Folks, people keep telling me I have lost the narrative and am not coming across in a way that explains the economy and what my administration is trying to do about it. I thought I was laying it out in a straightforward and simple way, but perhaps it requires more ‘personality’ to connect to you all who are caught up in the horrible drama we find ourselves in today. So listen up, here is a new type of message, with the same basic facts, to help you think about the America we are living in today.
Just about the same time that I secured the nomination for President in June 2008 things began to really turn sour in our financial system and economy. Two giant investment banking firms on Wall Street failed before the election in November, brought down by their greedy mistakes and excesses largely due to real estate finance and something related called derivatives, which are as risky as atom bombs.
As a result, also before the election, the nationwide banking system of the country began to freeze up and banks no longer trusted each other or even their best customers. That led to thousands of businesses all across the country letting employees go, as customers who could not borrow stopped buying and suppliers also stopped manufacturing and shipping. By January 20, when I actually became President, the unemployment rate had already risen to close to where it is today. The economy was clearly in free fall. So we had to move really fast to put a tourniquet on the bleeding country and find some way to prop up things and reverse what was about to become a slide into a full-fledged depression.
Why do I tell you this story now? Some people say I am simply trying to set up an excuse for why we are still struggling with these problems three years later. It is tempting to make that mistake, I know. The truth is, you really have to understand how we got to where we are now and what it will take to get us all out of this mess.
It is irrelevant that we got there on another President’s watch and I am not saying not to hold me responsible simply because I did not cause the problem. But, as I am responsible now, I am saying we have to be careful not to compound the kind of mistakes that got us in the mess in the first place with new mistakes now, which Republicans in the House and Senate, who are bent and determined to bring me down, are trying to force on us, even if they have to bring the whole economy, and you, down at the same time.
I would be willing to sacrifice a second term, if I believed that my successor could and would do the things necessary to get your bacon out of the fire. But, given what we all see they are proposing, it is clear to me, and most serious economists in the country, that what they are proposing now would almost surely push the whole country into a deeper and longer lasting hole. I cannot stand by passively and let that happen to you, my friends, and to our country.
Now, let’s go back to January 2009. We held taxes to the level they had been; we passed a $750 billion stimulus package (which, with hindsight, probably should have been bigger); we got the banks (too slowly, I agree) back into their business of lending; we saved General Motors and Chrysler and a few hundred thousand jobs; we took painfully slow first steps to get the real estate world back on its feet; and despite ferocious resistance, we started to reform Wall Street.
But we also know that the only way to get the country back to work is to regain peoples’ confidence. Trust and confidence is the bedrock of a free economy. We have to fear the fear of failure. I have always believed that when we get the country to regain our self-confidence in our future, while the path ahead will be thorny and arduous, it will take us to where we all want to be.
To get people back to work and into stores they need both confidence in the future and opportunity; that in turn leads to more goods and services and jobs. It truly is a virtuous circle. Only the private sector and its private employers can make that happen. Your government cannot simply order it. (If only we could, we would have.)
Our job is to create the conditions that enable and encourage private employers to add employees. While more infrastructure investment is essential, by itself it cannot be sufficient to get the economy fully back on track. And the last thing we need today is to expand public employment simply to replace lost private jobs.
We also knew that because it took a long time (like a couple of decades) to create the problem — 10 million excess homes and several million excess cars, just for starters — that it is inevitable that it must take a fair amount of time for those excesses to be worked off and recreate the kind of equilibrium that can become a new springboard to growth again.
Those are the hard, simple facts we faced in January 2009 and still face today to a greater degree than anyone would like. We did get the auto business back on track. But housing still is struggling with an excessively large overhang of foreclosed and abandoned homes.
Happily, many larger companies are doing a lot better today, but unhappily they are not the most important part of the economy that can create the most new jobs. Small businesses, taken as a whole, are by far the largest source of employment in America. Despite all the headwinds we have all faced there have been two-and-a-half million new private sector jobs created in the past two years, far short of what we need, but a reassuring start in the right direction. We are definitely on the right track but we have to stay the course and reinforce the policies and programs that my administration has begun.
That is where the current stalemate with Congress has become the big stumbling block. Yes, we need to work on our ever-growing national deficit, but if we try to do that too fast we are very likely to throw a body block to the economy and knock it back on its heels again. We must create more employment incentives as well as continue to protect the unemployed. The very rich can definitely afford somewhat higher taxes and we can seek some reductions in entitlement programs. But, if we make the kind of across the board budget cuts the Republicans propose, there is a very great risk they will throw the economy back into a recession or worse.
My program is not rocket science. It is straight forward, plain vanilla, sound economic good sense. And, I will continue to try to tell you the story in terms that you can relate to your personal everyday lives. Please do not think of me trying to save my job. That will take care of itself, if I can make you understand how I will save your job and help your neighbor regain his. Then, even though it may take longer than we all wish today, we can get back to the American dream of a bright future.