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Published: Thursday, 6/3/2010

In Pittsburgh, Obama defends fiscal work, claims results

BY JAMES O'TOOLE
AND BILL SCHACKNER
BLOCK NEWS ALLIANCE

PITTSBURGH - As his economic policies struggle, President Obama defended the need for aggressive government action and said Republicans were jeering from the sidelines through debates on financial and regulatory reform.

Mr. Obama discussed the economy at Carnegie Mellon University for the second time in two years, citing signs of progress from the "dramatic and unpopular steps" that his administration initiated to combat the world's economic crisis and delivering a rebuttal to GOP criticism of those policies.

His last appearance at the university was during the 2008 campaign. Yesterday's event had echoes of political combat as well.

The speech was billed as a sequel to Mr. Obama's New Foundations address last year in which he defended the administration's actions not just as an antidote to the downturn but as framework for postrecession growth.

"Now, some of you may have noticed that we have been building this foundation without much help from our friends in the other party," Mr. Obama said. "From our efforts to rescue the economy to health insurance reform to financial reform, most have sat on the sidelines and shouted from the bleachers. They said no to tax cuts for small businesses; no to tax credits for college tuition; no to investments in clean energy. They said no to protect patients from insurance companies and consumers from big banks."

Anticipating midterm elections in which Republicans hope to make significant gains, he said, "As November approaches, leaders in the other party will campaign furiously on the same economic argument they've been making for decades. Fortunately, we don't have to look back too many years to see how it turns out. For much of the last 10 years, we tried it their way. They gave tax cuts that weren't paid for to millionaires who didn't need them. They gutted regulations and put industry insiders in charge of industry oversight.

"Before I was even inaugurated, the congressional leaders of the other party got together and made a calculation that if I failed, they'd win," he said at another point.

Reminding the crowd that his inauguration came amid a profound economic downturn, Mr. Obama said the administration's fiscal counterattack had begun to show results.

"An economy that was shrinking at an alarming rate when I became president has now been growing for three consecutive quarters," he told the invited audience of about 375. "After losing an average of 750,000 jobs a month during the winter of last year, we have now added jobs for five of the last six months, and we expect to see strong job growth in [tomorrow's] report."

The President mixed self-congratulation with a warning of economic peril as he discussed the work of the nations that met in Pittsburgh in September.

"At the height of the financial crisis, the coordinated action we took with the nations of the G20 prevented a global depression and helped restore worldwide growth," he said "And as we have recently witnessed in Europe, economic difficulties in one part of the world can affect everyone else. That's why we must keep working with the nations of the G20 to pursue more balanced growth."

As his administration navigates increasing controversy over the Gulf of Mexico oil spill, Mr. Obama cited the catastrophic tide of pollution as evidence of the need for an aggressive energy policy.

"The catastrophe unfolding in the Gulf right now may prove to be a result of human error - or corporations taking dangerous shortcuts that compromised safety," he said. "But we have to acknowledge that there are inherent risks to drilling 4 miles beneath the surface of the Earth - risks that are bound to increase the harder oil extraction becomes. Just like we have to acknowledge that an America run solely on fossil fuels should not be the vision we have for our children and grandchildren."

He called for an end to tax breaks for oil companies along with a revival of legislative efforts to combat greenhouse gases.

"And the only way to do that is by finally putting a price on carbon pollution," he said, underscoring an issue GOP candidates hope to use in November.

A bill passed by the House in his first months of offices would address that goal by imposing a so-called cap-and-trade system to enlist market forces in curbing carbon emissions. Companion legislation has yet to make much progress in the Senate and Mr. Obama and the United States have been criticized by European Union officials for failing to enact legislation on the carbon issue.

Mr. Obama acknowledged that such progress remains elusive but he professed to be undeterred. "The votes may not be there right now, but I intend to find them in the coming months," he said.

Responding to Mr. Obama's remarks, Allan Meltzer, a Carnegie Mellon University economist and informal adviser to House Republican Leader John Boehner, derided the Obama Administration's record on deficit spending.

"His rhetoric was divorced from current reality. His administration and the Congress continue to increase government spending," Mr. Meltzer said after the speech. "President Obama talks about reducing spending, but he hasn't vetoed a spending bill."

But Paul Goodman, another professor at CMU's Tepper School of Business, said the President was "clear, thoughtful, and connected with the audience."

Mr. Goodman, an organizational psychologist, said the challenge facing Mr. Obama goes beyond the economy or energy and involves an increasingly polarized society with less affinity for government involvement. "I think he [Mr. Obama] is doing the right thing. I think the government does have to get involved now," said Mr. Goodman.

Mr. Obama's economic blueprint did include spending cuts, beginning in the 2011 fiscal year, and he warned that they could be painful.

"This won't be easy," he said. "I know that some like to make the argument that if only we eliminated pork and foreign aid, we could eliminate our deficit. But such spending makes up just 3 percent of our deficit. So meeting this challenge will require some very difficult decisions about the largely popular programs that make up the other 97 percent."

The Block News Alliance consists of The Blade and the Pittsburgh Post-Gazette. James O'Toole and Bill Schackner are reporters at the Post-Gazette.

Contact James O'Toole at:

jotoole@post-gazette.com

or 412-263-1562.



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