WASHINGTON — President Barack Obama told Americans Tuesday to brace for "more job loss, more foreclosures, and more pain" in 2009, saying the recession isn't over yet despite some early promise from the government's massive spending on bailouts and economic stimulus.
In lengthy remarks delivered at Georgetown University, Obama didn't lay out any new proposals, but sought to justify the steps his administration has taken so far and to make the case for more regulation and spending. At the same time, he urged patience and lower expectations for how quickly unemployment numbers will turn around.
As if to underscore his comments, the Commerce Department reported that retail sales fell sharply in March by 1.1 percent after two months of small gains. The unexpected March drop, led by still-falling auto sales, sent stock prices down, with the Dow Jones Industrial Average losing 137.63 points, or 1.7 percent, to close at 7920.18. Other market indexes fell similarly.
While addressing American workers, homeowners and investors, the president's timing also suggests that he wants to frame the debate on his terms as members of Congress return to Washington next week from their spring recess.
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Upon their return, lawmakers must reconcile House and Senate versions of a $3.6 trillion budget. Obama also is asking them this year to overhaul U.S. health care and to enact a "gradual, market-based" program to reduce greenhouse gas emissions. By year's end, he said, he also wants Congress to pass legislation tightening the regulation of Wall Street and the financial industry.
Another timing consideration: The Treasury's so-called stress tests for the 19 largest U.S. banks, measuring their ability to withstand worse-than-expected conditions, are due at the end of this month. Obama may be trying to brace taxpayers for requests for more assistance to the banks, as his budget anticipated.
He said that, "One of my most frequent questions in the letters that I get from constituents is, 'Where's my bailout?' And I understand the sentiment.
"But the truth is that a dollar of capital in a bank can actually result in $8 or $10 of loans to families and businesses." Rebutting critics who want him to nationalize failing banks rather than bail them out, he said that could undermine confidence and end up costing taxpayers even more.
Obama spoke of Washington's typical "impatience," of the 24-hour news cycle and desire for "instant gratification" and said the economy can't be fixed within those confines.
"I know how difficult it is for members of Congress in both parties to grapple with some of the big decisions we face right now," he said. "It's more than most Congresses and most presidents have to deal with in a lifetime. But we have been called to govern in extraordinary times."
Obama told of the Sermon on the Mount, and the house built on sand versus rock. "We cannot rebuild this economy on the same pile of sand; we must build our house upon a rock," he said.
He acknowledged "a criticism out there that my administration has somehow been spending with reckless abandon, pushing a liberal social agenda while mortgaging our children's future."
The president countered: "If we don't invest now in renewable energy or a skilled work force or a more affordable health care system, this economy simply won't grow at the pace it needs to in two or five or ten years" and that "it won't be long before we are right back where we are today."
House Minority Leader John Boehner, R-Ohio, said in a statement issued after the speech that Obama and Democrats have avoided "tough decisions" in terms of spending cuts "in favor of saddling our children and grandchildren with mountains of debt."
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