March 18, 2009 > Obama shifts to more upbeat economic message
Obama shifts to more upbeat economic message
WASHINGTON (AP), Mar 14 _ President Barack Obama is shifting to a more upbeat economic message as he talks of working to create a ``post-bubble'' model for solid economic growth once the recession ends.
But first, Obama cautions, ``We've got to get through this difficult period.''
The days of overheated housing markets and ``people maxing out on their credit cards'' are over, Obama said Friday in describing that ``post-bubble'' model.
Lawrence Summers, Obama's top economic adviser, said there were ``modestly encouraging signs'' on the economy including indications that consumer spending had stabilized after taking a dive over the holiday season.
White House attempts to be positive matched a fourth day in a row of stock market gains. The Dow Jones industrials gained 53.92 points Friday to cap Wall Street's best week since November.
Administration officials were criticized earlier this year for painting too dark a picture of the economy in an effort to win congressional passage of the president's $787 billion stimulus package. But more recently, the president and others on his team have tempered their comments in hopes of building confidence, including the president's suggestion last week that it was a good time for those with a long-term perspective to buy stocks.
Republicans, meanwhile, were expressing misgivings over Obama's ambitious budget proposal, claiming that the deficits and taxes he envisions are ``destroying opportunities for the next generation.''
``The president and his allies in Congress want to spend too much, tax too much, and borrow too much,'' Sen. Charles Grassley of Iowa said Saturday in the Republicans' weekly radio address. ``Somebody has to pay _ if not the middle class now, then later. Eventually the middle class gets hit.''
Grassley said Obama's budget proposal to raise taxes, starting in 2011, on individuals earning more than $200,000 and on households earning more than $250,000 will hurt small businesses.
``These small businesses happen to create 74 percent of all new private sector jobs in the United States,'' Grassley said. ``Tell these business owners their taxes will go up. Odds are, they'll cut spending. They'll cancel orders for new equipment, cut health insurance for their employees, stop hiring, and lay people off.''
He also said Obama's proposal for mandatory limits on carbon dioxide emissions to combat climate change will lead to higher energy costs and amount to an ``average hidden tax increase of around $3,000 per household a year.'' The Obama administration maintains that revenue from auctioning off carbon emission allowances would offset much of the higher energy costs for many Americans.
In the past week, Obama's proposals for major health care, energy and education changes amid a recession faced skepticism from both Democrats and Republicans on Capitol Hill. North Dakota Sen. Kent Conrad, the Democratic chairman of the Budget Committee, called the track of future deficits ``unsustainable.''
Obama is projecting a federal deficit of $1.75 trillion this year, by far the largest in history, but says he can get it down to $533 billion by 2013.
Despite the new enthusiasm at the White House and on Wall Street, there was little solid evidence to suggest an end was in sight to the severe recession that has already cost four million American jobs, driven home values down and sent foreclosures soaring.
And there were fresh signs of financial stress.
The Commerce Department reported Friday that the U.S. trade deficit plunged in January to the lowest level in six years as the economic downturn cut America's demand for imported goods.
Also, China's premier, Wen Jiabao, expressed concern over the U.S. economy and the value of his own nation's vast holdings in Treasury bonds. China is Washington's biggest foreign creditor, holding an estimated $1 trillion in U.S. government debt.
In response to the Chinese premier's comments, White House spokesman Robert Gibbs said, ``There's no safer investment in the world than in the United States.''
Summers, who was treasury secretary under President Bill Clinton and now is director of Obama's National Economic Council, said it was too soon to gauge the broad impact of the administration's recovery program or to predict when the recession might end. But he suggested glimmers of hope.
Summers said it was time for America to move past an ``excess of fear'' that has made things worse.
Private economists agree that it's too soon to declare recovery is on the way.
``As long as we are losing over 600,000 jobs per month, consumers are not going to be able to sustain consumer spending,'' said Mark Zandi, chief economist at Moody's Economy.com. ``It is too early to conclude that the bottom is at hand,'' he said after this week's report on retail sales and consumer spending.
Associated Press Writers Tom Raum and Jim Kuhnhenn contributed to this report.