President Barack Obama turned to cyberspace Thursday for an Internet town hall meeting, hoping to deepen support for his broad and expensive assault on economic hard times.
As he headed into the novel session, Obama was buoyed by congressional Democrats' embrace of his key budget priorities Wednesday night, pointing the way for expansive legislation this year on health care, energy and education, even as they sought to hold down deficits.
Obama is pressing his tax and spending plan as essential to long-term economic recovery by revamping the country's crippling spending on health care and to putting the nation on a path toward energy independence in the midst of the worst economic downturn in decades and a financial crisis unmatched since the 1930s Great Depression.
The latest data released Thursday showed U.S. economy shrank at a 6.3 percent pace at the end of 2008, the worst showing in a quarter-century.
As part of the administration effort, Treasury Secretary Timothy Geithner returns to Congress on Thursday to detail plans for an extensive overhaul of financial regulations to increase oversight of such exotic instruments as credit default swaps that have been blamed for contributing to financial meltdown.
They played a prominent role in the credit crisis that brought the downfall of investment banking giant Lehman Brothers Holdings Inc. last year and pushed insurance giant American International Group Inc. (AIG) to the brink of collapse, forcing the government to provide more than $180 billion in support.
Obama kicked off a first-of-its-kind Internet-era town hall at the White House on Thursday, taking questions asked from a pool of more than 100,000 sent to the White House Web site as well as from the audience of about 100 that was on hand for the event at the presidential mansion.
Many of the questions were on the economy. Obama reiterated his ideas of creating more jobs in high-paying, high-skill areas like clean energy technology to offset rising unemployment. Of the troubled housing market, he said his administration has made it easier for homeowners saddled with hefty mortgages and sinking home values to refinance at lower rates.
The president used the session to explain his massive budget plan, a $3.6 trillion version of which the House of Representatives Budget Committee approved over objections from Republicans who say it spends, taxes and borrows too much. Administration critics argued Obama would drive the country into unsustainable debt.
Obama defended his budget vigorously in the town hall meeting, evem as he acknowledged "a lot of critics out there."
"The money we are spending on education, health care and energy, if you add up all that increased money on what we're spending, it's still not driving up our long-term deficits," he said.
"We can't shortchange the investments that will allow us to grow in the future," Obama said.
Both the House and Senate versions of the budget plan lack specifics for any of the administration's signature proposals. And Democrats decided to cut spending and exploding deficits below levels envisioned in the Obama plan. Administration officials and congressional leaders said any differences were modest.
"This budget will protect President Obama's priorities — education, energy, health care, middle class tax relief and cut the deficit in half," Senate Majority Leader Harry Reid said after the chief executive met privately in the Capitol with rank-and-file Democrats.
The regulatory program Geithner was presenting to Congress will also include a recommendation for creation of a systemic risk regulator, possibly at the Federal Reserve, the U.S. central bank, to monitor risks to the entire system.
The plan also includes a measure that Geithner and Federal Reserve Chairman Ben Bernanke discussed in Congress early this week that would give the administration expanded powers to take over major nonbank financial institutions like AIG or hedge funds that were nearing collapse.
The administration, pushing Congress to act quickly on its reform agenda, sent Congress a 61-page bill dealing with the expanded powers to seize control of nonbank institutions late Wednesday and the House of Representatives Financial Services Committee has indicated it could move on the measure as early as next week.
The outline of the regulatory reform was being unveiled a week before Obama was scheduled to meet officials and leaders of the Group of 20 major industrialized and developing countries in London to assess what needs to be done to deal with the global financial crisis.
The administration is pushing other nations to follow the U.S. lead in putting together sizable economic stimulus programs to promote growth. However, many in Europe are resisting those calls and arguing that the United States needs to do more to toughen financial regulations.