Amid rising public impatience with an economy now under his watch, President Barack Obama on Tuesday said his administration needs to push money out faster to initiate a recovery and conceded that unemployment would rise above 10 percent.
“People are going through a very tough time right now,” Obama said at a White House news conference. “And I don’t expect them to be satisfied.”
For the second time in a month, Obama voiced unease over the results of a $787 billion economic stimulus that he pressed Congress to pass as one of his first acts as president.
New polls indicate that the still-popular president faces some erosion of support over his economic policies. Other polls show Americans are more upbeat than last year but still wary of spending, a sign of uncertainty and a prescription for a slow recovery.
Obama’s lowered expectations for employment served to prepare the public for more economic bad news even as the economy shows signs that the worst of the recession is over. Unemployment typically continues to rise even as an economy begins to recover, a political predicament for Obama as he pushes a domestic policy centered on health care reform.
Asked for his assessment of Federal Reserve Chairman Ben Bernanke, Obama said he has performed “a fine job under very difficult circumstances.” The Fed, which is the country’s independent central bank, has worked closely with the administration to inject money into the struggling financial sector and to ease the credit crunch.
Bernanke’s term ends Jan. 30 and speculation about his replacement has centered on Lawrence Summers, Obama’s top economic adviser and former Harvard president. Asked whether he would keep him on the job, Obama demurred. “I’m not going to make news about Ben Bernanke,” he said.
Obama said the Fed had done better than other government agencies in regulating the financial sector leading up to the Wall Street crisis, but he faulted the Fed for not anticipating the risks that contributed to the meltdown last fall.
“They didn’t do everything that needed to be done,” he said.
Republicans pounced on the president’s economic message, with House Republican leader John Boehner noting that nearly 3 million jobs have been lost this year. “The president did not lay out a clear path for how his administration will keep its promise to create jobs for middle-class families and small businesses,” he said.
In January, Obama’s economic team predicted unemployment would rise no higher than 8 percent with the help of $787 billion in new government spending. The unemployment rate in May reached a 25-year high of 9.4 percent. Obama aides have said that the economy took a turn for the worse since their initial forecast.
“At that point, nobody understood what the depths of this recession were going to look like,” Obama said. “If you recall, it was only significantly later that we suddenly get a report that the economy had tanked. And so it’s not surprising, then, that we missed the mark in terms of our estimates of where unemployment would go.”
Obama said that “it’s pretty clear now that unemployment will end up going over 10 percent.”
He said it was not yet time to decide whether the country needed a second stimulus to the economy. “It’s important to see how the economy evolves and how effective the first stimulus is,” he said.
But he said his administration needed to increase the pace with which it is spending the $787 billion that Congress approved at the start of his presidency.
“We’ve got to get our Recovery Act money out faster,” he said. “We’ve got to make sure that the programs that we put in place are working the way they’re supposed to.
Earlier this month, Obama promised to speed up the outflow of money and create or save 600,000 jobs by the end of the summer. But spending of the stimulus money had been expected to rise in the summer anyway and the 600,000 jobs had been a target for a month.
He defended his administration’s proposal to strengthen the power of the Fed to act as an overarching financial regulator, responsible even for nonbank institutions whose size and reach could pose risks to the financial system. A number of congressional Democrats and Republicans have criticized the plan, saying it would give the Fed too much authority.