Addressing Congress and the nation in the midst of a worsening economic crisis, President Obama Feb. 24 said the “day of reckoning has arrived” and called on Americans “to act boldly and wisely” to build a new economic foundation for lasting prosperity.

Just five weeks since his inauguration, Obama delivered the equivalent of a State of the Union address before a joint session of Congress in which he set out a list of his budget priorities in domestic policy, including energy policy, health care reform, and education.

“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 said, standing before members of the House and Senate, justices of the Supreme Court, and a nationally-televised audience.

His speech, given in the midst of one of worst recessions in decades, also came one day after a bipartisan “fiscal responsibility summit” held at the White House and two days before the presentation of his first budget to Congress.

New Era of Responsibility.

Obama called for a new era of responsibility, saying “we have lived through an era where too often, short-term gains were prized over long-term prosperity; where we failed to look beyond the next payment, the next quarter, or the next election.”

During most of the 52-minute speech, Obama spoke in sober terms of the severe economic crisis facing the nation. “You don’t need to hear another list of statistics to know that our economy is in crisis, because you live it every day,” he said.

Obama noted that in order to get the economy back on track, his administration is working to unfreeze the nation's credit markets.

“The concern is that if we do not re-start lending in this country, our recovery will be choked off before it even begins,” Obama said.

“Credit has stopped flowing the way it should. Too many bad loans from the housing crisis have made their way onto the books of too many banks. With so much debt and so little confidence, these banks are now fearful of lending out any more money to households, to businesses, or to each other. When there is no lending, families can't afford to buy homes or cars,” he said. “So businesses are forced to make layoffs. Our economy suffers even more, and credit dries up even further.”

The president noted that the administration is creating a new lending fund to help provide auto loans, college loans, and small business loans. In addition, he cited his plan proposed Feb. 18 to spend up to $275 billion in federal funds to address the nation's home-mortgage crisis.

Banks.

Obama also said his administration “will act with the full force of the federal government to ensure that the major banks that Americans depend on have enough confidence and enough money to lend even in more difficult times.”

He said that when his administration learns that a major bank has serious problems, “we will hold accountable those responsible, force the necessary adjustments, provide the support to clean up their balance sheets, and assure the continuity of a strong, viable institution that can serve our people and our economy.”

“I intend to hold these banks fully accountable for the assistance they receive, and this time, they will have to clearly demonstrate how taxpayer dollars result in more lending for the American taxpayer,” Obama said.

The president noted that it was likely he would have to ask Congress for even more money to bail out the nation's financial institutions.

However, he said, “while the cost of action will be great, I can assure you that the cost of inaction will be far greater, for it could result in an economy that sputters along for not months or years, but perhaps a decade. That would be worse for our deficit, worse for business, worse for you, and worse for the next generation.”

Obama also called on Congress to enact legislation to reform the regulatory scheme governing the financial sector.

“It is time to put in place tough, new common-sense rules of the road so that our financial market rewards drive and innovation, and punishes short-cuts and abuse,” he said.

Will Confront Challenges Ahead.

While painting a bleak picture of the current economic situation, Obama also made clear he believes the nation will successfully confront the challenges it faces. “The weight of this crisis will not determine the destiny of this nation,” he asserted.

“The answers to our problems don’t lie beyond our reach--they exist in our laboratories and universities; in our fields and our factories; in the imaginations of our entrepreneurs and the pride of the hardest-working people on Earth.”

Noting that his administration was not responsible for running up the deficit, Obama said: “My budget does not attempt to solve every problem or address every issue. It reflects the stark reality of what we’ve inherited: a trillion dollar deficit, a financial crisis, and a costly recession.”

Introducing his budget outline, Obama said the recently enacted stimulus plan, as well as a financial stability plan for financial institutions and a plan to address mortgage foreclosures, are only the “first steps” to restoring the nation’s economic strength.

Attempting to show that he intended to follow through on his campaign promise of fiscal responsibility, Obama said he had begun examining the federal budget and identified $2 trillion in costs that can be cut over the next 10 years. Obama has pledged cut the $1.3 trillion federal deficit in half by the end of his first term in office.

Calls for Cap-and-Trade Energy Plan.

On energy policy, Obama called for legislation setting up a so-called “cap-and-trade” market-based system to curb carbon emissions. Under such a system, companies with carbon emissions would get government permits allowing a set amount of emissions they could trade or sell to other companies having larger amounts of emissions. In theory, the system would result in lower emissions by encouraging companies to profit by selling the permits to heavier polluters.

He also said his administration will invest $15 billion a year to develop alternative energy sources, including wind and solar power, advanced biofuels, clean coal, and more fuel-efficient cars and trucks build in the United States.

In a reference to the struggling domestic auto industry, Obama said: “We should not, and will not, protect them from their own bad practices. But we are committed to the goal of a re-tooled, re-imagined auto industry that can compete and win.”

Health Care Reform Cannot Wait, Obama Says.

Obama also called for major action to address “the crushing cost of health care.”

Obama said that, despite a host of other pressing issues demanding attention, he does not intend to delay a comprehensive attempt to reform the nation’s health care system. “So let there be no doubt,” he said, “health care reform cannot wait, it must not wait, and it will not wait another year.”

While not offering specifics, Obama said his budget will provide “a down-payment on the principle that we must have quality, affordable health care for every American.” He said it will build on spending approved in the stimulus plan for electronic health records and increased investments for preventive care.

Speaking at the fiscal responsibility summit Feb. 23, Obama announced the White House would hold a health care summit the week of March 3.

Obama also called on Congress to address the growing costs in Medicare and Social Security, saying “comprehensive health care reform is the best way to strengthen Medicare for years to come.” He also urged beginning “a conversation on how to do the same for Social Security, while creating tax-free universal savings accounts.”

He emphasized that, in an effort to demonstrate more budget clarity, his fiscal year 2010 budget blueprint will forego several gimmicks employed by the Bush administration to hide the true amount of deficit spending.

Budget Clarity a Goal, Obama Says.

For example, Obama said his budget will include the full amount of the costs of the wars in Iraq and Afghanistan instead of addressing them later in a “supplemental” budget request. “For seven years, we have been a nation at war,” he said. “No longer will we hide its price.”

Describing the current state of education in the nation as “a prescription for economic decline,” Obama said his budget will create “new incentives for teacher performance, pathways for advancement, and rewards for success.”

Specifically, he called on every American “to commit to at least one year or more of higher education or career training” at a community college, four-year school, vocational training, or an apprenticeship.” “Dropping out of school is no longer an option,” he said.

Jindal Response.

Delivering the Republican response to Obama's address, Louisiana Gov. Bobby Jindal (R) said: “All of us want our economy to recover and our nation to prosper. So where we agree, Republicans must be the President's strongest partners. And where we disagree, Republicans have a responsibility to be candid and offer better ideas for a path forward.”

He continued, “To solve our current problems, Washington must lead. But the way to lead is not to raise taxes and put more money and power in hands of Washington politicians.”

Instead, he said, “The way to lead is by empowering you--the American people. Because we believe that Americans can do anything.”

By Ralph Lindeman

Copyright 2009, The Bureau of National Affairs, Inc.