President Obama Declares U.S. Will Recover from Economic Crisis

President Obama, in his first address to a joint session of Congress, spoke in stark terms about the deepening economic recession, but assured Americans that they will prevail. "We will rebuild, we will recover, and the United States of America will emerge stronger than before," the president declared.

The president, in his February 24 address, said that bold action is required to jumpstart the U.S. economy and pave the way for long-term growth. He said that the newly signed American Recovery and Reinvestment Act (P.L. 111-5) is an important first step but warned "there will be no real recovery unless we clean up the credit crisis that has severely weakened our financial system." In addition to implementing a financial rescue package, the president emphasized the necessity of a home foreclosure plan to help responsible homeowners keep their homes and an upcoming plan to re-regulate the financial industry.

On tax policy, Obama noted that only the "wealthiest 2 percent of Americans" earning above $250,000 will pay higher taxes, and that those earning less will begin to see a higher paycheck beginning on April 1 as a result of the new "Make Work Pay" tax credit. He also said corporations that outsource their jobs overseas should not receive the same tax breaks as companies that keep their jobs in the United States.

The president pledged to cut the soaring federal deficit in half by the end of his term and said that the administration has already identified $2 trillion in unspecified savings over the next 10 years. "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," Obama stated

To preserve long-term fiscal health, Obama said the White House and Congress must address the rising costs in Medicare and Social Security. He called for comprehensive health care reform as the best way to strengthen Medicare in the future. The president also said it is time to "begin a conversation" on Social Security reform. He indicated that, as the debate begins on overhauling Social Security, tax-free, universal savings accounts should be created for all Americans.

House Reaction

House Ways and Means Chairman Charles B. Rangel, D-N.Y., said the president's speech laid out the near-term and long-term challenges for the country, and that Congress would be ready to act on Social Security reform, energy independence and health care reform. Rangel said that the president is willing to work with GOP lawmakers, and that their help would be essential in meeting the country's challenges. House Republican Study Committee Chairman Tom Price, R-Ga., took a conciliatory tone toward Obama's speech, saying Obama's ambitious agenda shows that the president recognizes the challenges facing the U.S. He called on the president to forgo raising taxes during the current recession. Ways and Means ranking member Dave Camp, R-Mich., echoed that sentiment, saying that the president and Democratic leaders should work to cut federal spending instead of raising taxes.

Senate Reaction

Senate Finance Committee Chairman Max Baucus, D-Md., indicated the committee's near-term agenda by his deliberate focus on President Obama's commitment to health care, praising his call for quick action on comprehensive reform. "I was pleased to hear the president acknowledge that a comprehensive overhaul of our health care system must be part and parcel of America's economic recovery, and pleased to hear him promise a real investment toward that goal," said Baucus in a statement. His Republican counterpart, Senate Finance Committee ranking member Charles E. Grassley, R-Iowa, tempered the enthusiastic reception to Obama's speech by referencing the cost of the president's recovery plan in his statement. "Taxpayers are being asked for a lot right now, and there's danger that the excesses of Washington will match, or even out-do, the excesses of Wall Street," Grassley said. "The current administration inherited a $1 trillion deficit, and in its first month added another $1 trillion to the debt with its economic stimulus bill."

Source CCH Incorporated