Obama to Washington: Chill Out
President Obama is getting a little impatient at the shortness of certain people's attention spans.
Acknowledging a growing chorus of voices inside the Beltway calling for him to focus solely on short-term fixes to the economy, Obama yesterday made the case that if the goal is long-term growth (not "bubble and bust"), real confidence (not "false confidence") and lasting wealth (not "the illusion of prosperity"), then the nation needs to take a longer view than is currently fashionable in Washington's political and media circles.
In a fascinating, wide-ranging talk with top business executives yesterday, Obama didn't just explain his approach to the current economic crisis, he described how he keeps his head when others are losing theirs.
"We live in such a rapid-fire information-rich environment that people's attention spans go like this," he said, snapping his fingers. "And that makes for volatility in confidence. A smidgen of good news, and suddenly everything is doing great. A little bit of bad news — oh, we're down in the dumps. And I am obviously an object of this constantly varying assessment. I'm the Object-in-Chief of this varying assessment." His audience laughed.
"So my view — you know, people ask me sometimes, well, you seem like a pretty calm guy, how do you do that? I say, well, look, I don't think things are ever as good as they say and they're never as bad as they say. And things two years ago were not as good as we thought because there were a lot of underlying weaknesses in the economy, and they're not as bad as we think they are now."
That key passage comes at 1:02:25 in the C-SPAN video (above.)
Obama said a "spirited debate has emerged in Washington — a debate over what it will take to ultimately break the back of this recession and strengthen our economy for the long run. It's a debate that centers on one key question: Does the greatest economic crisis in our lifetime warrant extraordinary action to deal with the array of challenges we face? Or should we limit our efforts, and try to deal with them incrementally, or one at a time?"
And his answer -- think big -- is rooted in his analysis of how we got here.
In his view, it's not simply a matter of fixing an immediate problem or two, and then everything will be OK.
"[W]e cannot go back to endless cycles of bubble and bust," he said. "We can't continue to base our economy on reckless speculation and spending beyond our means; on bad credit and inflated home prices and over-leveraged banks. This crisis teaches us that such activity is not the creation of lasting wealth — it's the illusion of prosperity, and it hurts us all in the end.
"Instead, we must build this recovery on a foundation that lasts — on a 21st century infrastructure and a green economy with lower health care costs that create millions of new jobs and new industries; on schools that prepare our children to compete and thrive; on businesses that are free to invest in the next big idea or breakthrough discovery."
And, he said: "We cannot wait to build this foundation. Putting off these investments for another four years or eight years or 12 years or 20 years would be to continue the same irresponsibility that led us to this point. It would be exactly what Washington has done for decades. And it will make our recovery more fragile and our future less secure."
Obama said he is already moving aggressively on jobs, housing and credit -- and is moving as fast as possible, given the need to do some serious assessments of the true status of bank balance sheets, to right the banking system.
"I think there's some people, when we issued the budget they said, boy, these Obama people, they're really ambitious — they're taking on health care, they're taking on energy, they're taking on education — don't they know that there's this bank crisis right now, we've got to do one thing at a time."
But, he said: "Look, the budget document that we put forward is a 10-year document. We are, like any organization — just like all of yours, we have to do long-term planning even as we're addressing short-term issues. If we don't do the long-term planning, then we end up having more short-term issues again and again and again and again....
"The one thing I don't want to do is to replicate the false confidence that was premised on bubbles."
"The speech to the Business Roundtable was aimed at countering unease in Washington over the scale of the president's agenda, given the country's deep and unrelenting economic travails. The investor Warren E. Buffett, a strong Obama supporter, captured the sentiment this week when he said 'job 1 is to win the war, the economic war; job 2 is to win the economic war, and job 3.'
"Concern is growing in some quarters that the president's initiatives have not been enough to turn the economy around....
"But Mr. Obama has not been content to deal just with the immediate crisis as he works to get stimulus money out the door, stabilize fragile banks and ease the housing crisis. He has also begun efforts to rewrite the tax code to shift the burden to the rich; to bring down health costs and expand access to insurance; and to increase alternative energy supplies while imposing a market-based cap on pollution blamed for climate change."
Kim Chipman writes for Bloomberg that response from Obama's audience of executives was positive yesterday: "'When he left the room people felt better about him and his administration,' said William Green, CEO of Hamilton, Bermuda- based Accenture Ltd., the world's second largest technology-consulting firm. The executives 'genuinely want him to be successful.'
"Obama's emphasis on improving education and taming health- care costs were particularly important to the group, Green said."
The executives Obama called on after his prepared remarks were effusive in their praise -- but two of them did push back a bit on his plans.
Verizon CEO Ivan Seidenberg pushed for a more Bushian and less Obamaist approach to health care. "I think it's very important that we don't have a government plan competing with a private plan and finding out that our employees or the citizens in general could go to a plan that doesn't have the same incentives and requirements and behavioral characteristics to make sure that they do the right things long term," he said, adding: "We can do more with medical reform, medical liability reform."
Obama replied that he sees health care reform as a moral and financial obligation, and that part of the reason he has asked Congress to come up with a plan -- rather than just design his own -- is that he want members to appreciate the tough choices involved and why some constituencies oppose certain approaches.
But he told Seidenberg, "oftentimes...the resistance is not based on evidence, it's based on people's interests. Everybody is kind of dug in. They know that the system doesn't work, but at least it kind of works for them in one particular aspect.
Daniel S. Fulton, CEO of Weyerhaeuser, said he's concerned that Obama's cap-and-trade proposal to reduce carbon emissions would "effectively be a tax that would impose significant costs on energy-intensive industries such as some that we operate, and may impact existing industries' ability to fund needed investments in new low-carbon technologies."
Obama replied that he thought that his plan -- which enlists market forces to price carbon permits -- strikes a good balance. He also noted: "Under the cap proposal that we have it wouldn't even start until 2012, where we're going to be out of this recession — or you'll have somebody else speaking to you in 2013."
Eugene Robinson writes in his Washington Post opinion column today that he thinks it's the latter: "Shouting 'socialism' didn't work, so now they're yelling 'overload' and 'lack of focus.' Critics of the Obama administration counsel the president and his aides to spend every waking hour -- and every available dollar, including stray coins found behind the cushions of the Oval Office couch -- on the paralyzing financial crisis. What these critics really want, though, is to delay or derail the progressive reforms that voters elected President Obama to carry out....
"Fortunately, Obama seems to be ignoring all the chatter. This isn't about Rahm Emanuel's too-cute admonition not to 'waste' a good crisis. It's about honoring a clear mandate....
"Wall Street's impatience is understandable; the geniuses of Lower Manhattan just want to get back to business as usual, having failed to notice that business as usual is no longer remotely acceptable. Obama's political opponents have a subtler motive: to occupy, exhaust and impoverish the administration, making its promised domestic initiatives impossible...
"Politically, there are no winning arguments against fixing health care or reversing the tax-cutting excesses of the Bush administration. A more promising tactic for critics is to attack the administration for trying to do too much and taking its eye off the ball."
Meanwhile, in a speech this morning, Obama's chief economic adviser, Larry Summers, said Obama's stimulus bill may already be making a difference. "It is surely too early to gauge the broader economic impact of the President's program. But it is modestly encouraging that since it began to take shape, consumer spending in the US, which was collapsing during the holiday season, appears, according to a number of indicators, to have stabilized."
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