President Barack Obama is seeking credit for an economic turnaround, using the fifth anniversary of the collapse of the Lehman Brothers investment bank to highlight signs of recovery and to warn against potentially market-rattling fights over the federal budget and the nation’s debt ceiling.
Obama was scheduled to address the state of the economy Monday in a Rose Garden speech, accompanied by a selection of Americans who the White House says have benefited from the administration’s policies. The event marks the start of a week-long focus on the economy after a month of preoccupation with the crisis in Syria.
For Obama, the anniversary of Lehman’s bankruptcy in 2008, which marked the beginning of the global financial crisis and played havoc with an economy already in recession, is an opportunity to confront public skepticism about his stewardship of the economy and to put down his marker for budget clashes with Congress in the weeks ahead.
The White House’s National Economic Council on Sunday issued a report detailing economic policies that it says have helped shore up the financial system and put the economy on a path toward growth. Those steps range from the unpopular Troubled Asset Relief Program, or TARP, that shored up the financial industry and bailed out auto giants General Motors and Chrysler, to an $800 billion stimulus bill to sweeping new bank regulations.
Gene Sperling, a top Obama adviser and director of the National Economic Council, said Obama’s policies “have performed better than virtually anyone at the time predicted.”
“We came in, stabilized the situation,” Obama told ABC’s “This Week” in an interview broadcast Sunday. He cited 42 months in a row of growth, 7½ million jobs created and a revitalized auto industry.
“The banking system works. It is giving loans to companies who can get credit. And so we have seen, I think undoubtedly, progress across the board,” he said.
But the public is not convinced that the economy is on the mend. Only one-third say the economic system is more secure now than in 2008, and 52 percent say they disapprove of Obama’s handling of the economy, according to a Pew Research Center poll. There is still plenty of pain to justify their pessimism.
Despite job growth, the unemployment rate remains high at 7.3 percent. Though the rate has fallen, one of the reasons is because some people have dropped out of the labor force and no longer are counted as job seekers. The share of unemployed workers who have been unemployed for more than six months is more than double what it was in 2007 before the recession began. And the income gap between the very rich and the rest of the population is the biggest since 1928.
What’s more, some banks that received government aid because they were deemed “too big to fail” are now bigger than they were in 2008, although they are smaller as a share of the economy than the largest banks in other big economies. Three years after Obama signed a sweeping overhaul of lending and high-finance rules, execution of the law is behind schedule.
Eager to counter public sentiment, Obama intends to draw attention to signs of progress with daily events, including a speech Wednesday to the Business Roundtable, an association of CEOs from the top U.S. companies, and a trip Friday to Kansas City to visit a Ford plant, where he will promote the strength of the auto industry.
Obama wants to reverse automatic spending cuts that kicked in in March, but at the same time has said he would not negotiate with Republicans over the nation’s debt ceiling. He said using the threat of default to make policy demands on the president “changes the constitutional structure of this government entirely.”
Obama’s remarks hinted at a potential constitutional confrontation with Republicans. Section 4 of the 14th Amendment says that “the validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”
Some conservative Republicans say they will only extend current spending levels or increase the debt ceiling if Obama delays putting in place his health care law, a condition Obama has flatly rejected. Others say the scheduled spending cuts should stay in place to reduce the deficit.
“We need to start by keeping the cuts we’ve already agreed to,” Sen. Mitch McConnell said in a statement Sunday. “It’s time to get serious about the challenges we face and reposition America for growth and prosperity in the 21st century.”
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