help speed economic recovery. Pres. Obama said he believed the American people are already sacrificing “left and right” on a daily basis, and cited examples of people choosing to forego a day’s salary in order to allow coworkers to avoid being laid off, while states or businesses cut costs.

A tougher question to answer was whether or not he would sign a budget plan that did not include his middle-class tax cut or his cap-and-trade system for limiting carbon emissions. The president hedged, explaining that he believed the tax cut was essential to long-term economic recovery, and that the energy sector needs to be moved comprehensively toward clean energy.

He said cap-and-trade is the best short-term program to help markets do that, and that he would urge Congress to find a better solution or include it. Asked again if he would sign a bill without them, the president said he is confident the budget will contain provisions that meet his objectives, the second time he suggested the tax cuts would not be left out.

Asked about whether he was violating his own pledge not to “pass on our problems to the next generation”, by spending in such a way that could inflate the federal budget deficit, Obama retorted that the Congressional Budget Office (CBO) projects 2.2% growth several years out from the 2010 budget, while White House projections favored a 2.6% growth rate several years out.

The president noted that “blue chip” forecasters are in line with the higher White House estimate. But he also warned that inaction, or choosing the wrong approach to economic recovery, could mean a lag-time in recovery and lead to a situation in which the US economy is simply not growing, in which case deficits would be worse. He used this warning to draw a bright line between ineffective (if even reduced) spending, and pro-active investment in long-term recovery and sustainable growth.

Recent weeks have featured a growing number of news stories about the extreme violence in northern Mexico, imposed by out-of-control drug cartels on a defenseless population, and fueled by political corruption. Some have spoken of civil war or “failed state” status for Mexico, while Gov. Perry, of Texas, says the US needs to station national guard troops along the border to prevent the violence spilling over into US towns and cities.

Pres. Obama was asked if he views the situation as one that endangers national security or which could require a military solution. Obama noted that just today he had sent a new infusion of money and materials to aid Mexico’s authorities in fighting the cartels holding cities like Ciudad Juárez hostage. He also said it is imperative that US authorities act to “make sure illegal guns and cash stop flowing” to the drug cartels from US territory.

He did not, however, back a military response to the problem. He praised Mexico’s Pres. Calderón for having the “courage” to take on the cartels —infamous for political killings, though mostly at the local or regional level— and said there were many more appropriate and targeted ways the US could approach the problem of growing drug violence along Mexico’s US border.

He promised that Veterans’ Affairs would see its funding adjusted to make sure all needs were being met, including Obama’s chosen causes of making sure veterans suffering post-traumatic stress disorder and traumatic brain injury receive complete coverage for ongoing treatment related to their service. He used the issue, linked to government healthcare costs, to note that his team has “already identified $40 billion” in savings from reforms considered politically doable in the short term.

One of the most telling moments of the press conference came when Obama was pressed to answer why does it seem like New York attorney general Andrew Cuomo is “getting more action” in clamping down on AIG’s bonuses than the federal government and why did it take the White House several days to make public the news of the AIG bonuses. Obama quipped tersely that it took a few days, “because I like to know what I’m talking about before I speak”.

His tone was gracious throughout, however. He did take pains to remind the public and perhaps the press as well that “by the time an issue reaches my desk, it’s a hard issue” and that it otherwise would have been solved by someone else and would not ever appear on the president’s desk. In particular, he was addressing funding for embryonic stem cell research.

He said he did in fact wrestle with the moral and ethical considerations the issue raises, and that he believes there is always an ethical component to be considered in science and in law and policy-making. He said that “strict ideology” should not stand in the way of scientific exploration in search of the truth, but also said “No” in response to a follow-up about whether he believes “scientific consensus is enough to tell us what we can and can’t do”.

Obama pledged his strong support for the Israeli-Palestinian peace process and said there will have to be compromises made by both sides in order to make real progress toward a viable “two-state solution”. He said he’s “a big believer in persistence” and that “we’re not immediately going to achieve Middle East peace”, but that like economic reforms and government reforms, such long-term incremental progress is worth pursuing even when odds look long.

In office just over 60 days, Obama has been facing down a bewildering array of monumental crisis situations, none of which allow for easy fixes, and he has had an unruly and feverish Congress to deal with, already losing its willingness to cooperate on the specifics of the president’s agenda. The event was the latest in a series of pitches and outreaches aimed at shoring up public support for the struggles ahead.

There is an irresponsible analysis of economic outlook speeding over the airwaves these days, implying that if the stock market doesn’t “respond” favorably to a given political announcement then that is 1) a “vote” of no confidence in said policy, and 2) proof that said policy is obviously wrong. This analysis is a vicious disservice to the American people: markets respond to thousands of variables, which in combination represent countless numbers of interests large and small, problems large and small and long-term outlooks more and less long-term.

“The stock market” is not a public opinion survey, and public opinion surveys are not a read of whether a policy meant to do good for the general welfare is based on fact, viable long-term and actually the right approach or not. What’s more, “The Dow” is not the stock market: it is a selection of industrial companies (30 to be precise), that are supposed to serve as an “index” for measuring the performance over time of American industry, as one facet of an overall economic prism, as created by Charles Dow, c0-founder of Dow Jones.

It was supposed to work in concert with the older Dow Jones Transportation Average, an index of stocks in the transportation sector, to provide a rough gauge of the health of the largest heavy-industry businesses, on which American society at the peak of the industrial age was built. The Dow Jones Industrial Average (“The Dow”) is now more a measure of the 30 largest or most widely held public corporations based in the US. It has become something it was not intended to be: a quick-reference snapshot barometer for overall economic health.

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In point of fact, the Dow is not and cannot be that. It does tend to grow more when GDP grows more and decline when GDP declines, but like GDP, the Dow is unable to measure the degree of wealth or quality of life of individuals within or across the American economy as a whole. The Dow does not gauge whether banks are friendly or hostile to homeowners or whether credit-card accounts are verging on mass default. It does not tell us if our infrastructure is in need of a $2 trillion tune-up, just to fall in line with existing law.

Not only does it not comment on whether or not fossil fuels have a stranglehold on our economy, potentially draining away much-needed resources that would assist in transitioning to a sustainable, renewable energy economy, it elevates the bias toward already-existing carbon-heavy businesses, as if they were the best bet for the future. By working in a way that allows Wall Street to push those businesses ever forward, it desperately distorts the real economic facts regarding many major American businesses and business sectors.

But most importantly, the Dow is an index of stock values, and it must respond first and foremost to the market fluctuations that drive those values. In times of “irrational exuberance”, it may see price-per-share skyrocket to irrationally exuberant levels, only to see it come crashing down again when the market “corrects” because investors start clamoring for evidence of such value, or a hard return on their investment.

If the stock market is suffering, despite major efforts to move money to banks and through banks to consumers and businesses, it is not because those efforts are the wrong thing to do. The stock market’s valuations suffer because those trading them believe they are overvalued. These are the same people who previously overvalued them, and whose choices on these matters are based as much on speculation about the future value of those stocks as they are about any other factor across the economy.

The policies being enacted now in Washington are aimed at shoring up the American economy, over the long term, against this sort of volatility, and they are not (despite all the adolescent protests from Wall Street about “socialism”) intended to direct or set market prices. The markets must wrestle not only with issue of the long-term solvency of poorly run firms, industrial, financial and otherwise, but also with their own inherent methodological flaws.

There is lag-time for any institution in catching on to its own weaknesses. Right now, policy-makers in Washington are trying to enact policies that circumvent many of the financial and banking sector’s shortcomings, in order to restore some sense of stability to the economy broadly. Wall Street may or may not recognize the value of doing this, but those in Washington who keep pushing the story that new policies are somehow “not working” because Wall Street is losing value would do well to note that Wall Street is not the whole economy, though it may sometimes give us a measure of how well the underpinnings of the economy serve us.

It may be that Wall Street’s problem is to do with overvaluation of such extremes that we are still witnessing an honest correction in process. It may be that the banking sector is so unhealthy, that so much of its reported “assets” were in fact fictional or inviable, or derived from “bundled exotics” that reasonable people fear there is no solution in sight.

It may be that Wall Street is, after all, collectively crying out for someone, anyone, to replace the $10.9 trillion its institutions have “lost” since the Dow’s peak in October 2007, when it reached 14,000, well more than twice its recent mark of 6,763.29. In that case, anything short of spending more money than the entire US economy moves in one year on handouts to Wall Street, will be insufficient.

The fact is: banks and investors have made wildly irresponsible choices about unrealistic numbers, either because they were misled about the validity of those numbers or because a global groupthink took over, and no one but a handful of economists and reporters was willing to see the bubble’s membrane thinning. This is not about blame; it’s about relevance: the value of specific stocks is not a measure of the validity of major government policy initiatives, but of the health of those stocks or the mentality of those trading them.

To constantly repeat the inane mantra that “the stock market has reacted”, and then list an emotional qualification or a specific cause in the world beyond the market, within seconds of a turn in valuations, a turn actually comprised of millions of trades, is to fill the mass media with irresponsible drivel that threatens to derail any attempts at serious discussion we could have about the validity of specific policies aimed at long-term recovery and sustainability.

TheHotSpring.com :: Pres. Barack Obama today visited the Interior Dept., noting it was once called in jest “the Department of Everything Else”, a government agency with responsibility for nearly 1/5 of the entire land area of the United States. He professed his intention to task the Interior Dept. with taking major steps to help build green infrastructure for an energy economy based on solar-voltaic and wind-turbine-generated energy.

Obama said his budget plan would devote money to the Interior Dept. to provide clean drinking water for rural areas, and build improved schools with 21st century technology for Native American communities.

“Today I signed a memorandum that will help restore the scientific process to its proper place at the heart of the endangered species act”, Obama said, noting that the role of science in protecting endangered species and conserving natural resources had been diminished by those who sought to profit from exploiting natural resources.

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Obama said that “smart, sustainable” policy was the best way to carry out the stewardship required of the Interior Dept., so that natural resources found on that land, including sometimes fragile ecosystems that provide real natural services, can be protected and preserved for optimal use, far into the future.

There is a media battle shaping up among proponents and opponents of “clean coal” technology. Environmental groups warn that “there is no such thing as clean coal”, while the Clean Coal campaign backed by the coal industry is using Pres. Obama’s campaign footage to position their industry as a way to create jobs and combat the climate crisis.

Obama used the event as an opportunity to inform the public about the many and diverse responsibilities of the Interior Department, including the management of land-leases relating to use of public lands for the development of energy resources. He pledged to spend billions every year to direct energy projects toward greener, less environmentally costly technologies.

The president also spoke of the Department’s responsibility for federal government relations with Native American tribes and reservations, and pledged funding for schools and other facilities that would enable Native American populations to diversify the range of jobs and services they could engage in order to build a more vibrant, self-sustaining future.

Each of these priorities, including conservation of the natural environment and the building of new resources to help provide clean, affordable drinking water for rural communities without the resources to upgrade infrastructure for themselves, are aimed at ensuring the success of a complex process of greening the economy while securing a sustained economic recovery.

Zimbabwe has released a top human rights activist whose detention was illegal, according to activists, the opposition and foreign governments. Zimbabwe power-sharing arrangement still under strain as Mugabe regime seeks to guard against prosecution for past crimes.

After a sustained series of bombings across Pakistan, an attack by gunmen in Lahore, this time targeting a cricket team, apparently aimed at disrupting Pakistan’s relation to western allies, raises concerns about stability of the government. Taliban fighters have been taking ever more ground in the northeastern region, approaching the capital Islamabad, creating real concern about the government’s stability.

UK PM Gordon Brown, meeting with US pres. Barack Obama in Washington, said he believes “There is the possibility of a global New Deal”, that will coordinate economic recovery and even spur a “green recovery, a low-carbon recovery”, with a cooperative framework that allows even rivals to work together to fashion a more sustainable global economic system, where neither banking nor industry are likely to undermine long-term health.

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Brown said efforts will be made to avoid “shadow banking systems” and “regulatory tax havens”, which can put problematic strains on the existing banking system. Tax havens can also put serious strain on governments that rely on their internal revenue to secure complex economies against manipulations or fraud.

The president of the Dominican Republic, Leonel Fernández, as part of an ongoing struggle against endemic corruption, has dismissed over 700 policemen. He has also forced the retirement of 31 generals, in connection with allegations about the involvement of at least 538 military officials (purged in the last 6 months) in drug trafficking.

According to the Latin American Herald:

The president named Saturday a new navy commander, Homero Luis Lajara Sola, who warned that he will jail every member of his service who is found to be involved in criminal acts.

In his annual state of the nation address last Friday, Fernandez slammed the part played by the armed forces and police in the drug trade and other crimes, activities that, he said, have “terrified” the population.

Sen. Sanders demands Fed Chair Bernanke release names of banks that borrowed a total of $2.2 trillion from the Federal Reserve Bank in recent bailout efforts. Bernanke refused, during his Congressional testimony, saying the nature of the loans along with collateral terms are published on the Fed’s website. Sanders has said he will introduce legislation to force the release of bank names.

Transport Sec. Ray LaHood yesterday said: “The work begins today in Montgomery County, Maryland, where a work crew is starting on a project to resurface Maryland State Highway 650 — a very busy road that has not been fully repaired in 17 years.” Pres. Obama praised the project as a sign the ARRA is beginning to work toward economic recovery.

CNN iReporter says 34% of New Yorkers are now forced to choose between paying rent and buying food, while department stores, divorced from reality, are asking consumers to spend $1,100 on trenchcoats and $230 on t-shirts. Concerns about big business holding out for sudden change in consumer spending ability mount, as efforts to emerge from recession seem slow in private sector.

TheHotSpring.com :: The Obama administration is looking at the severity of the banking crisis with a mind to settling the issue of survivability and recoverability of banks, case by case, based on facts in evidence. The first step will be to gather evidence, through a series of ‘stress tests’ designed to examine what resources troubled banks have to weather oncoming storms, then plan according to the results of those tests.

A “public-private partnership” model will be used to determine how any given bank is managed under the conditions set for receiving government “rescue” funds. This model will allow the government to measure what level of resilience there is in the bank’s accounting, funding and commercial structures, in the face of hypothetical oncoming hardship, should economic conditions continue a trend not conducive to profitability.

Treasury Secretary Tim Geithner has said the stress test will entail “a more consistent, realistic and forward looking assessment about the risk on balance sheets”. Those government agencies whose jurisdiction includes the regulation of major banks will be responsible for conducting these sustained, forward-looking assessments. But it remains unclear what sort of timetable there will be for determining resilience or bailout-eligibility.

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There is widespread uncertainty about what exactly the government agencies’ scrutiny would consider and what qualifications would indicate passing or failing the stress test. Signals from the Obama administration suggest the term stress test is meant to provide a more pragmatic, “fact-based” approach to evaluating the viability of financial institutions, and that there is no great mystery.

But the banks want specifics and want to be able to say they can either count on government assistance or not. But the specifics of the government analysis seem less important than the specifics of the banks’ own planning: are they or are they not healthy enough to withstand the sorts of major market swings and spending and investment slowdowns we are likely to see in coming years.

MSNBC explains:

Economic scenarios used in the bank stress tests are the equivalent of jacking up the treadmill, to unmask financial weaknesses. Stress testing is widely used in the financial industry; federal regulators use it in their periodic “safety and soundness” reviews of banks, and banks run their own stress tests.

Essentially, computer models put the banks’ accounting through a series of potential future scenarios, in order to gauge what will happen, according to current planning or other alternatives, when compounded interventions occur (i.e. spiralling gain for certain market competitors, spiralling downturns, spiralling losses, the fallout from random market events).

What is unique about this process is the broad range of possible scenarios that will likely be considered, and the fact that they will look up to 2 years out, instead of the more common timeframe of 6-months for financial stress testing. In theory, the stress tests will consider a “baseline” overall economic environment and a more severe prolonged recession scenario.

The more severe scenario was considered to be a 3.3% decline for US GDP throughout 2009, but news that the Commerce Dept. now rates the last quarter of 2008 as having suffered a decline of over 6% means even more severe scenarios could be considered. MSNBC reports that the Treasury Dept. considers the following figures as representative of a more adverse environment for 2009:

3.3 percent decline in gross domestic product this year; unemployment rising to 8.9 percent this year and 10.3 percent in 2010, from the current 7.6 percent (already the highest in more than 16 years); and home prices plunging 22 percent this year and 7 percent next year.

But conditions could be worse than that, and they could be made worse by banks’ failure to restore credit and lending practices more conducive to a vibrant consumer economy. Some have suggested the banks should hand over far more detailed information than usual, so that regulators can better judge what the best plan for spending bailout money would be, for the economy broadly, and for the sake of the government’s own future accounting, but reports suggest there will not be a new expansion of data made available to regulators.

Fed Chairman Ben Bernanke has told Congress “The outcome of the stress test is not going to be fail or pass”. Bernanke said the tests will be used to determine what level of new funding the banks need in order to get money flowing, via new loans, to consumers and businesses, in order to push back against the forces of sustained recession.

As structured now, the plan would provide banks in need of additional capital up to 6 months to raise the capital from private sources, but would make certain funding options available after 6 months, in order to get the bank to a position where it could lend more freely. Those options might include government taking a much larger stake in some banks, as reportedly has happened with CitiGroup, where the government will now own up to 36% of the firm.

TheHotSpring.com :: The hardest thing to understand about the current, and deepening, economic crisis, is that it came about largely because some of the most experienced, well-staffed and prestigious financial institutions in the world gambled on untenable projects of unlimited expansion, without ever producing sound mathematics to back up the projections. Philosophical exuberance replaced philosophical underpinnings, and the dynamo of financial speculation greased the wheels of commerce in a way that masked underlying shortfalls.

It’s fair to say this is the hardest thing to grasp about how we got here, because it’s difficult to grasp no matter what angle you come at it from. Consumers are baffled that such expertise could not have seen what many did see, that there was not enough money behind the market valuations (in stocks, commodities and real estate) to back up the pricing and the accounting that was en vogue, for several years.

Meanwhile, the bankers themselves seem baffled, because even now, in the midst of financial and economic devastation, they still cling to the idea of an inherent validity to the claims that were so pervasive just a few years ago. Adjusting not only to the idea of sustained fallout from error and loss, but also, and perhaps more importantly, to the idea that the errors were rooted in the misapplication of market theory to financial “exotics” that were viable, but weren’t what their peddlers wanted them to be, is painful, and slow-going.

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Many of the minds who more easily grasp this problem are in economics, not in finance, and the financial sector is still reeling from the news of its own mutability. Its heroes are not in fact “masters of the universe”, but individuals at play with forces far beyond their control, and which they may not sufficiently understand. And so, an overly serene approach to figuring the truth out of market dynamics could lead to missing the cues and to far more agonizing choices, in the midst of change, which markets, of course, are designed to bring.

When viable rent-returns from mortgaged properties fell below the cost of maintaining the property-owner’s debt, the problem was becoming evident. By 2005, it was clear that real estate markets were steeply overvalued, and that there might be a deficit in the amount of remaining wealth consumers could devote to pushing the prices higher. A fall was coming, a “correction”, and it could be widespread and sustained.

The Hot Spring’s sister publication, Cafe Sentido, saw this and published some initial reporting in late 2005, using The Economist and other widely available economic reporting as references. By early 2006, it was clear there was a property bubble and that the correction could be long and painful. It was also becoming clear the crisis could be artificially delayed by “masking” policies that were put into effect and that concealed the impact the bust would have on banks.

It was, in fact, possible, if you wanted to believe, to just commit to believing in unending positive returns and the ingenious “fairness” of markets. The right policies had been put in place to mask all the pitfalls. One could always get richer, and only the inattentive would lose out. But that was not so. There was a tipping point coming, and the believers would be left over-exposed, along with their institutions, their clients, and potentially even their national economies, to the fury of the gathering storm.

Presumed, or reported wealth was growing at a substantially faster rate than the amount of actual wealth that could be devoted (via consumer spending, commercial borrowing or capital investment) to sustaining the rates of overall price amplification. In effect, the relationship between what was reported and what was true became less and less factual, and that meant that larger and larger segments of overall investment wealth were structured around non-existent wealth, or fictional capital rooted in inviable “exotics”.

Subprime mortgages (money lent with less projected return —initially— than the cost of the bank’s securing the funds to make the loan) were treated as hot commodities worth far more than their initial asking price. The problem: those loans, which can be a good business, with modest profit margins, but huge gains overall when implemented on a large scale, go to the least well-to-do and the least credit-worthy. That means, they may get paid back, but not at high rates of interest.

The credit system, of course, works to give more options to those with more money and better records of debt-repayment, and punishes borrowers with more modest means and less secure credit histories. It demands more from those who can’t afford it, and gives money away to those who could easily pay higher rates of interest. There’s a logic in this, but it’s a logic riddled with flaws and not likely to succeed if applied universally.

The financial system became too universal, and it universalized the inability-to-repay found in some of the least credit-worthy. That credit system needs to be reformed, dramatically. There is, at present, no way to apply the prevailing western credit system to all parties in any given market, because it is built specifically to privilege some and exclude others, and its mathematical logic is not aimed at optimizing returns.

It has been obvious for years that a renewable energy economy would be beneficial for creating sustainable economic growth, but the prevailing trends in the financial system, where speculation and credit (as we know it) take priority over sustainability or optimization, have kept the biggest investors away from the best investment available, if you’re serious about building a viable economic future.

Major banks and financial institutions have not only lost unprecedented sums of money over the last two years, but they have (amazingly) resisted the inevitable need to accept that much of that “loss” was simply the factual inability of projected profits to materialize. That money was never there and it never will be. It is not even really an “opportunity cost”, because the opportunity to earn it never really existed.

Expectations have to be adjusted to account for all of this, to understand the nature of a massive, global correction that is not just about overvaluation, but about the hyper-expansion of expected returns being rolled back to figures based on fact. A new, more modest type of expected return has to take the place of the lascivious allegiance to fantastic speculation, and a bricks-and-mortar pragmatist approach to capitalizing on stable, long-term investment needs to take hold.

Transcript of President Barack Obama’s Weekly Address
Saturday, February 28th, 2009, as released by the White House

Two years ago, we set out on a journey to change the way that Washington works.

We sought a government that served not the interests of powerful lobbyists or the wealthiest few, but the middle-class Americans I met every day in every community along the campaign trail – responsible men and women who are working harder than ever, worrying about their jobs, and struggling to raise their families. In so many town halls and backyards, they spoke of their hopes for a government that finally confronts the challenges that their families face every day; a government that treats their tax dollars as responsibly as they treat their own hard-earned paychecks.

That is the change I promised as a candidate for president. It is the change the American people voted for in November. And it is the change represented by the budget I sent to Congress this week.

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During the campaign, I promised a fair and balanced tax code that would cut taxes for 95% of working Americans, roll back the tax breaks for those making over $250,000 a year, and end the tax breaks for corporations that ship our jobs overseas. This budget does that.

I promised an economy run on clean, renewable energy that will create new American jobs, new American industries, and free us from the dangerous grip of foreign oil. This budget puts us on that path, through a market-based cap on carbon pollution that will make renewable energy the profitable kind of energy; through investments in wind power and solar power; advanced biofuels, clean coal, and more fuel-efficient American cars and American trucks.

I promised to bring down the crushing cost of health care – a cost that bankrupts one American every thirty seconds, forces small businesses to close their doors, and saddles our government with more debt. This budget keeps that promise, with a historic commitment to reform that will lead to lower costs and quality, affordable health care for every American.

I promised an education system that will prepare every American to compete, so Americans can win in a global economy. This budget will help us meet that goal, with new incentives for teacher performance and pathways for advancement; new tax credits that will make college more affordable for all who want to go; and new support to ensure that those who do go finish their degree.

This budget also reflects the stark reality of what we’ve inherited – a trillion dollar deficit, a financial crisis, and a costly recession. Given this reality, we’ll have to be more vigilant than ever in eliminating the programs we don’t need in order to make room for the investments we do need. I promised to do this by going through the federal budget page by page, and line by line. That is a process we have already begun, and I am pleased to say that we’ve already identified two trillion dollars worth of deficit-reductions over the next decade. We’ve also restored a sense of honesty and transparency to our budget, which is why this one accounts for spending that was hidden or left out under the old rules.

I realize that passing this budget won’t be easy. Because it represents real and dramatic change, it also represents a threat to the status quo in Washington. I know that the insurance industry won’t like the idea that they’ll have to bid competitively to continue offering Medicare coverage, but that’s how we’ll help preserve and protect Medicare and lower health care costs for American families. I know that banks and big student lenders won’t like the idea that we’re ending their huge taxpayer subsidies, but that’s how we’ll save taxpayers nearly $50 billion and make college more affordable. I know that oil and gas companies won’t like us ending nearly $30 billion in tax breaks, but that’s how we’ll help fund a renewable energy economy that will create new jobs and new industries. In other words, I know these steps won’t sit well with the special interests and lobbyists who are invested in the old way of doing business, and I know they’re gearing up for a fight as we speak. My message to them is this:

So am I.

The system we have now might work for the powerful and well-connected interests that have run Washington for far too long, but I don’t. I work for the American people. I didn’t come here to do the same thing we’ve been doing or to take small steps forward, I came to provide the sweeping change that this country demanded when it went to the polls in November. That is the change this budget starts to make, and that is the change I’ll be fighting for in the weeks ahead – change that will grow our economy, expand our middle-class, and keep the American Dream alive for all those men and women who have believed in this journey from the day it began.

Thanks for listening.

CitiGroup announces deal to let US government take 36% stake in firm, up from 8% stake, a move that will intensify regulatory scrutiny and possibly move firm toward solvency by way of nationalization. Move is third rescue in five months in ongoing effort to save massive banking operation.

Obama announces plan to remove most US combat forces from Iraq within 19 months. Plan would leave an estimated 50,000 US personnel in country to provide training, equipment, security and targeted counter-terrorism combat capacity.

Israel’s opposition Kadima party will not join Netanyahu government, says party leader Tzipi Livni after talks fail to yield viable program for governing from principles in line with Kadima platform. Netanyahu will have to turn to more extreme right-wing parties to form government, Livni says Kadima will form “responsible opposition” to Likud rule.

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Women’s rights group opens Morocco-based chapter, aims to combat abuse to women, raise awareness of need to protect women’s rights. VOA reports:

A French women’s rights group that led major marches to denounce violence to women in France’s immigrant heavy suburbs is opening its first formal chapter in the Muslim world – in Morocco. But the reception is mixed for the group, with some finding its name – as well as its existence, offensive.

Five years after it was launched, the rights group, Ni Putes Ni Soumises, or Neither Whores nor Submissive, has become a household name in France. It has fought hard against forced marriages and other abuses against women here, particularly immigrant women – many of whom live in poor income neighborhoods in cities and suburbs.

Obama’s budget, described by “ambitious” and seeking to protect against fallout from major economic faultlines, shifts tax incentives from 20th century energy priorities (i.e. fossil fuels) to cleaner technologies, innovation and entrepreneurship, in order to build greener, more sustainable market economy.

The FY2010 budget represents a significant increase over last year, but most of increase is accounted for by simply declaring war spending and other supplemental appropriations in the actual budget legislation. Republicans are gearing up for a major legislative fight, but the NY Times reports “Democrats are open to President Obama’s ambitious spending plan, saying it represents a new era of honesty in budgeting”.

Unemployment in the US soars, as a record 5 million are now collecting unemployment insurance. The Commerce Dept. has revised figures estimating annualized GDP output for the 4th quarter of 2008, saying it now believes the US economy shrank by 6% in the last three months of last year.

Pres. Obama has said he needs Americans broadly, Congress and the business world to recognize that there may be “things there would be nice to have” but that the economic emergency situation is dire enough that policy must be focused on what is responsible and what will create long-term growth and stability.

The US State Dept. has accused the regime of Zimbabwean president Robert Mugabe of murdering at least 193 people in 2008, for opposition to the authoritarian leader. Opposition leader Morgan Tsvangirai, now prime minister in a power-sharing arrangement, toured a struggling Harare hospital and promised to come up with the cash necessary to improve the quality of treatment available.

Pres. Obama’s remarks on the budget proposal for fiscal year 2010, delivered 26 February 2009, as released by the White House

Before I begin, I have some good news to report. Starting today, the recently unemployed will benefit from a COBRA subsidy that will make health care affordable. At a time when health care is too often too expensive for the unemployed, this critical step will help 7 million Americans who’ve lost their jobs keep their health care. That’s 7 million Americans who will have one less thing to worry about when they go to sleep at night. Equally important, it prevents a further downward spiral in our economy by ensuring that these families don’t fall further behind because of mounting health care bills. And it is a direct result of the American Recovery and Reinvestment Act that I signed into law the other week — a recovery plan that has only just begun to yield benefits for the American people.

But while we must add to our deficits in the short term to provide immediate relief to families and get our economy moving, it is only by restoring fiscal discipline over the long run that we can produce sustained growth and shared prosperity. And that is precisely the purpose of the budget I’m submitting to Congress today.

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In keeping with my commitment to make our government more open and transparent, this budget is an honest accounting of where we are and where we intend to go. For too long, our budget has not told the whole truth about how precious tax dollars are spent. Large sums have been left off the books, including the true cost of fighting in Iraq and Afghanistan. And that kind of dishonest accounting is not how you run your family budgets at home; it’s not how your government should run its budgets, either. We need to be honest with ourselves about what costs are being racked up — because that’s how we’ll come to grips with the hard choices that lie ahead. And there are some hard choices that lie ahead.

Just as a family has to make hard choices about where to spend and where to save, so do we, as a government. You know, there are times where you can afford to redecorate your house and there are times where you need to focus on rebuilding its foundation. Today, we have to focus on foundations. Having inherited a trillion-dollar deficit that will take a long time for us to close, we need to focus on what we need to move the economy forward, not on what’s nice to have. That’s why, on Monday, I held a fiscal summit to come up with a plan to put us on a more sustainable path. And that is why, as we develop a full budget that will come out this spring, we’re going to go through our books page by page, line by line, to eliminate waste and inefficiency. This is a process that will take some time, but in the last 30 days alone, we have already identified $2 trillion in deficit reductions that will help us cut our deficit in half by the end of my first term.

For example, Agriculture Secretary Vilsack is saving nearly $20 million with reforms to modernize programs and streamline bureaucracy. Interior Secretary Salazar will save nearly $200 million by stopping wasteful payments to clean up abandoned coal mines that just happen to have already been cleaned up. Education Secretary Duncan is set to save tens of millions dollars more by cutting an ineffective mentoring program for students, a program whose mission is being carried out by 100 other programs in 13 other agencies.

We’ve targeted almost $50 billion in savings by cracking down on overpayments of benefits and tax loopholes — that is money going to businesses and people to which they are simply not entitled.

This is just the beginning of the cuts we’re going to make. No part of my budget will be free from scrutiny or untouched by reform. We will end no-bid contracts that have wasted billions in Iraq and end tax breaks for corporations that ship jobs overseas. And we’ll save billions of dollars by rolling back tax cuts for the wealthiest Americans while giving a middle-class tax cut to 95 percent of hardworking families. But we’ll also have to do something more — we will, each and every one of us, have to compromise on certain things we care about, but which we simply cannot afford right now. That’s a sacrifice we’re going to have to make.

Now, I know that this will not always sit well with the special interests and their lobbyists here in Washington, who think our budget and tax system is just fine as it is. No wonder — it works for them. I don’t think that we can continue on our current course. I work for the American people, and I’m determined to bring the change that the people voted for last November. And that means cutting what we don’t need to pay for what we do.

Now, what I won’t do — as I mentioned at the Joint Session speech a couple of days ago — what I won’t do is sacrifice investments that will make America stronger, more competitive, and more prosperous in the 21st century; investments that have been neglected for too long. These investments must be America’s priorities and that’s what they will be when I sign this budget into law.

Because our future depends on our ability to break free from oil that’s controlled by foreign dictators, we need to make clean, renewable energy the profitable kind of energy. That’s why we’ll be working with Congress on legislation that places a market-based cap on carbon pollution and drives the production of more renewable energy.

And to support this effort, we’ll invest $15 billion a year for 10 years to develop technologies like wind power and solar power, and to build more efficient cars and trucks right here in America. It’s an investment that will put people back to work, make our nation more secure, and help us meet our obligation as good stewards of the Earth we all inhabit.

Because of crushing health care costs and the fact that they drag down our economy, bankrupt our families, and represent the fastest-growing part of our budget, we must make it a priority to give every single American quality, affordable health care. That’s why this budget builds on what we have already done over the last month to expand coverage for millions more children, to computerize health records to cut waste and reduce medical errors, which save, by the way, not only tax dollars, but lives.

With this budget, we are making a historic commitment to comprehensive health care reform. It’s a step that will not only make families healthier and companies more competitive, but over the long term it will also help us bring down our deficit.

And because countries that out-teach us today will out-compete us tomorrow, we must make excellence the hallmark of an American education. That’s why this budget supports the historic investment in education we made as part of the recovery plan by matching new resources with new reform. We want to create incentives for better teacher performance and pathways for advancement. We want to reward success in the classroom. And we’ll invest in innovative initiatives that will help schools meet high standards and close achievement gaps, preparing students for the high-paying jobs of tomorrow — but also helping them fulfill their God-given potential.

These must be the priorities reflected in our budget. For in the end, a budget is more than simply numbers on a page. It is a measure of how well we are living up to our obligations to ourselves and one another. It is a test for our commitment to making America what it was always meant to be — a place where all things are possible for all people. That is a commitment we are making in this, my first budget, and it is a commitment I will work every day to uphold in the months and years ahead.

I want to thank all of you for being here, but I also want to give a special thanks to Peter Orszag, Rob Nabors. They have been working tirelessly in getting this budget prepared, getting it out in a timely fashion. They’re going to be doing more work in the weeks to come. And I am absolutely confident that as messy as this process can sometimes be, that we are going to be able to produce a budget that delivers for the American people.

All right. Thank you.

A few years back, an ambitious youngish president staged an impressive event, in which he landed a fighter-jet on an aircraft carrier, then declared “Mission Accomplished”, in the midst of what would turn out to be only the first baby steps of a very complicated war. The $780 billion American Recovery and Reinvestment Act is a victory for the president in terms of his organizing Congressional support, but it is just the beginning of a very long, high-stakes journey, for his nascent administration, and for the nation.

Pres. Barack Obama has persuaded Congress to follow many of his principles for economic recovery and reinvestment, but the nature of doing hard things in hard times is that, even when right, they may be treated as the wrong thing by people unable to see their impact. He has, perhaps more effectively than any recent president, marshalled massive political capital to effect immediate, sweeping policy changes, and the eyes of the world are on him, both amazed and apprehensive.

His political enemies will say this is politics as usual, because they will most certainly engage in politics as usual. There will be accusations that the massive recovery package, aimed at promoting economic stimulus and both short-term and long-term growth, is nothing but spending. As Obama himself quipped in dismayed disbelief, “That’s the whole point!” You have to spend to stimulate. But the return on investment must swiftly be shown.

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Whether Republicans like to hear it or not, the most “stimulative” tax cuts are not those that go to the “investor class” or even to the upper middle class; they are those that are substantial enough to allow low-income families to change their spending habits and up their standard of living, if even slightly. So food stamps put more money back into circulation than income tax cuts, because they require immediate spending.

Engineering tax cuts that would be truly stimulatiive would be called “class warfare” by the Republicans. These are the sticky details of debating economic stimulus. But the long-term issue is that Obama will have to spend massively through the Treaasury Dept. in order to save the banks, and he has promised transparency to such a degree that he will integrate the full costs of Iraq and Afghanistan into the official budget package, which will make it look far larger than any in history.

Barack Obama’s program has been, since long before he came to Washington, to make a difference, to make things work for the better for real people, and as president, this project has manifested itself not just as change, but as an effort to sweep away the irresponsible policies of recent years and even decades that have undermined the engine of the American economy, the vibrant middle class.

Whether it’s the ARRA, or whether it’s bank bailouts that force lending and come with major new regulatory tools, or whether it’s a budget that tells the truth about bloated military expenditure and tries to set better priorities in energy, taxes, healthcare and education, Obama will have to ruffle many feathers of many powerful Washington players, but he seems to be betting that doing the right thing will resonate, because now, times are hard enough that people can understand the need for tough choices and the degree to which Bush’s tax policies were a luxury attitude for luxuriant times.

But the wholesale absence of luxury across the economy means that people may be willing to see the truth behind hard choices, but they may also be guided by defensive posturing and worries about their own immediate interests. This makes all public perception highly volatile, which means every major expenditure can be misinterpreted, even if it’s the best, most responsible choice, and there is no predicting who public opinion will deal with the evolving crisis.

The president has reportedly been studying up on FDR’s famed “fireside chats” from the Depression era, through which he made himself the close family friend and advisor of struggling Americans and won support for sometimes esoteric fiscal strategies whose long-term aim was sustainable widespread prosperity. He knows that communication is the key to holding the political high ground, and of course, as we have all seen, nobody does it better.

Polls leading up to and immediately after his inauguration, just one month ago, suggested the public understood the severity and the degree of complexity of the current economic crisis, and that they were willing to entrust to Pres. Obama the task of righting the ship of state for up to 2 years, before judging whether his efforts had failed. Essentially, as pundits talked of a crisis-eroded days-long honeymoon, pollsters were finding the people were more interested in his succeeding; that is, after all, why then sent him to the White House, and they knew, apparently, it would take time.

His message was working. That was the real victory, and that is what gives him the political capital now to tackle, in the most open and deliberate way any public official has been able in recent decades, all the complicated pitfalls of the clumsy, hamfisted ideology of always-in-all-cases supply-side stimulus. Doing so is a massive undertaking, and will require courage, resilience, communication, public support and media willing to talk about complexity, detail, and the long-term nature of economic trends.

If any of those pillars of this enterprise falters, Obama will find that his “victory” on the ARRA will be treated as anomalous and inadequately thought-through (not because it was, but because the “loyal opposition” will be relentlessly pushing this point, ever second of every day), and his major policy initiatives may be derailed. For this very reason, it is worth noting that he did not, in fact, wait to get down to business: he has taken the opportunity of crisis to redirect spending toward the major substantive improvement he wants to make on economic and social policy.

His generative long-term approach, privileging plans that utilize or enable reinvestment to expand the cycle of sustainable growth, directing incentives to not just renewable resources, but to projects that will build sustainability and broad-based potential for prosperity into the mainstream functioning of the economic system, allows for what may be the most intelligent use of the federal budget in more than half a century.

If Obama’s plans are implemented, they will bring prosperity over the long term and create a far more robust and agile American middle class, with education and living standards appropriate to a 21st century knowledge economy. If they are thwarted by relentless Congressional sabotage or widespread misunderstanding of the problem, then our current emergency will balloon into prolonged drudgery, and his political fortunes will flag.

So, he has shown his mettle and won a victory, but it is far too early to declare “mission accomplished”. The next few years will be an endless test of Obama’s diplomatic and managerial skills, as he seeks to build a bipartisan coalition for bold reform, yet pulls no punches in fighting back the more irresponsible maneuvers by the Republican leadership, aimed not at helping speed economic recovery but at pinning the blame on the new president.

Press Conference by the President, Transcript released by the White House
East Room of the White House, 8:01 P.M. EST, February 9, 2009

THE PRESIDENT: Good evening, everybody. Please be seated.

Before I take your questions tonight, I’d like to speak briefly about the state of our economy and why I believe we need to put this recovery plan in motion as soon as possible.

I took a trip to Elkhart, Indiana today. Elkhart is a place that has lost jobs faster than anywhere else in America. In one year, the unemployment rate went from 4.7 percent to 15.3 percent. Companies that have sustained this community for years are shedding jobs at an alarming speed, and the people who’ve lost them have no idea what to do or who to turn to. They can’t pay their bills and they’ve stopped spending money. And because they’ve stopped spending money, more businesses have been forced to lay off more workers. In fact, local TV stations have started running public service announcements that tell people where to find food banks, even as the food banks don’t have enough to meet the demand.

As we speak, similar scenes are playing out in cities and towns across America. Last Monday more than a thousand men and women stood in line for 35 firefighter jobs in Miami. Last month our economy lost 598,000 jobs, which is nearly the equivalent of losing every single job in the state of Maine. And if there’s anyone out there who still doesn’t believe this constitutes a full-blown crisis, I suggest speaking to one of the millions of Americans whose lives have been turned upside down because they don’t know where their next paycheck is coming from.

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And that is why the single most important part of this Economic Recovery and Reinvestment Plan is the fact that it will save or create up to 4 million jobs — because that’s what America needs most right now.

It is absolutely true that we can’t depend on government alone to create jobs or economic growth. That is and must be the role of the private sector. But at this particular moment, with the private sector so weakened by this recession, the federal government is the only entity left with the resources to jolt our economy back into life. It is only government that can break the vicious cycle where lost jobs lead to people spending less money which leads to even more layoffs. And breaking that cycle is exactly what the plan that’s moving through Congress is designed to do.

When passed, this plan will ensure that Americans who have lost their jobs through no fault of their own can receive greater unemployment benefits and continue their health care coverage. We’ll also provide a $2,500 tax credit to folks who are struggling to pay the costs of their college tuition, and $1,000 worth of badly needed tax relief to working and middle class families. These steps will put more money in the pockets of those Americans who are most likely to spend it, and that will help break the cycle and get our economy moving.

But as we’ve learned very clearly and conclusively over the last eight years, tax cuts alone can’t solve all of our economic problems — especially tax cuts that are targeted to the wealthiest few Americans. We have tried that strategy time and time again, and it’s only helped lead us to the crisis we face right now.

And that’s why we have come together around a plan that combines hundreds of billions in tax cuts for the middle class with direct investment in areas like health care, energy, education, and infrastructure — investments that will save jobs, create new jobs and new businesses, and help our economy grow again, now and in the future.

More than 90 percent of the jobs created by this plan will be in the private sector. They’re not going to be make-work jobs, but jobs doing the work that America desperately needs done, jobs rebuilding our crumbling roads and bridges, repairing our dangerously deficient dams and levees so that we don’t face another Katrina. They’ll be jobs building the wind turbines and solar panels and fuel-efficient cars that will lower our dependence on foreign oil, and modernizing our costly health care system that will save us billions of dollars and countless lives.

They’ll be jobs creating the 21st century classrooms, libraries, and labs for millions of children across America. And they’ll be the jobs of firefighters and teachers and police officers that would otherwise be eliminated if we do not provide states with some relief.

After many weeks of debate and discussion, the plan that ultimately emerges from Congress must be big enough and bold enough to meet the size of the economic challenges that we face right now. It’s a plan that is already supported by businesses representing almost every industry in America; by both the Chamber of Commerce and the AFL-CIO. It contains input, ideas, and compromises from both Democrats and Republicans. It also contains an unprecedented level of transparency and accountability, so that every American will be able to go online and see where and how we’re spending every dime. What it does not contain, however, is a single pet project, not a single earmark, and it has been stripped of the projects members of both parties found most objectionable.

Now, despite all of this, the plan is not perfect. No plan is. I can’t tell you for sure that everything in this plan will work exactly as we hope, but I can tell you with complete confidence that a failure to act will only deepen this crisis as well as the pain felt by millions of Americans. My administration inherited a deficit of over $1 trillion, but because we also inherited the most profound economic emergency since the Great Depression, doing a little or nothing at all will result in even greater deficits, even greater job loss, even greater loss of income, and even greater loss of confidence. Those are deficits that could turn a crisis into a catastrophe. And I refuse to let that happen. As long as I hold this office, I will do whatever it takes to put this economy back on track and put this country back to work.

I want to thank the members of Congress who’ve worked so hard to move this plan forward. But I also want to urge all members of Congress to act without delay in the coming week to resolve their differences and pass this plan.

We find ourselves in a rare moment where the citizens of our country and all countries are watching and waiting for us to lead. It’s a responsibility that this generation did not ask for, but one that we must accept for the future and our children and our grandchildren. And the strongest democracies flourish from frequent and lively debate, but they endure when people of every background and belief find a way to set aside smaller differences in service of a greater purpose.

That’s the test facing the United States of America in this winter of our hardship. And it is our duty as leaders and citizens to stay true to that purpose in the weeks and months ahead. After a day of speaking with and listening to the fundamentally decent men and women who call this nation home, I have full faith and confidence that we can do it. But we’re going to have to work together. That’s what I intend to promote in the weeks and days ahead.

And with that, I’ll take some of your questions. And let me go to Jennifer Loven, AP.

Q Thank you, Mr. President. Earlier today in Indiana, you said something striking. You said that this nation could end up in a crisis without action that we would be unable to reverse. Can you talk about what you know or what you’re hearing that would lead you to say that our recession might be permanent, when others in our history have not? And do you think that you risk losing some credibility or even talking down the economy by using dire language like that?

THE PRESIDENT: No, no, no, no — I think that what I’ve said is what other economists have said across the political spectrum, which is that if you delay acting on an economy of this severity, then you potentially create a negative spiral that becomes much more difficult for us to get out of. We saw this happen in Japan in the 1990s, where they did not act boldly and swiftly enough, and as a consequence they suffered what was called the “lost decade” where essentially for the entire ’90s they did not see any significant economic growth.

So what I’m trying to underscore is what the people in Elkhart already understand: that this is not your ordinary run-of-the-mill recession. We are going through the worst economic crisis since the Great Depression. We’ve lost now 3.6 million jobs, but what’s perhaps even more disturbing is that almost half of that job loss has taken place over the last three months, which means that the problems are accelerating instead of getting better.

Now, what I said in Elkhart today is what I repeat this evening, which is, I’m absolutely confident that we can solve this problem, but it’s going to require us to take some significant, important steps.

Step number one: We have to pass an economic recovery and reinvestment plan. And we’ve made progress. There was a vote this evening that moved the process forward in the Senate. We already have a House bill that’s passed. I’m hoping over the next several days that the House and the Senate can reconcile their differences and get that bill on my desk.

There have been criticisms from a bunch of different directions about this bill, so let me just address a few of them. Some of the criticisms really are with the basic idea that government should intervene at all in this moment of crisis. Now, you have some people, very sincere, who philosophically just think the government has no business interfering in the marketplace. And in fact there are several who’ve suggested that FDR was wrong to intervene back in the New Deal. They’re fighting battles that I thought were resolved a pretty long time ago.

Most economists, almost unanimously, recognize that even if philosophically you’re wary of government intervening in the economy, when you have the kind of problem we have right now — what started on Wall Street goes to Main Street, suddenly businesses can’t get credit, they start carrying back their investment, they start laying off workers, workers start pulling back in terms of spending — when you have that situation, that government is an important element of introducing some additional demand into the economy. We stand to lose about $1 trillion worth of demand this year and another trillion next year. And what that means is you’ve got this gaping hole in the economy.

That’s why the figure that we initially came up with of approximately $800 billion was put forward. That wasn’t just some random number that I plucked out of a hat. That was Republican and Democratic, conservative and liberal economists that I spoke to who indicated that given the magnitude of the crisis and the fact that it’s happening worldwide, it’s important for us to have a bill of sufficient size and scope that we can save or create 4 million jobs. That still means that you’re going to have some net job loss, but at least we can start slowing the trend and moving it in the right direction.

Now, the recovery and reinvestment package is not the only thing we have to do — it’s one leg of the stool. We are still going to have to make sure that we are attracting private capital, get the credit markets flowing again, because that’s the lifeblood of the economy.

And so tomorrow my Treasury Secretary, Tim Geithner, will be announcing some very clear and specific plans for how we are going to start loosening up credit once again. And that means having some transparency and oversight in the system. It means that we correct some of the mistakes with TARP that were made earlier, the lack of consistency, the lack of clarity in terms of how the program was going to move forward. It means that we condition taxpayer dollars that are being provided to banks on them showing some restraint when it comes to executive compensation, not using the money to charter corporate jets when they’re not necessary. It means that we focus on housing and how are we going to help homeowners that are suffering foreclosure or homeowners who are still making their mortgage payments, but are seeing their property values decline.

So there are going to be a whole range of approaches that we have to take for dealing with the economy. My bottom line is to make sure that we are saving or creating 4 million jobs, we are making sure that the financial system is working again, that homeowners are getting some relief. And I’m happy to get good ideas from across the political spectrum, from Democrats and Republicans. What I won’t do is return to the failed theories of the last eight years that got us into this fix in the first place, because those theories have been tested and they have failed. And that’s part of what the election in November was all about.

Okay, Caren Bohan of Reuters.

Q Thank you, Mr. President. I’d like to shift gears to foreign policy. What is your strategy for engaging Iran, and when will you start to implement it? Will your timetable be affected at all by the Iranian elections? And are you getting any indications that Iran is interested in a dialogue with the United States?

THE PRESIDENT: I said during the campaign that Iran is a country that has extraordinary people, extraordinary history and traditions, but that its actions over many years now have been unhelpful when it comes to promoting peace and prosperity both in the region and around the world; that their attacks or their financing of terrorist organizations like Hezbollah and Hamas, the bellicose language that they’ve used towards Israel, their development of a nuclear weapon, or their pursuit of a nuclear weapon — that all those things create the possibility of destabilizing the region and are not only contrary to our interests, but I think are contrary to the interests of international peace. What I’ve also said is that we should take an approach with Iran that employs all of the resources at the United States’ disposal, and that includes diplomacy.

And so my national security team is currently reviewing our existing Iran policy, looking at areas where we can have constructive dialogue, where we can directly engage with them. And my expectation is in the coming months we will be looking for openings that can be created where we can start sitting across the table, face to face, diplomatic overtures that will allow us to move our policy in a new direction.

There’s been a lot of mistrust built up over the years, so it’s not going to happen overnight. And it’s important that even as we engage in this direct diplomacy, we are very clear about certain deep concerns that we have as a country — that Iran understands that we find the funding of terrorist organizations unacceptable; that we’re clear about the fact that a nuclear Iran could set off a nuclear arms race in the region that would be profoundly destabilizing.

So there are going to be a set of objectives that we have in these conversations, but I think that there’s the possibility at least of a relationship of mutual respect and progress. And I think that if you look at how we’ve approached the Middle East, my designation of George Mitchell as a special envoy to help deal with the Arab-Israeli situation, some of the interviews that I’ve given, it indicates the degree to which we want to do things differently in the region. Now it’s time for Iran to send some signals that it wants to act differently as well, and recognize that even as it has some rights as a member of the international community, with those rights come responsibilities.

Chip Reid.

Q Thank you, Mr. President. You have often said that bipartisanship is extraordinarily important overall, and in the stimulus package. But now when we ask your advisors about the lack of bipartisanship so far — zero votes in the House, three in the Senate — they say, well, it’s not the number of votes that matters, it’s the number of jobs that will be created. Is that a sign that you are moving away, your White House is moving away from this emphasis on bipartisanship? And what went wrong? Did you underestimate how hard it would be to change the way Washington works?

THE PRESIDENT: Oh, I don’t think — I don’t think I underestimated it. I don’t think the — the American people underestimated it. They understand that there have been a lot of bad habits built up here in Washington and it’s going to take time to break down some of those bad habits.

You know, when I made a series of overtures to the Republicans — going over to meet with both Republican caucuses; you know, putting three Republicans in my Cabinet, something that is unprecedented; making sure that they were invited here to the White House to talk about the economic recovery plan — all those were not designed simply to get some short-term votes. They were designed to try to build up some trust over time. And I think that as I continue to make these overtures, over time hopefully that will be reciprocated.

But understand the bottom line that I’ve got right now, which is what’s happening to the people of Elkhart and what’s happening across the country. I can’t afford to see Congress play the usual political games. What we have to do right now is deliver for the American people. So my bottom line when it comes to the recovery package is, send me a bill that creates or saves 4 million jobs. Because everybody has to be possessed with a sense of urgency about putting people back to work, making sure the folks are staying in their homes and that they can send their kids to college.

That doesn’t negate the continuing efforts that I’m going to make to listen and engage with my Republican colleagues, and hopefully the tone that I’ve taken, which has been consistently civil and respectful, will pay some dividends over the long term. There are going to be areas where we disagree, and there are going to be areas where we agree.

As I said, the one concern I’ve got on the stimulus package in terms of the debate and listening to some of what’s been said in Congress is that there seems to be a set of folks who — I don’t doubt their sincerity — who just believe that we should do nothing. Now, if that’s their opening position or their closing position in negotiations, then we’re probably not going to make much progress, because I don’t think that’s economically sound and I don’t think that’s what the American people expect, is for us to stand by and do nothing.

There are others who recognize that we’ve got to do a significant recovery package, but they’re concerned about the mix of what’s in there. And if they’re sincere about it, then I’m happy to have conversations about this tax cut versus that tax cut, or this infrastructure project versus that infrastructure project. But what I — what I’ve been concerned about is some of the language that’s been used suggesting that this is full of pork and this is wasteful government spending, so on and so forth.

First of all, when I hear that from folks who presided over a doubling of the national debt, then I just want them to not engage in some revisionist history. I inherited the deficit that we have right now, and the economic crisis that we have right now.

Number two is that although there are some programs in there that I think are good policy, some of them aren’t job creators. I think it’s perfectly legitimate to say that those programs should be out of this particular recovery package, and we can deal with them later. But when they start characterizing this as pork without acknowledging that there are no earmarks in this package — something again that was pretty rare over the last eight years — then you get a feeling that maybe we’re playing politics instead of actually trying to solve problems for the American people.

So I’m going to keep on engaging. I hope that as we get the Senate and the House bills together, that everybody is willing to give a little bit. I suspect that the package that emerges is not going to be a hundred percent of what I want. But my bottom line is, are we creating 4 million jobs, and are we laying the foundation for long-term economic growth. This is another concern that I’ve had in some of the arguments that I’m hearing.

When people suggest that, what a waste of money to make federal buildings more energy efficient — why would that be a waste of money? We’re creating jobs immediately by retrofitting these buildings, or weatherizing 2 million American’s homes, as was called for in the package. So that right there creates economic stimulus. And we are saving taxpayers when it comes to federal buildings potentially $2 billion. In the case of homeowners, they will see more money in their pockets, and we’re reducing our dependence on foreign oil in the Middle East. Why wouldn’t we want to make that kind of investment?

Now, maybe philosophically you just don’t think that the federal government should be involved in energy policy. I happen to disagree with that. I think that’s the reason why we find ourselves importing more foreign oil now than we did back in the early ’70s when OPEC first formed. And we can have a respectful debate about whether or not we should be involved in energy policymaking, but don’t suggest that somehow that’s wasteful spending. That’s exactly what this country needs.

The same applies when it comes to information technologies in health care. We know that health care is crippling businesses and making us less competitive as well as breaking the banks of families all across America, and part of the reason is we’ve got the most inefficient health care system imaginable. We’re still using paper — we’re still filing things in triplicate. Nurses can’t read the prescriptions that doctors have written out. Why wouldn’t we want to put that on an electronic medical record that will reduce error rates, reduce our long-term cost of health care, and create jobs right now?

Education — yet another example. The suggestion is why should the federal government be involved in school construction. Well, I visited a school down in South Carolina that was built in the 1850s. Kids are still learning in that school, as best they can. When the railroad — it’s right next to a railroad, and when the train runs by, the whole building shakes and the teacher has to stop teaching for a while. The auditorium is completely broken down; they can’t use it. So why wouldn’t we want to build state-of-the-art schools with science labs that are teaching our kids the skills they need for the 21st century, that will enhance our economy and, by the way, right now will create jobs?

So we can differ on some of the particulars, but again, the question I think the American people are asking is, do you just want government to do nothing, or do you want it to do something? If you want it to do something, then we can have a conversation. But doing nothing, that’s not an option from my perspective.

All right. Chuck Todd. Where’s Chuck?

Q Thank you, Mr. President. In your opening remarks, you talked about that if your plan works the way you want it to work, it’s going to increase consumer spending. But isn’t consumer spending or overspending how we got into this mess? And if people get money back into their pockets, do you not want them saving it or paying down debt first before they start spending money into the economy?

THE PRESIDENT: Well, first of all, I don’t think it’s accurate to say that consumer spending got us into this mess. What got us into this mess initially were banks taking exorbitant, wild risks with other people’s monies based on shaky assets. And because of the enormous leverage where they had $1 worth of assets and they were betting $30 on that $1, what we had was a crisis in the financial system. That led to a contraction of credit, which in turn meant businesses couldn’t make payroll or make inventories, which meant that everybody became uncertain about the future of the economy, so people started making decisions accordingly — reducing investment, initiated layoffs — which in turn made things worse.

Now, you are making a legitimate point, Chuck, about the fact that our savings rate has declined and this economy has been driven by consumer spending for a very long time — and that’s not going to be sustainable. You know, if all we’re doing is spending and we’re not making things, then over time other countries are going to get tired of lending us money and eventually the party is going to be over. Well, in fact, the party now is over.

And so the sequence of how we’re approaching this is as follows: Our immediate job is to stop the downward spiral, and that means putting money into consumers’ pockets, it means loosening up credit, it means putting forward investments that not only employ people immediately but also lay the groundwork for long-term economic growth. And that, by the way, is important even if you’re a fiscal conservative, because the biggest problem we’re going to have with our federal budget is if we continue a situation in which there are no tax revenues because economic growth is plummeting at the same time as we’ve got more demands for unemployment insurance, we’ve got more demands for people who’ve lost their health care, more demand for food stamps. That will put enormous strains on the federal budget as well as the state budget.

So the most important thing we can do for our budget crisis right now is to make sure that the economy doesn’t continue to tank. And that’s why passing the economic recovery plan is the right thing to do, even though I recognize that it’s expensive. Look, I would love not to have to spend money right now. This notion that somehow I came in here just ginned up to spend $800 billion, that wasn’t — that wasn’t how I envisioned my presidency beginning. But we have to adapt to existing circumstances.

Now, what we are going to also have to do is to make sure that as soon as the economy stabilizes, investment begins again; we’re no longer contracting but we’re growing; that our mid-term and long-term budget is dealt with. And I think the same is true for individual consumers. Right now they’re just trying to figure out, how do I make sure that if I lose my job, I’m still going to be able to make my mortgage payments. Or they’re worried about how am I going to pay next month’s bills. So they’re not engaging in a lot of long-term financial planning.

Once the economy stabilizes and people are less fearful, then I do think that we’re going to have to start thinking about how do we operate more prudently, because there’s no such thing as a free lunch. So if you want to get — if you want to buy a house, then putting zero down and buying a house that is probably not affordable for you in case something goes wrong, that’s something that has to be reconsidered.

So we’re going to have to change our bad habits. But right now, the key is making sure that we pull ourselves out of the economic slump that we’re in.

All right, Julianna Goldman, Bloomberg.

Q Thank you, Mr. President. Many experts, from Nouriel Roubini to Senator Schumer, have said that it will cost the government more than a trillion dollars to really fix the financial system. During the campaign you promised the American people that you won’t just tell them what they want to hear, but what they need to hear. Won’t the government need far more than the $350 billion that’s remaining in the financial rescue funds to really solve the credit crisis?

THE PRESIDENT: Well, the credit crisis is real and it’s not over. We averted catastrophe by passing the TARP legislation. But as I said before, because of a lack of clarity and consistency in how it was applied, a lack of oversight in how the money went out, we didn’t get as big of a bang for the buck as we should have.

My immediate task is making sure that the second half of that money, $350 billion, is spent properly. That’s my first job. Before I even think about what else I’ve got to do, my first task is to make sure that my Secretary of the Treasury, Tim Geithner, working with Larry Summers, my National Economic Advisor, and others, are coming up with the best possible plan to use this money wisely — in a way that’s transparent; in a way that provides clear oversight; that we are conditioning any money that we give to banks on them reducing executive compensation to reasonable levels; and to make sure that they’re not wasting that money.

We are going to have to work with the banks in an effective way to clean up their balance sheets so that some trust is restored within the marketplace, because right now part of the problem is that nobody really knows what’s on the banks’ books. Any given bank, they’re not sure what kinds of losses are there. We’ve got to open things up and restore some trust.

We also have to deal with the housing issue in a clear and consistent way. I don’t want to preempt my Secretary of the Treasury; he’s going to be laying out these principles in great detail tomorrow. But my instruction to him has been, let’s get this right, let’s create a template in which we’re restoring market confidence. And the reason that’s so important is because we don’t know yet whether we’re going to need additional money or how much additional money we’ll need until we’ve seen how successful we are at restoring a sense of confidence in the marketplace, that the federal government and the Federal Reserve Bank and the FDIC, working in concert, know what they’re doing. That can make a big difference in terms of whether or not we attract private capital back into the marketplace.

And ultimately, the government cannot substitute for all the private capital that has been withdrawn from the system. We’ve got to restore confidence so that private capital goes back in.

Jake.

Q Thank you, Mr. President. My question follows Julianna’s in content. The American people have seen hundreds of billions of dollars spent already, and still the economy continues to free fall. Beyond avoiding the national catastrophe that you’ve warned about, once all the legs of your stool are in place, how can the American people gauge whether or not your programs are working? Can they — should they be looking at the metric of the stock market, home foreclosures, unemployment? What metric should they use? When? And how will they know if it’s working, or whether or not we need to go to a plan B?

THE PRESIDENT: I think my initial measure of success is creating or saving 4 million jobs. That’s bottom line number one, because if people are working, then they’ve got enough confidence to make purchases, to make investments. Businesses start seeing that consumers are out there with a little more confidence, and they start making investments, which means they start hiring workers. So step number one, job creation.

Step number two: Are we seeing the credit markets operate effectively? I can’t tell you how many businesses that I talk to that are successful businesses, but just can’t get credit. Part of the problem in Elkhart, that I heard about today, was the fact that — this is the RV capital of America. You’ve got a bunch of RV companies that have customers who want to purchase RVs, but even though their credit is good, they can’t get the loan. Now, the businesses also can’t get loans to make payments to their suppliers. But when they have consumers, consumers can’t get the loans that they need. So normalizing the credit markets is I think step number two.

Step number three is going to be housing: Have we stabilized the housing market? Now, the federal government doesn’t have complete control over that, but if our plan is effective, working with the Federal Reserve Bank, working with the FDIC, I think what we can do is stem the rate of foreclosure and we can start stabilizing housing values over time. And the most — the biggest measure of success is whether we stop contracting and shedding jobs, and we start growing again. Now, I don’t have a crystal ball, and as I’ve said, this is an unprecedented crisis. But my hope is that after a difficult year — and this year is going to be a difficult year — that businesses start investing again, they start making decisions that, you know, in fact there’s money to be made out there, customers or consumers start feeling that their jobs are stable and safe, and they start making purchases again. And if we get things right, then starting next year we can start seeing some significant improvement.

Ed Henry. Where’s Ed, CNN? There he is.

Q Thank you, Mr. President. You promised to send more troops to Afghanistan. And since you’ve been very clear about a timetable to withdraw all combat troops from Iraq within 16 months, I wonder what’s your timetable to withdraw troops eventually from Afghanistan?

And related to that, there’s a Pentagon policy that bans media coverage of the flag-draped coffins from coming in to Dover Air Force Base. And back in 2004, then-Senator Joe Biden said that it was shameful for dead soldiers to be “snuck back into the country under the cover of night.” You’ve promised unprecedented transparency, openness in your government. Will you overturn that policy so the American people can see the full human cost of war?

THE PRESIDENT: Your question is timely. We got reports that four American servicemembers have been killed in Iraq today, and obviously our thoughts and prayers go out to the families. I’ve said before that — you know, people have asked me when did it hit you that you are now President? And what I told them was the most sobering moment is signing letters to the families of our fallen heroes. It reminds you of the responsibilities that you carry in this office and the consequences of decisions that you make.

Now, with respect to the policy of opening up media to loved ones being brought back home, we are in the process of reviewing those policies in conversations with the Department of Defense, so I don’t want to give you an answer now before I’ve evaluated that review and understand all the implications involved.

With respect to Afghanistan, this is going to be a big challenge. I think because of the extraordinary work done by our troops, and some very good diplomatic work done by Ambassador Crocker in Iraq, we just saw an election in Iraq that went relatively peacefully. And you get a sense that the political system is now functioning in a meaningful way.

You do not see that yet in Afghanistan. They’ve got elections coming up, but effectively the national government seems very detached from what’s going on in the surrounding community.

In addition, you’ve got the Taliban and al Qaeda operating in the FATA and these border regions between Afghanistan and Pakistan, and what we haven’t seen is the kind of concerted effort to root out those safe havens that would ultimately make our mission successful.

So we are undergoing a thorough-going review. Not only is General Petraeus now the head of CENTCOM conducting his own review, he’s now working in concert with the special envoy that I’ve sent over, Richard Holbrooke, one of our top diplomats, to evaluate a regional approach. We are going to need more effective coordination of our military efforts with diplomatic efforts with development efforts with more effective coordination with our allies in order for us to be successful.

The bottom line, though — and I just want to remember [sic] the American people, because this is going to be difficult — is this is a situation in which a region served as the base to launch an attack that killed 3,000 Americans. And this past week, I met with families of those who were lost in 9/11 — a reminder of the costs of allowing those safe havens to exist. My bottom line is that we cannot allow al Qaeda to operate. We cannot have those safe havens in that region. And we’re going to have to work both smartly and effectively, but with consistency, in order to make sure that those safe havens don’t exist. I do not have yet a timetable for how long that’s going to take. What I know is, I’m not going to make — I’m not going to allow al Qaeda or bin Laden to operate with impunity, planning attacks on the U.S. homeland.

All right. Helene Cooper. Where’s Helene? There you are.

Q Thank you, sir. I wanted to ask you on the next bank bailout. Are you going to impose a requirement that the financial institutions use this money to loosen up credit and make new lending? And if not, how do you make the case to the American people that this bailout will work, when the last one didn’t?

THE PRESIDENT: Again, Helene — and I’m trying to avoid preempting my Secretary of the Treasury, I want all of you to show up at his press conference as well; he’s going to be terrific. But — this relates to Jake’s earlier question — one of my bottom lines is whether or not credit is flowing to the people who need it. Is it flowing to banks — excuse me, is it flowing to businesses, large and small? Is it flowing to consumers? Are they able to operate in ways that translate into jobs and economic growth on Main Street? And the package that we’ve put together is designed to help do that.

And beyond that, I’m going to make sure that Tim gets his moment in the sun tomorrow.

All right. Major Garrett. Where’s Major?

Q Mr. President, at a speech Friday that many of us covered, Vice President Biden said the following thing about a conversation the two of you had in the Oval Office, about a subject he didn’t disclose: “If we do everything right, if we do it with absolute certainty, if we stand up there and we really make the tough decisions, there’s still a 30 percent chance we’re going to get it wrong.” Since the Vice President brought it up, can you tell the American people, sir, what you were talking about? And if not, can you at least reassure them it wasn’t the stimulus bill or the bank rescue plan — (laughter) — and if in general, you agree with that ratio of success, 30 percent failure, 70 percent success?

THE PRESIDENT: You know, I don’t remember exactly what Joe was referring to. (Laughter.) Not surprisingly. But let me try this out. I think what Joe may have been suggesting, although I wouldn’t put numerical — I wouldn’t ascribe any numerical percentage to any of this — is that given the magnitude of the challenges that we have, any single thing that we do is going to be part of the solution, not all of the solution. And as I said in my introductory remarks, not everything we do is going to work out exactly as we intended it to work out.

This is an unprecedented problem. And when you talk to economists, there is some general sense of how we’re going to move forward; there’s some strong consensus about the need for a recovery package of a certain magnitude; there’s a strong consensus that you shouldn’t put all your eggs in one basket, all tax cuts or all investment, but that there should be a range of approaches.

But even if we do everything right on that, we’ve still got to deal with what we just talked about, the financial system, and making sure that banks are lending again. We’re still going to have to deal with housing. We’re still going to have to make sure that we’ve got a regulatory structure — a regulatory architecture for the financial system that prevents crises like this from occurring again. Those are all big, complicated tasks. So I don’t know whether Joe was referring to that, but I use that as a launching point to make a general point about these issues.

Q Did you get any promise from them?

THE PRESIDENT: I have no idea, I really don’t.

Michael Fletcher, The Washington Post.

Q Yes, thank you, sir. What is your reaction to Alex Rodriguez’s admission that he used steroids as a member of the Texas Rangers?

THE PRESIDENT: I think it’s depressing news on top of what’s been a flurry of depressing items when it comes to Major League Baseball. And if you’re a fan of Major League Baseball, I think it — it tarnishes an entire era to some degree. And it’s unfortunate, because I think there are a lot of ballplayers who played it straight. And the thing I’m probably most concerned about is the message that it sends to our kids.

What I’m pleased about is Major League Baseball seems to finally be taking this seriously, to recognize how big of a problem this is for the sport. And that our kids, hopefully, are watching and saying, you know what, there are no shortcuts; that when you try to take shortcuts, you may end up tarnishing your entire career, and that your integrity is not worth it. That’s the message I hope is communicated.

All right, Helen. This is my inaugural moment here. (Laughter.) I’m really excited.

Q Mr. President, do you think that Pakistan are maintaining the safe havens in Afghanistan for these so-called terrorists? And also, do you know of any country in the Middle East that has nuclear weapons?

THE PRESIDENT: Well, I think that Pakistan — there is no doubt that in the FATA region of Pakistan, in the mountainous regions along the border of Afghanistan, that there are safe havens where terrorists are operating. And one of the goals of Ambassador Holbrooke, as he is traveling throughout the region, is to deliver a message to Pakistan that they are endangered as much as we are by the continuation of those operations. And that we’ve got to work in a regional fashion to root out those safe havens. It’s not acceptable for Pakistan or for us to have folks who, with impunity, will kill innocent men, women and children. I believe that the new government of Pakistan and Mr. Zardari cares deeply about getting control of this situation. We want to be effective partners with them on that issue.

Q (Inaudible.)

THE PRESIDENT: Well, Mr. Holbrooke is there, and that’s exactly why he is being sent there, because I think that we have to make sure that Pakistan is a stalwart ally with us in battling this terrorist threat.

With respect to nuclear weapons, you know, I don’t want to speculate. What I know is this: that if we see a nuclear arms race in a region as volatile as the Middle East, everybody will be in danger. And one of my goals is to prevent nuclear proliferation generally. I think that it’s important for the United States, in concert with Russia, to lead the way on this. And, you know, I’ve mentioned this in conversations with the Russian President, Mr. Medvedev, to let him know that it is important for us to restart the conversations about how we can start reducing our nuclear arsenals in an effective way so that — so that we then have the standing to go to other countries and start stitching back together the nonproliferation treaties that, frankly, have been weakened over the last several years.

Q Why do we have to pick –

THE PRESIDENT: Okay, all right.

Q — on who (inaudible)?

THE PRESIDENT: Sam Stein, Huffington Post — where’s Sam? Here.

Q Thank you, Mr. President. Today Senator Patrick Leahy announced that he wants to set up a truth and reconciliation committee to investigate the misdeeds of the Bush administration. He said that before you turn the page, you have to read the page first. Do you agree with such a proposal, and are you willing to rule out right here and now any prosecution of Bush administration officials?

THE PRESIDENT: I haven’t seen the proposal, so I don’t want to express an opinion on something that I haven’t seen.

What I have said is that my administration is going to operate in a way that leaves no doubt that we do not torture, and that we abide by the Geneva Conventions, and that we observe our traditions of rule of law and due process, as we are vigorously going after terrorists that can do us harm. And I don’t think those are contradictory; I think they are potentially complementary.

My view is also that nobody is above the law, and if there are clear instances of wrongdoing, that people should be prosecuted just like any ordinary citizen; but that generally speaking, I’m more interested in looking forward than I am in looking backwards. I want to pull everybody together, including, by the way, the — all the members of the intelligence community who have done things the right way and have been working hard to protect America, and I think sometimes are painted with a broad brush without adequate information.

So I will take a look at Senator Leahy’s proposal, but my general orientation is to say, let’s get it right moving forward.

Mara Liasson.

Q Thank you, Mr. President. If it’s this hard to get more than a handful of Republican votes on what is relatively easy — spending tons of money and cutting people’s taxes — when you look down the road at health care and entitlement reform and energy reform, those are really tough choices. You’re going to be asking some people to get less and some people to pay more.

What do you think you’re going to have to do to get more bipartisanship? Are you going to need a new legislative model, bringing in Republicans from the very beginning, getting more involved in the details yourself from the beginning, or using bipartisan commissions? What has this experience with the stimulus led you to think about when you think about these future challenges?

THE PRESIDENT: Well, as I said before, Mara, I think that old habits are hard to break. And we’re coming off an election and I think people want to sort of test the limits of what they can get. There’s a lot of jockeying in this town and a lot of who’s up and who’s down and positioning for the next election.

And what I’ve tried to suggest is that this is one of those times where we’ve got to put that kind of behavior aside, because the American people can’t afford it. The people in Elkhart can’t afford it. The single mom who’s trying to figure out how to keep her house can’t afford it. And whether we’re Democrats or Republicans, surely there’s got to be some capacity for us to work together — not agree on everything, but at least set aside small differences to get things done.

Now, just in terms of the historic record here, the Republicans were brought in early and were consulted. And you’ll remember that when we initially introduced our framework, they were pleasantly surprised and complimentary about the tax cuts that were presented in that framework. Those tax cuts are still in there. I mean, I suppose what I could have done is started off with no tax cuts, knowing that I was going to want some, and then let them take credit for all of them. And maybe that’s the lesson I learned.

But there was consultation. There will continue to be consultation. One thing that I think is important is to recognize that because all these — all these items that you listed are hard, that people have to break out of some of the ideological rigidity and gridlock that we’ve been carrying around for too long.

And let me give you a prime example — when it comes to how we approach the issue of fiscal responsibility. Again, it’s a little hard for me to take criticism from folks about this recovery package after they presided over a doubling of the national debt. I’m not sure they have a lot of credibility when it comes to fiscal responsibility.

Having said that, I think there are a lot of Republicans who are sincere in recognizing that unless we deal with entitlements in a serious way, the problems we have with this year’s deficit and next year’s deficit pale in comparison to what we’re going to be seeing 10 or 15 years or 20 years down the road.

Both Democrats and Republicans are going to have to think differently in order to come together and solve that problem. I think there are areas like education where some in my party have been too resistant to reform, and have argued only money makes a difference. And there have been others on the Republican side or the conservative side who said no matter how much money you spend, nothing makes a difference, so let’s just blow up the public school systems.

And I think that both sides are going to have to acknowledge we’re going to need more money for new science labs, to pay teachers more effectively, but we’re also going to need more reform, which means that we’ve got to train teachers more effectively, bad teachers need to be fired after being given the opportunity to train effectively, that we should experiment with things like charter schools that are innovating in the classroom, that we should have high standards.

So my whole goal over the next four years is to make sure that whatever arguments are persuasive and backed up by evidence and facts and proof that they can work, that we are pulling people together around that kind of pragmatic agenda. And I think that there was an opportunity to do this with this recovery package because as I said, although there are some politicians who are arguing that we don’t need a stimulus, there are very few economists who are making that argument.

I mean, you’ve got economists who were advising John McCain, economists who were advisors to George Bush — one and two — all suggesting that we actually needed a serious recovery package. And so when I hear people just saying, oh, we don’t need to do anything, this is a spending bill, not a stimulus bill — without acknowledging that by definition, part of any stimulus package would include spending — that’s the point — then what I get a sense of is that there’s some ideological blockage there that needs to be cleared up.

But I am the eternal optimist. I think that over time people respond to civility and rational argument. I think that’s what the people of Elkhart and people around America are looking for. And that’s what I’m — that’s the kind of leadership I’m going to try to provide.

All right, thank you, guys.

[END of president's remarks and Q&A: 9:01pm EST]

Pres. Barack Obama led his remarks with a mention of today’s town-hall meeting in Elkhart, Indiana, which he highlighted as a town whose troubles illustrate the gravity of the current crisis. He said that job losses and recession have become so deep there that local television stations are broadcasting public service announcements notifying residents where to find food banks.

Obama also assured his audience that 90% of the jobs created by the economic recovery and reinvestment plan will be private-sector jobs, and they will not be “make-work” jobs, but jobs doing the work that desperately needs doing, if the US economy is going to get up to date and remain viable in the highly competitive global economy of the 21st century.

The president also said the all-important words that millions were hoping to hear: that the plan contains no “pet projects” and no earmarks directing funds to specific projects or companies. The bill has been stripped of the projects most objectionable to members in both parties, and overall spending has been reduced by a group of “moderates” in the Senate.

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“It is our duty as leaders and citizens” to do everything possible “in this winter of our hardship”, Obama said, to help the economy move toward healing itself. He indirectly chastized members of Congress who seek to stop the recovery plan based solely on ideological rigidity or due to political calculation.

The first question was about Obama’s “dire language” and his claims earlier in the day that failure to act could push the US into an economic crisis the nation would be helpless to reverse. The reporter suggested Obama meant the recession could be permanent or that his rhetoric could “talk down” the economy. Obama said he only means to refer to analysis from numerous economists that suggests inaction would likely leave the US closer to an economic downward spiral that is much more difficult to get out of and could mirror the Great Depression or Japan’s worrying experience known as the “lost decade”.

The president also addressed what was motivating the opposition to the legislation. He noted that there are “very sincere” individuals in Congress who disagree “philosophically” that government should intervene at all, for any reason. He said that some of them are actually still arguing that FDR was wrong to intervene with the New Deal, saying they were “fighting battles I thought were settled a long time ago”. Obama made it clear that even free-market economists do not share this extreme view with certain Republican ideologues in Congress.

He said there will be a focus on housing, working to prevent further foreclosures and ensure that communities, and community-based businesses, do not come apart due to sustained economic hardship.

“What I won’t do is return to the failed theories of the last eight years”

Asked about Iran and a timetable for implementing a more diplomatic approach, Obama said “Iran is a country that has extraordinary people, extraordinary history and traditions, but that its actions, over many years now, have been unhelpful”. He criticized Iran for supporting Hezbollah and Hamas, for “bellicose language” against Israel, for pursuit of a nuclear weapon and other actions that could “destabilize” the region.

Obama went on to say he wants US policy to use all the tools available to the US government to engage Iran responsibly and work for a situation which will be less destabilizing to the region. He said that in coming months, his administration will be “looking for openings” that could lead to more direct diplomacy and the possibility of sitting down for talks.

He reiterated that he wanted Iran to understand that even a less hostile US cannot tolerate funding of terrorist organizations or the pursuit of nuclear weapons and that he seeks to establish the goal of “a relationship of mutual respect and progress”. He also said that while Iran has “some rights as a member of the international community”, Tehran must understand that “with those rights come responsibilities”.

Questioned about his approach to bipartisanship, Obama said “I can’t afford to see Congress play the usual political games; what we have to do right now is get the job done for the American people” and urged the Congress to “send me a bill that creates or saves 4 million jobs”. He also said he continues to seek to use a tone with opponents that is consistently “civil and respectful”.

Obama reiterated his observation that certain members of Congress appear to sincerely hold the position that the government should “do nothing”. He said those individuals will probably not reach agreement with him, primarily because he does not believe there are any sound economic reasons for such a view in a time of crisis like this, and that he seeks to work with critics who understand the urgency of the moment and want to create policy that works.

Obama noted that some criticisms don’t seem to have much relevance, citing the criticism of provisions that would make federal buildings more energy efficient. “Now, why would that be a waste of money?” he said. Such moves, he said, create jobs immediately, save taxpayers money on energy and reduce the government’s dependence on foreign oil, which could also help to bring down energy costs across the economy.

Asked by Chuck Todd what he thought consumers should do with recovery funds, and whether consumer spending has been the crux of the crisis, Obama said that “banks taking exorbitant wild risks with other people’s money” was the initial cause of this credit-based economic crisis. He said gambling $30 on $1 of actual assets led to dangerously precarious financial structures, and that now “the party’s over” and economic recovery demands a new economic focus.

Helping the federal budget crisis to not worsen, he said, means spending money

“This notion that I came in here just ginned up to spend $800 billion” is wrong, and that it’s not what he envisioned for his presidency when he set out to seek the office.

Obama was asked whether in fact fixing the financial sector would require at least $1 trillion, not just the $350 billion remaining from October’s TARP legislation. “We’ve got to open things up and restore some trust”, he said, warning that as things stand, we don’t know enough about what’s on the books of any given bank.

How can Americans know whether the plan is working? First, Obama said, is job creation. The program should ultimately create or save 4 million jobs, so making sure that job losses slow or reverse is first. Second is making credit markets work. Third is housing: “stem the rate of foreclosure and we can start stabilizing home prices over time”.

Asked about what VP Biden was referring to when he told reporters that in a conversation with the president, it was clear that even if we do everything right, there’s still a 30% chance it will fail, Obama said he would not ascribe a number to the potential for failure, but that whatever is done to find a solution, it won’t be the entire solution to a crisis as big as the one facing the nation now.

Helen Thomas, in her “inaugural” question to the new president, asked about Obama’s strategy for Afghanistan and Pakistan, how to ensure that Pakistan does not tolerate Al Qaeda and Taliban activity on its territory. She also asked the very provocative question about whether he knows of any country in the Middle East that may have nuclear weapons.

Obama said he is already talking to Pakistan, and has sent Special Envoy Holbrooke to discuss with Pakistan the importance of not allowing such safe havens to exist. He did not comment on whether or not Israel has nuclear weapons and said he is committed to making sure that Iran does not obtain them. He also said his administration plans to work closely with Russia to prevent further proliferation of nuclear weapons.

Asked about Sen. Leahy’s call for a “truth and reconciliation” commission on Bush administration violations of domestic or international law, Obama declined to comment on the plan for not having read it yet, but that his administration was looking closely at how to make sure the policies are right going forward. He did not make an explicit statement on whether or not there might be prosecutions for crimes committed, if uncovered, by the previous administration.

Pres. Obama said that his “whole goal over the next four years” would be to make sure that where there are viable practical solutions, supported by evidence and successes, people should come together to act pragmatically. He added that “there’s some ideological blockage there that needs to be cleared out, but I’m the eternal optimist who believes that over time people respond to civility and sound argument”.

Pres. Barack Obama today held a unique town-hall meeting in Elkhart, Indiana, in which he explained to a community beset with the worst unemployment rate in the country, at 15.3%, why the recovery and reinvestment bill before Congress is urgently needed and how it will work. First delivering a detailed assessment of the nation’s economic woes, then answering questions from unscreened citizens in attendance, Obama gave a vigorous defense of the unique stimulus project that blends “economic recovery” and “community reinvestment”.

Elkhart is a part of Indiana that did not vote for Obama, but Obama’s last campaign stop in November was in Indiana, and he noted this was his first community visit after becoming president. The town’s 15.3% unemployment is twice the national average, the highest in the nation, and shockingly higher than the 4.7% of just one year ago. Local politicians say they have 17 “shovel-ready” projects awaiting funding and that they could break ground within weeks of stimulus, in order to start creating jobs and cut into the swelling unemployment rates.

Republicans have demanded over $100 billion in cuts to the Democratic “recovery and reinvestment” plan, which turned out to be just enough to get 3 of their members to back the legislation. Among the cuts are $40 billion cut from education spending, which House Speaker Nancy Pelosi (D-CA) will “do violence to what we are trying to do for the future”; her stance suggests she is not willing to allow the aims of the House majority to be undermined by an effort to win the support of Senate Republicans.
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Indeed, Pennsylvania Republican Arlen Specter wrote in an editorial in the Washington Post today that he is supporting the stimulus bill because “The country cannot afford not to take action”. He also warned that:

Wave after wave of bad economic news has created its own psychology of fear and lowered expectations. As in the old Movietone News, the eyes and ears of the world are upon the United States. Failure to act would be devastating not just for Wall Street and Main Street but for much of the rest of the world, which is looking to our country for leadership in this crisis.

Specter’s admonition is a shot across the bow to Republican leaders, warning them that inaction, or worse, inaction resulting from Republican sabotage of the measure, would be bad for the nation, but also a stain on the party. If one or two Republican senators join the three already on board, the conference committee process will likely produce a bill that goes to the president’s desk.

It is in this environment that Obama, with an approval percentage consistently in the mid 70s, goes directly to the people to call on Congress to cease delaying action toward economic recovery. To some extent, his goal is make sure that the stimulus package he’s pushing not fail, but that maximum pressure will be on ideologically-motivated Republicans leading the opposition to the measure to recognize that blame will fall to them should the economy continue to worsen, with no comprehensive action taken on stimulus.

Asking his audience to get comfortable for a lengthy conversation, Pres. Obama said he knows that behind every economic statistic, the real truth is that “We’re talking about people… families that have lost their home… young people that ahve put that college acceptance letter back in the envelope, because they just can’t afford it”, adding that “I have not forgotten” how much he learned of that truth visiting communities across the country.

In a vital reminder to the public and to Congressional Republicans, Obama quipped that “We have inherited an economic crisis as deep and as dire as any since the Great Depression”, making sure the debate on stimulus comprehends that this is an effort to fix a crisis that started under his Republican predecessor.

A new CNN poll shows that the vast majority of the public sees Obama working hard to get Republicans on board (74%), while fully 60% say they think the Republicans are not doing enough to behave in a bipartisan way and get behind the new Democratic president. Political analysts appear increasingly convinced the Republican party is looking to its political future and the desire to say they opposed Obama, rather than to craft a viable solution.

Pres. Barack Obama announced, just one week after taking office, the creation of a new website, Recovery.gov, which will detail the manner in which all the money from his American Recovery and Reinvestment Plan, once passed by Congress and signed into law, is being spent. The website is another in a series of steps to create a far-reaching reform of the federal government’s reporting to the public about its activities, with the aim of achieving Obama’s promise of the “most transparent” government in US history.

Economic recovery requires a massive amount of new federal spending, and the administration has asked Congress to find ways to use that wave of spending to implement vital innovations in the overall structure of the American economy, so that some of the “stimulative” effects actually turn into sustainable new areas of compounded growth. That means not only infrastructure, but the fomenting of new industries, like clean-energy businesses that will build a new energy distribution system and new industrial output.

Stimulus also requires the rapid disbursal of funds to specific industries, which will immediately use those funds on projects that will lead to retention or increase of jobs in a given market. Among those industries is the entertainment industry that dominates the city of Los Angeles, and which needs the investment to keep employing the hundreds of thousands who depend on its intermittent projects for their income, as banks are not lending as freely as they once did.

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All of this means Recovery.gov is a necessary tool, aimed at informing the public about how each recovery dollar is spent, where that stimulus has been directed, or where there are long-term infrastructure projects getting underway. This is a new wave of information which will also benefit those who are practically or geographically mobile and can shift skill-focus or change location in order to take advantage of new funding, something that can optimize the effects of the recovery and reinvestment plan.

Over the long-term, education spending has a better return-on-investment than any other type of government spending, in terms of generating economic activity, and so it will be instructive for the public to be able to view what sorts of new economic opportunities are being made available and what sorts of new horizons open up for the adults and young people who are able to take advantage of those opportunities.

Consistently available continuing education is a needed asset for a dynamic 21st-century “knowledge economy”, in which the nature of specific skills and the knowledge needed to make best use of them are constantly evolving. Recovery.gov will enable observers of all stripes to examine how dollars directed at informational and education-enabling initiatives are being spent, to gauge whether real people are getting increased access to education or whether consultants and administrators are getting the bulk of the benefit.

Recovery.gov, because of the scope of the spending programs it will track, is a major revolution in government accountability, opening up the executive to intimate scrutiny of the details of spending that amounts —between Troubled Asset Relief Program (TARP) and the American Recovery and Reinvestment Plan (ARRP)— to roughly half the annual federal budget. This brings the eyes and the insights of however many millions of American citizens choose to inspect and judge the process into the policy analysis.

This sort of action, which on its face may seem like the trivial creation of another government website, has the potential to generate one of the most effective avenues of public input into government activity and priorities. If the public is willing or able to take advantage of this information, a vast reservoir of detailed economic-potential data could be created, with immense potential for better gauging the health and resilience of the overall structure of the American economy, at any given moment.

Peripheral activity, such as the creation of vast analytic mash-ups and evolving composite real-time reports, a threadwork of data and interpretive theory, could make it possible for planners, activists and entrepreneurs in the private sector to hone their planning and craft the best solutions for shaping an agile, inventive marketplace of ideas, technology and financial activity. Allowing real people in the real world to have access to such information is itself potentially stimulative, in terms of confidence and better organization of future gambles, is a necessary improvement and the right thing for catching up to the information age.

Pres. Barack Obama today announced his Economic Recovery Advisory Board, a panel of business leaders and economic advisors who will advise the president as to the better or more risky proposals which may be used to reverse the economic downturn. Obama sought to press lawmakers on the “urgency” of the crisis, warning that inaction will only allow the problem to worsen.

Pres. Obama announced that 600,000 more Americans lost their jobs in January, “the single worst month of job losses in 35 years”. He also noted that the Labor Dept. revised its statistics for 2008, and now says at least 3.6 million jobs have been lost since the recession began at the end of 2007. “The situation could not be serious”, said Obama, calling on members of Congress to see the crisis through the lens of the “unseen story” behind each job lost.

Obama warned that “Although we had a terrible year with respect to jobs last year, the problem is accelerating” and said that inaction would lead to millions more job losses, and said inaction “is not acceptable to the American people”. Speaking with emphasis, he reiterated his critique of those who seek to implement “the same tried and failed” policies he was elected to replaced with better ideas.

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“Every day that Washington fails to act, the recovery is delayed” said Obama, but he also noted that “no single idea” will fix the problem. He called the “new institution” of the Economic Recovery Advisory Board an historic effort to seek counsel from “beyond the Washington echo chamber”, to harvest a broad range of opinions from across the country.

He joked that the group of business leaders and economic luminaries includes “some economists and some who think they’re economists”. Paul Volcker will head the board, and his top deputy will be Austan Goolsbee, one of Obama’s most trusted economic advisers. He said the group is designed to help avoid “groupthink”, and to challenge whatever ideas are taking prevalence in order to craft the best, most well-planned solutions for economic difficulty.

Paul Volcker spoke, saying he believes all the members of the Board share the “sense of urgency” Obama has called for. Obama then signed the executive order officially creating the Advisory Board, then greeted members of the press and others gathered for the event.

Pres. Barack Obama is struggling to make a case for economic stimulus, despite being one of the most talented communicators seen in American politics for decades. Political pundits on television and in print are criticizing the White House for failing to communicate the virtues of a very large, very complex economic stimulus plan. But, in defense of the new model of the presidency which Obama has sought to manifest, the man has been working diligently on a vast range of issues that require attention or correction, and most likely, he wanted the legislative process to be more effective than it has been.

The news media are heavily focused on the American Recovery and Reinvestment bill, which will spend anywhere from $800 to $900 billion over several years in order to stimulate and rebuild our economy. It is major legislation; it is major spending; it deserves attention. But the news media in general have been reverting to the flawed methods of reporting that allowed non-existent WMD intel to drive the nation to war in Iraq: parroting rhetoric and taking the absence of a more hearty counter-attack as evidence that the parroted rhetoric is a true argument.

The fact is: the president has been absolutely nothing like absentee, no matter how many times the Republican leadership or fringe commentators attempt to make it so. Each day of his presidency, he has been somehow or another accessible and explaining the work he is doing. He has held one bipartisan meeting after another, including Republicans in discussions about economic recovery, and it is the Republican party’s skewed view of what “bipartisan” means: it is now clear that to the GOP, bipartisan means they call the shots. This is sabotage, cloaked in rhetoric, and we need to recognize the truth of the situation.

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Nobel-laureate economist Paul Krugman writes today that:

Businesses are canceling plans to expand capacity, since they aren’t selling enough to use the capacity they have. And exports, which were one of the U.S. economy’s few areas of strength over the past couple of years, are now plunging as the financial crisis hits our trading partners.

He adds that “Some private analysts predict double-digit unemployment”, while MSNBC anchor Contessa Brewer asks Republican Sen. Barrasso if the stimulus fails and the economy ends up in a situation where we are “stuffing cardboard into our shoes, like back in the Great Depression, are you willing to put your name behind that?” Barrasso said he wanted to work for effective stimulus, but offered nothing aside from tax cuts.

While dealing with some of the most pervasive and worrying crises facing the nation in decades, especially if taken together, as he has to, all inherited from his predecessor, Pres. Obama is actually working hard at finding the best solutions. He has been assailed by former Bush chief of staff Andrew Card for appearing in the Oval Office without a suit jacket, but the shirtsleeves look clearly indicates the man is hard at work, not just hosting photo-ops or glad-handing the like-minded.

Krugman warns with very firm language:

It’s time for Mr. Obama to go on the offensive. Above all, he must not shy away from pointing out that those who stand in the way of his plan, in the name of a discredited economic philosophy, are putting the nation’s future at risk. The American economy is on the edge of catastrophe, and much of the Republican Party is trying to push it over that edge.

Obama’s presidency has been a virtuoso lesson in quick, principled, well-thought action: he has suspended a system of military tribunals that is not widely considered to be coherent with American constitutional law, pledging to study the best ways to carry out effective prosecutions, that will not be overturned, in order to bring justice to the families of terror victims and punish the guilty among those detained so far. Getting it right is hard work.

He has been actively involved in talks with leaders from the middle east in an effort to craft a more responsible way to lasting peace. He has been overseeing a (much needed) shift in military policy, moving the focus of deployments to Afghanistan, where a 7-year old war is severely in danger of ending in a failed state, possibly overrun again by the primitive Taliban movement.

He is also working to engineer a very necessary and very comprehensive overhaul of the approach to gathering and reporting intelligence on security issues from around the world. He is working to rebuild strained relations with allies around the world, in a time of major security crises on every continent except Australia. He has to craft a viable policy for staring down the bully regime of Russia’s shadow president Vladimir Putin, self-declared “father of the nation”.

Pres. Obama is facing the largest national debt in history, because his immediate predecessor actually created more national debt than all 42 of his predecessors combined. After just 17 days in office, he is being attacked by Republicans for not reaching out, which he has done, for not respecting the office, which is a sad joke of a critique, when his entire project to date has been about re-establishing the loyalty of the president to the rule of law, and in the midst of severe Congressional squabbling, he has had to stand up and become the sole voice of clarity in Washington, it seems.

This is the hard work of governing, and Barack Obama has sought to fulfill all these many obligations, without delay, and without remorse, despite the opposition showing they can remain “loyal” only for a couple of weeks and only until anyone in Washington proposes that it might not be entirely true that only tax cuts “create jobs” or “stimulate the economy”. He deserves credit for the firmness of conviction with which he has not only worked hard to effect results, but with which he has sought to bring the minority party into his policy-making.

Citigroup forced to join with Morgan Stanley —which will hold 51% of shared assets— to hold onto Smith Barney, which accounts for 30% of its profits. Analysts suggest government of $45 billion to prop up massive bank now “underwater”, Citi will be forced to start selling assets.

US retail sales fell by 2.7% last month, raising concerns that recession is in fact deepening. With comprehensive economic stimulus still not enacted, American consumers of all income levels are struggling to keep up their levels of spending or payments on the specifics of their standard of living, as already established. Consumer spending accounts for roughly 70% of GDP.

US federal budget deficit projected to hit $1.2 trillion in 2009, even before counting the $775 billion Pres.-elect Obama wants to devote to economic recovery and reinvestment, and without counting the huge “war supplementals” for Iraq and Afghanistan, which have been funded outside the standing Pentagon budget over recent years.

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Oakland-area demonstrators clash with police, after mounting protest against delays in charging a police-officer who fatally shot an unarmed man. The clashes are reminiscent of the violence that spread across Greece after the fatal shooting of an unarmed youth by police. According to the Associate Press:

Witnesses say Mehserle fired into the back of 22-year-old Oscar Grant while the man was lying facedown on a train platform at a station in Oakland. Grant and others had been pulled off a train after reports of fighting, as New Year’s Eve revelers were shuttling home after midnight.

The shooting was captured on several cell phone cameras and widely viewed on the Internet. Hundreds of protesters have taken to the streets calling for the prosecution of Mehserle, with one rally last Wednesday spiraling into violence and resulting in more than 100 arrests and dozens of businesses damaged.

US Congress to debate release of second $350 billion tranche of funds for the ‘Troubled Asset Recovery Program’ (TARP). The bill is a response to an official request, by Pres.-elect Barack Obama, to Pres. Bush, that the process of releasing the remaining TARP funds be initiated, to give maximum choice to incoming administration in dealing with economic crisis.

Illinois governor Rod Blagojevich, facing impeachment on corruption charges, will drop the gavel to open the first session of the new state Senate. The first order of business will be to officially designate the Senate leader, after which Blagojevich will hand the gavel to that leader. One of the first orders of business will be to begin the impeachment trial of the governor, with the aim of removing him from office. Blagojevich says he believes he will be “properly exonerated”.

Radio & web address by President-elect Barack Obama, 10 January 2009

We start this new year in the midst of an economic crisis unlike any we have seen in our lifetime.  We learned yesterday that in the past month alone, we lost more than half a million jobs – a total of nearly 2.6 million in the year 2008.  Another 3.4 million Americans who want and need full-time work have had to settle for part-time jobs.  And families across America are feeling the pinch as they watch debts mount, bills pile up and savings disappear.

These numbers are a stark reminder that we simply cannot continue on our current path.  If nothing is done, economists from across the spectrum tell us that this recession could linger for years and the unemployment rate could reach double digits – and they warn that our nation could lose the competitive edge that has served as a foundation for our strength and standing in the world.

It’s not too late to change course – but only if we take immediate and dramatic action.  Our first job is to put people back to work and get our economy working again.  This is an extraordinary challenge, which is why I’ve taken the extraordinary step of working – even before I take office – with my economic team and leaders of both parties on an American Recovery and Reinvestment Plan that will call for major investments to revive our economy, create jobs, and lay a solid foundation for future growth.

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I asked my nominee for Chair of the Council of Economic Advisers, Dr. Christina Romer, and the Vice President-Elect’s Chief Economic Adviser, Dr. Jared Bernstein, to conduct a rigorous analysis of this plan and come up with projections of how many jobs it will create – and what kind of jobs they will be.  Today, I am releasing a report of their findings so that the American people can see exactly what this plan will mean for their families, their communities, and our economy.

The report confirms that our plan will likely save or create three to four million jobs.  90 percent of these jobs will be created in the private sector – the remaining 10 percent are mainly public sector jobs we save, like the teachers, police officers, firefighters and others who provide vital services in our communities.

The jobs we create will be in businesses large and small across a wide range of industries.  And they’ll be the kind of jobs that don’t just put people to work in the short term, but position our economy to lead the world in the long-term.

We’ll create nearly half a million jobs by investing in clean energy – by committing to double the production of alternative energy in the next three years, and by modernizing more than 75% of federal buildings and improving the energy efficiency of two million American homes. These made-in-America jobs building solar panels and wind turbines, developing fuel-efficient cars and new energy technologies pay well, and they can’t be outsourced.

We’ll create hundreds of thousands of jobs by improving health care – transitioning to a nationwide system of computerized medical records that won’t just save money, but save lives by preventing deadly medical errors.  And we’ll create hundreds of thousands more jobs in education, equipping tens of thousands of schools with 21st century classrooms, labs and computers to help our kids compete with any worker in the world for any job.

We’ll put nearly 400,000 people to work by repairing our infrastructure – our crumbling roads, bridges and schools.  And we’ll build the new infrastructure we need to succeed in this new century, investing in science and technology, and laying down miles of new broadband l

As the economic downturn deepens, and job losses continue, with the Treasury moving tens of billions of dollars in “bridge loans” into Chrysler, GM and GMAC, in hopes of preventing the collapse of American manufacturing and the loss of millions more jobs, with banks desperate enough to “deal over debt” that credit-card holders can no longer pay, President-elect Barack Obama is reported to be planning an expansion of unemployment assistance.

The New York Times reports:

President-elect Barack Obama and Congressional Democrats are considering major expansions of government-assisted health care insurance and unemployment compensation as they begin intensive work this week on a two-year economic recovery package.

One part of the plan is reported to include the extension of unemployment assistance to part-time workers. Republicans have blocked this proposal in the past, but Obama has been careful to include all specific policy points in an overall approach to economic recovery, a goal Republicans do not want to work against.

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Part of Obama’s plan to reinvigorate the job market includes a renewed focus on adult education. Without going as far as Sen. Bill Bradley’s 2000 proposal for “lifelong learning”, Obama has said he wants adults to be able to return to school or retrain, as needed, to ensure the American job market is more agile and richer in overall knowledge and skills.

The Times also notes that:

The proposals indicate the sorts of potentially long-range changes that Mr. Obama intends to push in his promised American Recovery and Reinvestment Plan, as he named it in his weekly Saturday address on the radio and YouTube. They will be combined with one-time measures that are more typical of federal stimulus packages to jump-start a weak economy, like spending for roads and other job-creating public works projects.

Economic recovery is not a quick fix in Obama’s view, according to statements he has made, and plans he has announced throughout the transition. Public works, community reinvestment, spurring consumer spending —which will include a massive economic stimulus package and entails not abetting further waves of layoffs, and not leaving the unemployed unable to pay for basic expenses—, and a comprehensive overhaul of energy infrastructure, will fit together into a long-term strategy to restore sustained prosperity to the American economy.