Accessibility links

Breaking News

Obama: U.S. To Survive Economic 'Day Of Reckoning'

U.S. President Barack Obama
WASHINGTON (Reuters) -- President Barack Obama sought to strike a delicate balance between hope and reality on February 24 to reassure Americans mired in economic crisis that they would survive a "day of reckoning."

Riding high in opinion polls as he delivered his first address to a joint session of Congress, Obama was careful to include a sober assessment of the grim economic situation and his efforts to fix it.

But the politician whose memoir was called "The Audacity of Hope" and who won the White House in last November's election amid chants of "yes, we can" was also back in stride, telling recession-weary Americans they can expect better days ahead.

"While our economy may be weakened and our confidence shaken, though we are living through difficult and uncertain times, tonight I want every American to know this: We will rebuild, we will recover," Obama, a Democrat, said in a televised speech five weeks after taking office.

"And the United States of America will emerge stronger than before," he said to loud applause in the packed chamber. Obama was interrupted by applause more than 60 times as he addressed Congress, where Democrats control both chambers.

His primetime address came against a backdrop of growing anxiety across the country in the face of the worst financial meltdown in decades. While his public support is strong, Wall Street remains skeptical of his economic remedies.

Jittery investors sent U.S. stocks to a 12-year low on February 23, but the markets rallied on February 24 on Federal Reserve Chairman Ben Bernanke's assurances that the country's troubled banks should be able to weather the downturn without being nationalized.

Banks, Automakers

Obama said more money may be needed to fix debt-laden banks and revive the economy, warning that "while the cost of action will be great, I can assure you that the cost of inaction will be far greater."

But he seemed to take a harder line against troubled U.S. automakers, saying that while he supports making the companies more competitive, the government would not protect them from their own bad decision-making.

Trying to show he will make good on his promise of fiscal responsibility, Obama said he had identified $2 trillion in budget cuts over over the next decade.

Obama, who rolls out his first budget proposal on February 25, has vowed to halve the $1 trillion-plus annual deficit he inherited from Bush by the end of his term.

That may be difficult, critics say, if he moves swiftly on his pledge to undertake a costly healthcare overhaul while the economy is still slumping and tax revenues are down.

But some analysts were cheered by his words.

"Obama is obviously trying to allay concerns that there will be a budget blowout. Whether he can deliver it or not is tough to say, but it is the rhetoric that matters," said Amy Auster, head of foreign exchange and international economics research at ANZ Bank in Melbourne.

Obama was quick with indirect criticism for his Republican predecessor George W. Bush, citing his administration's failure to plan for the country's economic plight and bloated debt.

"Critical debates and difficult decisions were put off for some other time on some other day," Obama said. "Well, that day of reckoning has arrived, and the time to take charge of our future is here."

Break With Bush

Underscoring his break with some of Bush's more divisive policies that damaged America's image overseas, Obama also reiterated that the United States "does not torture." He has ordered the closing of the internationally condemned Guantanamo Bay military prison where foreign terrorism suspects are held.

He also highlighted a shift in the U.S. military focus from Iraq to Afghanistan, saying he would soon unveil a plan that "responsibly ends" the unpopular Iraq war launched by Bush in 2003.

He offered assurances that his administration would not pursue the go-it-alone approach for which Bush was widely criticized abroad, saying, "In words and deeds, we are showing the world that a new era of engagement has begun."

He also made an indirect overture to U.S. foe Iran, saying, "We cannot shun the negotiating table."

First and foremost, however, Obama pressed the case for his economic approach while laying out a broader agenda, including a much-anticipated push for a healthcare overhaul and a stepped-up U.S. role in the fight against climate change.

He was candid about problems. But with misgivings among some fellow Democrats that his tone has become too gloomy, he also injected a clear note of optimism.

Obama's first weeks in office have been marked by a $787 billion economic stimulus package, a retooled financial industry bailout program and a home mortgage rescue plan.

But he has also faced embarrassing miscues in the completion of his cabinet and criticism that some of his early financial proposals have been lacking in specifics.

Taking a page from Obama's upbeat tone as a candidate in delivering the Republican response, Louisiana Governor Bobby Jindal, a rising star in the opposition party and a potential presidential candidate in 2012, entitled his rebuttal "Americans can do anything."

Jindal insisted Republicans were ready to work with Obama on the economy but also tore into the president and Democrats who control Congress for legislation he said will "saddle future generations with debt.