President Barack Obama held his first nationally televised press conference on Monday. (Photo: Getty Images)
The White House - In his first press conference, President Barack Obama focused on the disintegrating economy and defended his plan for prompt and expansive spending by the federal government to stem rising unemployment.
Obama walked to the podium in the plush East Room of the White House and spoke for ten minutes before taking 50 minutes of questions from the press. He faced the American public in prime time and he faced the global economy. But his message targeted the 535 members of the US Congress who control the government checkbook.
"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," Obama said.
Congress is working to pass a stimulus bill that would spend more than $800 billion on infrastructure projects and direct payments to taxpayers and to state and local governments, aiming to prevent job cuts and put people back to work by injecting cash into the grinding economy. Democrats in the House of Representatives passed a version of the bill without any support from House Republicans. Democrats were able to pull three Republican votes to override a Republican filibuster in the Senate on Monday evening, setting up the probable passage of a modified stimulus bill on Tuesday. The two plans would then need to be reconciled and passed again before Obama could sign the plan into law.
Turning to the successful tactics of the presidential campaign, the Obama administration held a rally in Elkhart, Indiana, where he spoke to 1,700 residents of the town, which relied on recreational vehicle (RV) manufacturing plants for jobs until the financial meltdown. Because of a drop in demand and greater difficulty getting a bank loan, the RV market has dried up and the town's manufacturers had to cut jobs. Elkhart's unemployment rate more than tripled in one year as a result, reaching over 15 percent in December 2008.
Obama used the story of Elkhart's failing food banks to illustrate the dangers of a continuing "vicious cycle": job cuts leading to further cutbacks in consumer spending and more job cuts, eventually leading to widespread destitution.
Before taking questions from reporters, Obama appealed again for cooperation, a theme he later said would remain a focus of his administration despite bitter ideological clashes in Congress over the stimulus 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," Obama said, adding, "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."
Later, Obama referred to the fighting between Democrats and Republicans as "bad habits," which will "take time to break down," adding "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."
Obama also strongly defended the economic philosophy underlying the stimulus plan. The plan would implement so-called "demand-side" or "Keynesian" economics where the government spends money to spur demand when consumers are afraid or unable to spend, a strategy employed by President Franklin Delano Roosevelt during The Great Depression.
"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."
When asked how Americans can measure the success of the administration's economic policies, Obama gave four benchmarks for success. First, the stimulus plan should create or save as many as four million jobs. Second, a revised bank rescue plan should normalize the credit markets so businesses and consumers can borrow again. Third, the administration must figure out a way to stabilize the housing market - a tall order given the ongoing drop in home prices, only made worse by increasing foreclosures. And finally, the combined policies should lead to overall economic growth - the mark of recovery.
Treasury Secretary Timothy Geithner is scheduled to unveil the Obama administration's new bank rescue plan on Tuesday. Obama declined to go into detail about the plan, but promised more transparency and oversight.
The Bush administration's original bank bailout, the Troubled Asset Relief Program (TARP), which has so far sunk about $350 billion into faulty banks, and has been criticized as ineffectual, overly secret, lacking in accountability and wasteful.
Elizabeth Warren, the chairwoman of the TARP Oversight Board, a Congressional watchdog setup to monitor the massive spending, said that the Treasury Department gave away $78 billion of taxpayer money with nothing to show for it.
"According to the data we have investigated, treasury put in 254 billion dollars for which it received $176 billion in value from the financial institutions. That is a short fall of about 78 billion dollars," Warren told the Senate Banking Committee on February 5.
Geithner's revamped plan may be even tougher to sell to members of Congress because of the problems with TARP and the public outrage over bailing out Wall Street.
On Tuesday, Obama takes his show on the road again, holding a town hall meeting in Fort Myers, Florida, where he will be introduced by popular Republican Gov. Charlie Crist.