Confronting misgivings, even in his own party, President Barack Obama mounted a stout defense of his blueprint to overhaul the economy Thursday, declaring the national crisis is "not as bad as we think" and his plans will speed recovery.
Challenged to provide encouragement as the nation's "confidence builder in chief," Obama said Americans shouldn't be whipsawed by bursts of either bad or good news and he was "highly optimistic" about the long term.
The president's proposals for major health care, energy and education changes in the midst of economic hard times faced skepticism from both Democrats and Republicans on Capitol Hill, as senators questioned his budget outlook and the deficits it envisions in the middle of the next decade.
But Obama, speaking to top executives of the Business Roundtable, expressed an optimistic vision and called for patience.
Battle between confidence and fear
Richard Parsons, chairman of beleaguered Citigroup Inc., asked if Obama could offer some help in a national battle "between confidence and fear."
"A smidgen of good news and suddenly everything is doing great. A little bit of bad news and ooohh , we're down on the dumps," Obama said. "And I am obviously an object of this constantly varying assessment. I am the object in chief of this varying assessment."
"I don't think things are ever as good as they say, or ever as bad as they say," Obama added. "Things two years ago were not as good as we thought because there were a lot of underlying weaknesses in the economy. They're not as bad as we think they are now."
"And my long-term projections are highly optimistic, if we take care of some of these long-term structural problems."
But in Congress, Obama's budget plans were meeting resistance.
Sen. Kent Conrad, the chairman of the Budget Committee called the track of future deficits "unsustainable" and singled out Obama's proposal for adding $634 billion in health care spending over the next 10 years.
"Some of us have a real pause about the notion of putting substantially more money into the health care system when we've already got a bloated system," said Conrad, D-N.D.
Geithner gets blunt questions
Treasury Secretary Timothy Geithner, testifying before Conrad's committee, also encountered blunt questions about the administration's plans for shoring up the nation's banks. He reiterated the administration's goal to lay out a private-public partnership to make up to $1 trillion in financing available to help banks clear their books of toxic, mortgage-related assets that have led to a national credit freeze.
Geithner hinted more money might be required beyond the existing $700 billion financial rescue fund. "We certainly can start with the resources we have," he said.
Meanwhile, House Speaker Nancy Pelosi, D-Calif., played down talk that Democrats would consider a second economic stimulus bill.
"I know that people have made suggestions that we should be ready to do something, but I really would like to see this stimulus package play out," Pelosi said. "It's just not something that, right now, is in the cards," she added later.
The flurry of comments illustrated the complicated moving parts confronting Washington as the economy continues to decline, credit remains clogged and a new president advances broad and expensive initiatives. The money set aside to address those needs so far has been staggering — $787 billion for an economic stimulus designed to save and create jobs, the $700 billion approved by Congress for the financial rescue package and hundreds of billions more through programs from the Federal Reserve Bank.
Pledges to reduce deficit
On top of that, Obama wants to overhaul health care, reduce greenhouse-gas pollution and undertake major changes in energy policy. He's projecting a federal deficit of $1.75 trillion this year, by far the largest in history, but says he can get it down to $533 billion by 2013.
"I am not choosing to address these additional challenges just because I feel like it, or because I'm a glutton for punishment," Obama told the Business Roundtable, a group of top business executives. "I am doing so because they are fundamental to our economic growth, and to ensuring that we don't have more crises like this in the future."
Obama said his health and energy changes would build a foundation for lasting recovery, arguing that the current economic crisis was precipitated by an "illusion of prosperity." He told the business leaders he wants government to "right the ship" and then "let private enterprise do its magic."
Critics of Obama's budget, such as Sen. Judd Gregg, R-N.H., complained that the spending blueprint does not tackle the rising costs of Social Security and Medicare. Geithner said the administration intends to confront higher health care costs with broad changes that will lower Medicare spending.
Geithner is at the center of Obama's economic policy, advocating for its budget proposals and tax policies, as well as the rescue program for the financial sector. He faced questions on all those fronts before heading to London for talks Friday and Saturday with finance officials from the Group of 20 nations.
Higher taxes for wealthier households
Obama's budget would raise taxes, starting in 2011, on individuals earning more than $200,000 and on households earning more than $250,000. Geithner said the increases would kick in after the economy was expected to be in recovery.
But he sidestepped a question by Sen. Mike Crapo, R-Idaho, about whether the administration would let the increases take effect if the economy had not recovered in two years. "We have to watch how the economy evolves," Geithner said.
On Thursday, Wall Street extended its rally to a third day, and Conrad took note because the markets have not always responded well to Geithner's public utterances. "You've done a superb job," Conrad joked as the hearing came to a close shortly after noon. "Markets are up over 100."
The Dow Jones industrials rose 239.66 points for the day on a string of hopeful news, apparently unconnected to Geithner.
At the White House, the administration conferred with state officials about how the $787 billion in stimulus money will go out.
Vice President Joe Biden opened the meeting by warning state officials that if they misuse money from the stimulus package, they should not expect more help from the federal government for a long time.
"If we don't get this right, folks, this is the end of the ability to convince Congress that anything should go to the states," Biden said.
Added Obama: "If we see money being misspent, we're going to put a stop to it."