Obama sees signs of progress toward recovery, appeals for patience

U.S. President Barack Obama delivers a speech during his second prime time news conference at the White House in Washington, March 24, 2009.

by Liu Hong

WASHINGTON, March 24 (Xinhua) -- Seeking to rally more support for his efforts to tackle the crisis, U.S. President Barack Obama assured Americans on Tuesday that there were "signs of progress" toward recovery, while pleaded for more time and patience.

"We will recover from this recession," Obama said at a prime-time news conference, the second he has held since taking office in January. "But it will take time, it will take patience."

He noted that "there are no quick fixes, and there are no silver bullets," adding "it will take many months and many different solutions to lead us out."

U.S. President Barack Obama delivers a speech during his second prime time news conference at the White House in Washington, March 24, 2009. (Xinhua/Zhang Yan)

COMPREHENSIVE STRATEGY

Obama faced tough questions about recent projections that his budget would create trillions of dollars in deficit over the next decade and potentially double the national debt.

But Obama argued that the 3.6 trillion dollar budget is a critical part in his "comprehensive strategy” to attack the current crisis on all fronts.

"It's a strategy to create jobs, to help responsible homeowners, to restart lending and to grow our economy over the long term. And we are beginning to see signs of progress," Obama said.

"That's why this budget is inseparable from this recovery -- because it is what lays the foundation for a secure and lasting prosperity," said the president.

The bipartisan Congressional Budget Office has projected that the budget deficit is expected to top 1.8 trillion dollars in the current fiscal year, which ends on September 30, 2009.

The CBO-estimated red ink is even higher than the 1.75 trillion dollars expected by the Obama administration for the current year.

For the next fiscal year, which starts on October 1, 2009, the CBO forecast a budget deficit of around 1.4 trillion dollars, about 200 billion dollars more than that the Obama administration had predicted.

The Republicans attacked the bill was too costly. "It's a hollow number," said Sen. Judd Gregg, the senior Republican on the Senate Budget Committee, who recently withdrew as Obama's nominee to head the Commerce Department.

"You're not getting savings if you're assuming spending that isn't actually going to occur," he said.

However, Obama signaled Tuesday that he was not concerned his massive budget could be threatened.

"We never expected, when we printed out our budget, that they would simply Xerox it and vote on it. We assume that it has to go through the legislative process," he said. "I am confident that the budget we put forward will have those principles in place."

BROAD POWER OVER FINANCIAL COMPANIES

Speaking in the East Room of the White House, Obama used the controversy over bailed-out AIG, urging Congress to grant his government broad power to seize non-bank financial companies whose collapse could jeopardize the economy.

He said such power could have lessened the problems at AIG and that he anticipates "strong support" from the public and Congress for the new authority.

"We should have obtained it much earlier so that any institution that poses a systemic risk that can bring down the financial system, we can handle and we can do it in an orderly fashion, that quarantines it from other institutions," Obama said at the conference.

"We don't have that power right now, that's what (Treasury) Secretary (Timothy) Geithner is talking about and I think there's going to be strong support from the American people and Congress to provide that authority," he said.

Both Geithner and Federal Reserve Chairman Ben Bernanke, who appeared at Tuesday's hearing in the House, called on Congress to grant the Treasury "legal means to manage the orderly restructuring of a large, complex non-bank financial institution."

"All institutions and markets that could pose systemic risk will be subject to strong oversight, including appropriate constraints on risk-taking," warned Geithner. "Regulators must apply standards, not just to protect the soundness of individual institutions, but to protect the stability of the system as a whole."

"AIG highlights the urgent need for new resolution procedures for systemically important non-bank financial firms," also said Bernanke.

The U.S. government currently has the authority to seize only banks. A change in the Treasury Department's power would need to be approved by Congress.

Earlier Tuesday, White House press secretary Robert Gibbs also said in television interviews that the expanded power would have given the government more options, and potentially more control to tackle the crisis.

"If the Treasury had resolution authority on AIG, you wouldn't have to put it into bankruptcy to change executive compensation, you could do that automatically," He said on CNN.

U.S. President Barack Obama delivers a speech during his second prime time news conference at the White House in Washington, March 24, 2009. (Xinhua/Zhang Yan)

STRONG DOLLAR

Obama also expressed his confidence in the U.S. dollar. "As far as confidence in the U.S. economy or the dollar, I would just point out that the dollar is extraordinarily strong right now," he said.

"The reason the dollar is strong right now is because investors consider the United States the strongest economy in the world with the most stable political system in the world," he noted.

He also said there is no need for a new global currency as an alternative to the dollar. "I don't believe that there's a need for global currency," said Obama, responding to a recent call by China's central bank Governor Zhou Xiaochuan.

In an article posted on the website of the People's Bank of China on Monday, Zhou proposed to create a super-sovereign reserve currency as part of reform in the international monetary system.

The desirable goal of the international monetary system is to "create an international reserve currency that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies," Zhou said.

The Special Drawing Right (SDR) of the International Monetary Fund (IMF) has the potential to act as a super-sovereign reserve currency, said the Chinese central bank chief, admitting the creation of a new reserve currency is a long-term goal that requires foresight and courage from state leaders of various countries.

The SDR is an international reserve asset created by the IMF in 1969, and it is only used by governments and international institutions.

Last week, Russia announced a similar call for the introduction of a super-national reserve currency as part of the country's proposal to reform the international monetary and financial system at the upcoming London summit.