WASHINGTON — President Barack Obama claimed early progress Tuesday night in his aggressive campaign to lead the nation out of economic chaos and declared that despite obstacles ahead, "we're moving in the right direction."
At the second prime-time news conference of his presidency, Obama also toned down his criticism of bonuses to executives at bailed-out AIG, and shot back at Republican critics of his budget.Read a full trascript of the president's press conference here.
In office for 64 tumultuous days, Obama cast his budget — now under review in Congress — as essential if the economy is to recover. The tax and spending plan "is inseparable from this recovery because it is what lays the foundation for a secure and lasting prosperity," he said.
The president also defended the U.S. dollar in the wake of China's suggestion for a universal currency, saying: "The dollar is extraordinarily strong right now," and "I don't believe that there is a need for a global currency."
The news conference, lasting 55 minutes, came at a pivotal, early moment in Obama's young presidency. Democrats in Congress are readying budget proposals that will largely determine how much of his first-term agenda will be passed, Treasury Secretary Timothy Geithner is churning out near-daily proposals to solve the nation's economic crisis and the administration is struggling with public and congressional outrage over bonuses paid to executives of bailed-out AIG. Additionally, Obama departs next week for his first European trip as commander in chief, with the global economy a major focus.
Flexible on some points, Obama was unyielding on others. Pressed on why he seemed to delay before condemning the AIG bonuses, Obama said, "It took us a couple of days because I like to know what I'm talking about before I speak."
The news conference was dominated by questions about the economy. Obama defended the steps his administration has taken to counter the recession and an unprecedented credit crisis. He said teachers and others have jobs today because of the economic stimulus measure that Congress passed, and the nation is "beginning to see signs of increased sales and stabilized housing prices for the first time in a long time."
He said full-fledged recovery is months away, and he added, "It will take patience."
At the same time, he said, "we're in a better place because of the decisions that we made."
Obama put in a plug for the request Geithner made to Congress earlier in the day for extraordinary authority to take over failing companies like American International Group Inc., much as the Federal Deposit Insurance Corp. now does for banks.
"It is precisely because of the lack of this authority" that AIG's problems threatened to bring down the entire U.S. economy, he said. Top Democrats in Congress reacted positively to the proposal, although it is not clear when legislation might be considered.
Obama has been vocal in his unhappiness over the $165 million in retention bonuses paid to executives at AIG, although his favorable reference to business men and women seeking profits was a new twist.
"Bankers and executives on Wall Street need to realize that enriching themselves on the taxpayers' dime is inexcusable, that the days of outsized rewards and reckless speculation that puts us all at risk have to be over," he said.
"At the same time, the rest of us can't afford to demonize every investor or entrepreneur who seeks to make a profit. That drive is what has always fueled our prosperity, and it is what will ultimately get these banks lending and our economy moving once more," he said.
On other issues, Obama:
— Said the American people are assessing his ability as chief executive based on his skills and work, not the color of his skin. He said there was justifiable pride in January, when he was inaugurated as the first black president.
— Strongly defended his proposal to raise taxes on the wealthy by reducing the value of the deductions they may take for items such as home mortgages or charitable donations. It's a "realistic way for us to raise some revenue from people who benefited enormously over the last several years. Its not going to cripple them. They will still be well-to-do," he said.
— Called his decision to expand federal support of embryonic stem cell research the "right thing to do and the ethical thing to do." He said he wrestled with the ethics of the decision but is hopeful that the science will lead to help for people with debilitating diseases.
— Said the recent elections in Israel would not make it easier to create a stable environment with side-by-side Israeli and Palestinian states.
The president opened the news conference with a prepared statement read from a screen, turning the event's opening moments into a brief speech delivered to a nationwide TV audience in addition to the roomful of reporters.
He said his administration was taking steps to make sure banks have money to lend "even if the economy gets worse."
Obama said he did not feel the government should call on Americans to make sacrifices beyond those imposed by the recession and credit crisis. "Folks are sacrificing left and right ... across the board, people are making adjustments large and small," he said.
Obama was quick with a retort when asked about Republican criticism of his budget, with its huge projected deficits.
"First of all," he said he inherited a deficit of over $1 trillion from his predecessor. And secondly, he said the Republicans have yet to offer an alternative to his own tax and spending plan.
Obama has emphasized a desire to cut projected deficits in half by the end of his current term, although recent estimates make it appear almost impossible barring an extraordinary series of events.
Given concern in Congress over the red ink, Senate Democrats are drafting a separate budget plan that assumes Obama's proposed middle class tax cut expires after two years — the sort of sleight of hand that other administrations of both parties have used in the past.
While Congress' budget does not go to the White House for a president's signature, the White House traditionally seeks to influence its provisions. Obama restated his objectives Tuesday night — health care overhaul, a new energy policy and more money for education and deficit control.
Obama stepped to the microphone one day after his administration unveiled a plan to melt the credit freeze by helping banks shed bad loans. Under the proposal, the government will finance the purchase by private investors of as much as $1 trillion of the $2 trillion in bad assets still held by the nation's banks, in the hopes of freeing banks to begin lending more freely and churn up economic activity.
On Wednesday, Obama is heading to Capitol Hill to lobby Senate Democrats.
Before Obama's speech, Senate GOP leader Mitch McConnell emphasized Republican criticism of the president's proposed budget as an over-spending, over-taxing disaster. A Congressional Budget Office analysis released last Friday estimates Obama's budget would generate deficits totaling $9.3 trillion over the next decade
"If these plans are carried out, we run the risk of looking like a Third World country," said McConnell, R-Ky.
Obama's job approval rating is 63 percent, according to Gallup polling. That number has been relatively stable recently, down from the 68 percent when the president took office mostly on a loss of support among Republicans.