President Obama gives a press conference to sell the $800 stimulus package. - 10-Feb-2009 - Generational Dynamics

It was about ten minutes into the Monday evening press conference, as he was answering the first question, that I realized that President Obama was babbling, and really had no idea what to say. Here's the transcript:

"Q: Thank you, Mr. President. Earlier today in Indiana, you said something striking. You said that this nation could end up in a crisis without action that we would be unable to reverse. Can you talk about what you know or what you're hearing that would lead you to say that our recession might be permanent, when others in our history have not? And do you think that you risk losing some credibility or even talking down the economy by using dire language like that?

THE PRESIDENT: No, no, no, no -- I think that what I've said is what other economists have said across the political spectrum, which is that if you delay acting on an economy of this severity, then you potentially create a negative spiral that becomes much more difficult for us to get out of. We saw this happen in Japan in the 1990s, where they did not act boldly and swiftly enough, and as a consequence they suffered what was called the "lost decade" where essentially for the entire '90s they did not see any significant economic growth.

So what I'm trying to underscore is what the people in Elkhart already understand: that this is not your ordinary run-of-the-mill recession. We are going through the worst economic crisis since the Great Depression. We've lost now 3.6 million jobs, but what's perhaps even more disturbing is that almost half of that job loss has taken place over the last three months, which means that the problems are accelerating instead of getting better.

Now, what I said in Elkhart today is what I repeat this evening, which is, I'm absolutely confident that we can solve this problem, but it's going to require us to take some significant, important steps.

Step number one: We have to pass an economic recovery and reinvestment plan. And we've made progress. There was a vote this evening that moved the process forward in the Senate. We already have a House bill that's passed. I'm hoping over the next several days that the House and the Senate can reconcile their differences and get that bill on my desk.

There have been criticisms from a bunch of different directions about this bill, so let me just address a few of them. Some of the criticisms really are with the basic idea that government should intervene at all in this moment of crisis. Now, you have some people, very sincere, who philosophically just think the government has no business interfering in the marketplace. And in fact there are several who've suggested that FDR was wrong to intervene back in the New Deal. They're fighting battles that I thought were resolved a pretty long time ago.

Most economists, almost unanimously, recognize that even if philosophically you're wary of government intervening in the economy, when you have the kind of problem we have right now -- what started on Wall Street goes to Main Street, suddenly businesses can't get credit, they start carrying back their investment, they start laying off workers, workers start pulling back in terms of spending -- when you have that situation, that government is an important element of introducing some additional demand into the economy. We stand to lose about $1 trillion worth of demand this year and another trillion next year. And what that means is you've got this gaping hole in the economy.

That's why the figure that we initially came up with of approximately $800 billion was put forward. That wasn't just some random number that I plucked out of a hat. That was Republican and Democratic, conservative and liberal economists that I spoke to who indicated that given the magnitude of the crisis and the fact that it's happening worldwide, it's important for us to have a bill of sufficient size and scope that we can save or create 4 million jobs. That still means that you're going to have some net job loss, but at least we can start slowing the trend and moving it in the right direction.

Now, the recovery and reinvestment package is not the only thing we have to do -- it's one leg of the stool. We are still going to have to make sure that we are attracting private capital, get the credit markets flowing again, because that's the lifeblood of the economy.

And so tomorrow my Treasury Secretary, Tim Geithner, will be announcing some very clear and specific plans for how we are going to start loosening up credit once again. And that means having some transparency and oversight in the system. It means that we correct some of the mistakes with TARP that were made earlier, the lack of consistency, the lack of clarity in terms of how the program was going to move forward. It means that we condition taxpayer dollars that are being provided to banks on them showing some restraint when it comes to executive compensation, not using the money to charter corporate jets when they're not necessary. It means that we focus on housing and how are we going to help homeowners that are suffering foreclosure or homeowners who are still making their mortgage payments, but are seeing their property values decline.

So there are going to be a whole range of approaches that we have to take for dealing with the economy. My bottom line is to make sure that we are saving or creating 4 million jobs, we are making sure that the financial system is working again, that homeowners are getting some relief. And I'm happy to get good ideas from across the political spectrum, from Democrats and Republicans. What I won't do is return to the failed theories of the last eight years that got us into this fix in the first place, because those theories have been tested and they have failed. And that's part of what the election in November was all about."

This is close to gibberish. It's a laundry list of problems and what he'd like to do, but nothing that explains how he'd like to do it. His tone of voice sounded desperate. I actually felt bad for him.

One thing that made me chuckle was, "That's why the figure that we initially came up with of approximately $800 billion was put forward. That wasn't just some random number that I plucked out of a hat."

Actually, he's right. It isn't a "random number." It was chosen because they want to spend as much money as they can get away with, but they don't want to go over $1 trillion, because too many people would object.

I watched the local news after the press conference. They interviewed a 41 year old man with two degrees from MIT, a wife who's a stay-at-home mom, and two children. He was shocked to lose his job at the end of December, and doesn't know where he'll find another job.

The wife commented on Obama's performance. She looked very worried, and said, "When he said that he has full confidence that he can turn things around, that he has a solution to the problem, then I believe that he has a solution to the problem."

The "common wisdom" today is that the financial crisis is caused by a "lack of confidence," a diagnosis completely without meaning. Thus, the wisdom goes, all Obama has to do is give a stirring speech that restores confidence, and the crisis will end. In his heart, even Obama knows that's bullshit, but he's gotta do what he's gotta do.

According to Matt1989, writing in the Generational Dynamics forum, said that "As for Millies [i.e., in the young Millennial generation], there's very little chance that this will have much of an effect. Obama's got at least 8-9 months (though I'd double it) worth of cushioning where he can do very little wrong in my generation's eyes. We'll see what direction the financial crisis takes us."

President Obama is still having a honeymoon. Politics continues to be kind to him, as do events. In my opinion, Obama did poorly on Monday evening. Let's see how he does when a full-scale crisis occurs.

Generational Dynamics Web Log for 10-Feb-2009
President Obama gives a press conference to sell the $800 stimulus package.

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Generational Dynamics Web Log for 10-Feb-2009 President Obama gives a press conference to sell the $800 stimulus package.

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Generational Dynamics Web Log for 10-Feb-2009
President Obama gives a press conference to sell the $800 stimulus package.