[Congressional Record (Bound Edition), Volume 156 (2010), Part 1]
[Senate]
[Pages 1366-1368]
[From the U.S. Government Publishing Office, www.gpo.gov]




 ECONOMIC REPORT OF THE PRESIDENT DATED FEBRUARY 2010 WITH THE ANNUAL 
       REPORT OF THE COUNCIL OF ECONOMIC ADVISERS FOR 2010--PM 45

  The PRESIDING OFFICER laid before the Senate the following message 
from the President of the United States, together with an accompanying 
report; which was referred to the Joint Economic Committee:

To the Congress of the United States:
  As we begin a new year, the American people are still experiencing 
the effects of a recession as deep and painful as any we have known in 
generations. Traveling across this country, I have met countless men 
and women who have lost jobs these past two years. I have met small 
business owners struggling to pay for health care for their workers; 
seniors unable to afford prescriptions; parents worried about paying 
the bills and saving for their children's future and their own 
retirement. And the effects of this recession come in the aftermath of 
a decade of declining economic security for the middle class and those 
who aspire to it.
  At the same time, over the past two years, we have also seen reason 
for hope: the resilience of the American people who have held fast--
even in the face of hardship--to an unrelenting faith in the promise of 
our country.
  It is that determination that has helped the American people overcome 
difficult periods in our Nation's history. And it is this perseverance 
that

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remains our great strength today. After all, our workers are as 
productive as ever. American businesses are still leaders in 
innovation. Our potential is still unrivaled. Our task as a Nation--and 
our mission as an Administration--is to harness that innovative spirit, 
that productive energy, and that potential in order to create jobs, 
raise incomes, and foster economic growth that is sustained and broadly 
shared. It's not enough to move the economy from recession to recovery. 
We must rebuild the economy on a new and stronger foundation.
  I can report that over the past year, this work has begun. In the 
coming year, this work continues. But to understand where we must go in 
the next year and beyond, it is important to remember where we began 
one year ago.
  Last January, years of irresponsible risk-taking and debt-fueled 
speculation--unchecked by sound oversight--led to the near-collapse of 
our financial system. We were losing an average of 700,000 jobs each 
month. Over the course of one year, $13 trillion of Americans' 
household wealth had evaporated as stocks, pensions, and home values 
plummeted. Our gross domestic product was falling at the fastest rate 
in a quarter century. The flow of credit, vital to the functioning of 
businesses large and small, had ground to a halt. The fear among 
economists, from across the political spectrum, was that we could sink 
into a second Great Depression.
  Immediately, we took a series of difficult steps to prevent that 
catastrophe for American families and businesses. We acted to get 
lending flowing again so ordinary Americans could get financing to buy 
homes and cars, to go to college, and to start businesses of their own; 
and so businesses, large and small, could access loans to make payroll, 
buy equipment, hire workers, and expand. We enacted measures to stem 
the tide of foreclosures in our housing market, helping responsible 
homeowners stay in their homes and helping to stop the broader decline 
in home values.
  To achieve this, and to prevent an economic collapse, we were forced 
to use authority enacted under the previous Administration to extend 
assistance to some of the very banks and financial institutions whose 
actions had helped precipitate the turmoil. We also took steps to 
prevent the collapse of the American auto industry, which faced a 
crisis partly of its own making, to prevent another round of widespread 
job losses in an already fragile time. These decisions were not 
popular, but they were necessary. Indeed, the decision to stabilize the 
financial system helped to avert a larger catastrophe, and thanks to 
the efficient management of the rescue--with added transparency and 
accountability--we have recovered most of the money provided to banks.
  In addition, even as we worked to address the crises in our banking 
sector, in our housing market, and in our auto industry, we also began 
attacking our economic crisis on a broader front. Less than one month 
after taking office, we enacted the most sweeping economic recovery 
package in history: the American Recovery and Reinvestment Act of 2009. 
The Recovery Act not only provided tax cuts to small businesses and 95 
percent of working families and provided emergency relief to those out 
of work or without health insurance; it also began to lay a new 
foundation for long-term growth. With investments in health care, 
education, infrastructure, and clean energy, the Recovery Act has saved 
or created roughly two million jobs so far, and it has begun the hard 
work of transforming our economy to thrive in the modern, global era.
  Because of these and other steps, we can safely say that we've 
avoided the depression many feared. Our economy is growing again, and 
the growth over the last three months was the strongest in six years. 
But while economic growth is important, it means nothing to somebody 
who has lost a job and can't find another. For Americans looking for 
work, a good job is the only good news that matters. And that's why our 
work is far from complete.
  It is true that the steps we have taken have slowed the flood of job 
losses from 691,000 per month in the first quarter of 2009 to 69,000 in 
the last quarter. But stemming the tide of job loss isn't enough. More 
than 7 million jobs have been lost since the recession began two years 
ago. This represents not only a terrible human tragedy, but also a very 
deep hole from which we'll have to climb out. Until jobs are being 
created to replace those we've lost--until America is back at work--my 
Administration will not rest and this recovery will not be finished.
  That's why I am continuing to call on the Congress to pass a jobs 
bill. I've proposed a package that includes tax relief for small 
businesses to spur hiring, that accelerates construction on roads, 
bridges, and waterways, and that creates incentives for homeowners to 
invest in energy efficiency, because this will create jobs, save 
families money, and reduce pollution that harms our environment.
  It is also essential that as we promote private sector hiring, we 
continue to take steps to prevent layoffs of critical public servants 
like teachers, firefighters, and police officers, whose jobs are 
threatened by State and local budget shortfalls. To do otherwise would 
not only worsen unemployment and hamper our recovery; it would also 
undermine our communities. And we cannot forget the millions of people 
who have lost their jobs. The Recovery Act provided support for these 
families hardest hit by this recession, and that support must continue.
  At the same time, long before this crisis hit, middle-class families 
were under growing strain. For decades, Washington failed to address 
fundamental weaknesses in the economy: rising health care costs, 
growing dependence on foreign oil, an education system unable to 
prepare all of our children for the jobs of the future. In recent 
years, spending bills and tax cuts for the very wealthiest were 
approved without paying for any of it, leaving behind a mountain of 
debt. And while Wall Street gambled without regard for the 
consequences, Washington looked the other way.
  As a result, the economy may have been working for some at the very 
top, but it was not working for all American families. Year after year, 
folks were forced to work longer hours, spend more time away from their 
loved ones, all while their incomes flat-lined and their sense of 
economic security evaporated. Growth in our country was neither 
sustained nor broadly shared. Instead of a prosperity powered by smart 
ideas and sound investments, growth was fueled in large part by a rapid 
rise in consumer borrowing and consumer spending.
  Beneath the statistics are the stories of hardship I've heard all 
across America--hardships that began long before this recession hit two 
years ago. For too many, there has long been a sense that the American 
dream--a chance to make your own way, to work hard and support your 
family, save for college and retirement, own a home--was slipping away. 
And this sense of anxiety has been combined with a deep frustration 
that Washington either didn't notice, or didn't care enough to act.
  These weaknesses have not only made our economy more susceptible to 
the kind of crisis we have been through. They have also meant that even 
in good times the economy did not produce nearly enough gains for 
middle-class families. Typical American families saw their standards of 
living stagnate, rather than rise as they had for generations. That is 
why, in the aftermath of this crisis, and after years of inaction, what 
is clear is that we cannot go back to business as usual.
  That is why, as we strive to meet the crisis of the moment, we are 
continuing to lay a new foundation for prosperity: a foundation on 
which the middle class can prosper and grow, where if you are willing 
to work hard, you can find a good job, afford a home, send your 
children to world-class schools, afford high-quality health care, and 
enjoy retirement security in your later years. This is the heart of the 
American Dream, and it is at the core of our efforts to not only 
rebuild this economy--but to rebuild it stronger than before. And this 
work has already begun.
  Already, we have made historic strides to reform and improve our 
education system. We have launched a

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Race to the Top in which schools are competing to create the most 
innovative programs, especially in math and science. We have already 
made college more affordable, even as we seek to increase student aid 
by ending a wasteful subsidy that serves only to line the pockets of 
lenders with tens of billions of taxpayer dollars. And I've proposed a 
new American Graduation Initiative and set this goal: by 2020, America 
will once again have the highest proportion of college graduates in the 
world. For we know that in this new century, growth will be powered not 
by what consumers can borrow and spend, but what talented, skilled 
workers can create and export.
  Already, we have made historic strides to improve our health care 
system, essential to our economic prosperity. The burdens this system 
places on workers, businesses, and governments is simply unsustainable. 
And beyond the economic cost--which is vast--there is also a terrible 
human toll. That's why we've extended health insurance to millions more 
children; invested in health information technology through the 
Recovery Act to improve care and reduce costly errors; and provided the 
largest boost to medical research in our history. And I continue to 
fight to pass real, meaningful health insurance reforms that will get 
costs under control for families, businesses, and governments, protect 
people from the worst practices of insurance companies, and make 
coverage more affordable and secure for people with insurance, as well 
as those without it.
  Already, we have begun to build a new clean energy economy. The 
Recovery Act included the largest investment in clean energy in 
history, investments that are today creating jobs across America in the 
industries that will power our future: developing wind energy, solar 
technology, and clean energy vehicles. But this work has only just 
begun. Other countries around the world understand that the nation that 
leads the clean energy economy will be the nation that leads the global 
economy. I want America to be that nation. That is why we are working 
toward legislation that will create new incentives to finally make 
renewable energy the profitable kind of energy in America. It's not 
only essential for our planet and our security, it's essential for our 
economy.
  But this is not all we must do. For growth to be truly sustainable--
for our prosperity to be truly shared and our living standards to 
actually rise--we need to move beyond an economy that is fueled by 
budget deficits and consumer demand. In other words, in order to create 
jobs and raise incomes for the middle class over the long run, we need 
to export more and borrow less from around the world, and we need to 
save more money and take on less debt here at home. As we rebuild, we 
must also rebalance. In order to achieve this, we'll need to grow this 
economy by growing our capacity to innovate in burgeoning industries, 
while putting a stop to irresponsible budget policies and financial 
dealings that have led us into such a deep fiscal and economic hole.
  That begins with policies that will promote innovation throughout our 
economy. To spur the discoveries that will power new jobs, new 
businesses--and perhaps new industries--I have challenged both the 
public sector and the private sector to devote more resources to 
research and development. And to achieve this, my budget puts us on a 
path to double investment in key research agencies and makes the 
research and experimentation tax credit permanent. We are also pursuing 
policies that will help us export more of our goods around the world, 
especially by small businesses and farmers. And by harnessing the 
growth potential of international trade--while ensuring that other 
countries play by the rules and that all Americans share in the 
benefits--we will support millions of good, high-paying jobs.
  But hand in hand with increasing our reliance on the Nation's 
ingenuity is decreasing our reliance on the Nation's credit card, as 
well as reining in the excess and abuse in our financial sector that 
led large firms to take on extraordinary risks and extraordinary 
liabilities.
  When my Administration took office, the surpluses our Nation had 
enjoyed at the start of the last decade had disappeared as a result of 
the failure to pay for two large tax cuts, two wars, and a new 
entitlement program. And decades of neglect of rising health care costs 
had put our budget on an unsustainable path.
  In the long term, we cannot have sustainable and durable economic 
growth without getting our fiscal house in order. That is why even as 
we increased our short-term deficit to rescue the economy, we have 
refused to go along with business as usual, taking responsibility for 
every dollar we spend. Last year, we combed the budget, cutting waste 
and excess wherever we could, a process that will continue in the 
coming years. We are pursuing health insurance reforms that are 
essential to reining in deficits. I've called for a fee to be paid by 
the largest financial firms so that the American people are fully 
repaid for bailing out the financial sector. And I've proposed a freeze 
on nonsecurity discretionary spending for three years, a bipartisan 
commission to address the long-term structural imbalance between 
expenditures and revenues, and the enactment of ``pay-go'' rules so 
that Congress has to account for every dollar it spends.
  In addition, I've proposed a set of common sense reforms to prevent 
future financial crises. For while the financial system is far stronger 
today than it was one year ago, it is still operating under the same 
rules that led to its near-collapse. These are rules that allowed firms 
to act contrary to the interests of customers; to hide their exposure 
to debt through complex financial dealings that few understood; to 
benefit from taxpayer-insured deposits while making speculative 
investments to increase their own profits; and to take on risks so vast 
that they posed a threat to the entire economy and the jobs of tens of 
millions of Americans.
  That is why we are seeking reforms to empower consumers with the 
benefit of a new consumer watchdog charged with making sure that 
financial information is clear and transparent; to close loopholes that 
allowed big financial firms to trade risky financial products like 
credit defaults swaps and other derivatives without any oversight; to 
identify system-wide risks that could cause a financial meltdown; to 
strengthen capital and liquidity requirements to make the system more 
stable; and to ensure that the failure of any large firm does not take 
the economy down with it. Never again will the American taxpayer be 
held hostage by a bank that is ``too big to fail.''
  Through these reforms, we seek not to undermine our markets but to 
make them stronger: to promote a vibrant, fair, and transparent 
financial system that is far more resistant to the reckless, 
irresponsible activities that might lead to another meltdown. And these 
kinds of reforms are in the shared interest of firms on Wall Street and 
families on Main Street.
  These have been a very tough two years. American families and 
businesses have paid a heavy price for failures of responsibility from 
Wall Street to Washington. Our task now is to move beyond these 
failures, to take responsibility for our future once more. That is how 
we will create new jobs in new industries, harnessing the incredible 
generative and creative capacity of our people. That is how we'll 
achieve greater economic security and opportunity for middle-class 
families in this country. That is how in this new century we will 
rebuild our economy stronger than ever before.

                                                        Barack Obama,  
The White House.

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