THE PRESIDENT: Good morning. I ran for President pledging to change the way business is done in Washington and build a government that works for the people by opening it up to the people. And that means restoring responsibility and transparency and accountability to actions that the government takes. And working with the Congress over my first 50 days in office, we’ve made important progress toward that end.

Working together, we passed an American Recovery and Reinvestment Act that’s already putting people back to work doing the work that America needs done. We did it without the customary Congressional earmarks — the practice by which individual legislators insert projects of their choosing. We’re implementing the Recovery Act with an unprecedented level of aggressive oversight and transparency, including a website — recovery.gov — that allows every American to see how their tax dollars are spent and report on cases where the system is breaking down.

I also signed a directive that dramatically reforms our broken system of government contracting, reining in waste and abuse and inefficiency; saving the American taxpayers up to $40 billion each year in the process.

And I’ve laid out plans for a budget that begins to restore fiscal discipline so we can bring down the $1.3 trillion budget deficit we’ve inherited and pave the way for our long-term prosperity. For the first time in many years, we’ve produced an honest budget that makes the hard choices required to cut our deficit in half by the end of my first term in office.

Now, yesterday Congress sent me the final part of last year’s budget; a piece of legislation that rolls nine bills required to keep the government running into one, a piece of legislation that addresses the immediate concerns of the American people by making needed investments in line with our urgent national priorities.

That’s what nearly 99 percent of this legislation does — the nearly 99 percent that you probably haven’t heard much about.

What you likely have heard about is that this bill does include earmarks. Now, let me be clear: Done right, earmarks have given legislators the opportunity to direct federal money to worthy projects that benefit people in their districts, and that’s why I’ve opposed their outright elimination. And I also find it ironic that some of those who rail most loudly against this bill because of earmarks actually inserted earmarks of their own –- and will tout them in their own states and their own districts.

But the fact is that on occasion, earmarks have been used as a vehicle for waste, and fraud, and abuse. Projects have been inserted at the 11th hour, without review, and sometimes without merit, in order to satisfy the political or personal agendas of a given legislator, rather than the public interest. There are times where earmarks may be good on their own, but in the context of a tight budget might not be our highest priority. So these practices hit their peak in the middle of this decade, when the number of earmarks had ballooned to more than 16,000, and played a part in a series of corruption cases.

In 2007, the new Democratic leadership in Congress began to address these abuses with a series of reforms that I was proud to have helped to write. We eliminated anonymous earmarks and created new measures of transparency in the process, so Americans can better follow how their tax dollars are being spent. These measures were combined with the most sweeping ethics reforms since Watergate. We banned gifts and meals and made sure that lobbyists have to disclose who they’re raising campaign money from, and who in Congress they send it to. So we’ve made progress. But let’s face it, we have to do more.

I am signing an imperfect omnibus bill because it’s necessary for the ongoing functions of government, and we have a lot more work to do. We can’t have Congress bogged down at this critical juncture in our economic recovery. But I also view this as a departure point for more far-reaching change.

In my discussions with Congress, we have talked about the need for further reforms to ensure that the budget process inspires trust and confidence instead of cynicism. So I believe as we move forward, we can come together around principles that prevent the abuse of earmarks.

These principles begin with a simple concept: Earmarks must have a legitimate and worthy public purpose. Earmarks that members do seek must be aired on those members’ websites in advance, so the public and the press can examine them and judge their merits for themselves. Each earmark must be open to scrutiny at public hearings, where members will have to justify their expense to the taxpayer.

Next, any earmark for a for-profit private company should be subject to the same competitive bidding requirements as other federal contracts. The awarding of earmarks to private companies is the single most corrupting element of this practice, as witnessed by some of the indictments and convictions that we’ve already seen. Private companies differ from the public entities that Americans rely on every day –- schools, and police stations, and fire departments.

When somebody is allocating money to those public entities, there’s some confidence that there’s going to be a public purpose. When they are given to private entities, you’ve got potential problems. You know, when you give it to public companies — public entities like fire departments, and if they are seeking taxpayer dollars, then I think all of us can feel some comfort that the state or municipality that’s benefitting is doing so because it’s going to trickle down and help the people in that community. When they’re private entities, then I believe they have to be evaluated with a higher level of scrutiny.

Furthermore, it should go without saying that an earmark must never be traded for political favors.

And finally, if my administration evaluates an earmark and determines that it has no legitimate public purpose, then we will seek to eliminate it, and we’ll work with Congress to do so.

Now I know there are members in both Houses with good ideas on this matter. And just this morning, the House released a set of recommendations for reform that I think hold great promise. I congratulate them on that.

Now I’m calling on Congress to enact these reforms as the appropriation process moves forward this year. Neither I nor the American people will accept anything less.

It’s important that we get this done to ensure that the budget process works better, that taxpayers are protected, and that we save billions of dollars that we so desperately need to right our economy and address our fiscal crisis. Along with that reform, I expect future spending bills to be debated and voted on in an orderly way, and sent to my desk without delay or obstruction, so that we don’t face another massive, last-minute omnibus bill like this one.

I recognize that Congress has the power of the purse. As a former senator, I believe that individual members of Congress understand their districts best. And they should have the ability to respond to the needs of their communities. I don’t quarrel with that. But leadership requires setting an example and setting priorities, and the magnitude of the economic crisis we face requires responsibility on all our parts.

The future demands that we operate in a different way than we have in the past. So let there be no doubt: This piece of legislation must mark an end to the old way of doing business, and the beginning of a new era of responsibility and accountability that the American people have every right to expect and demand.

If we’re going to solve our economic crisis; if we’re going to put Americans back to work; if we’re going to make the investments required to build a foundation for our future growth — then we must restore the American people’s faith that their government is working for them, and that it’s on their side. That’s the government I promised. That’s the government I intend to lead.

Thank you very much, everybody.

Madam Speaker, Mr Vice-President, distinguished members of Congress, I come to this great capital of this great nation, an America renewed under a new President to say that America’s faith in the future has been, is and always will be an inspiration to the whole world.

The very creation of America was a bold affirmation of faith in the future: a future you have not just believed in but built with your own hands.

And on January 20th, you the American people began to write the latest chapter in the American story, with a transition of dignity, in which both sides of the aisle could take great pride. President Obama gave the world renewed hope, and on that day billions of people truly looked to Washington D.C as “a shining city upon a hill”.

And I hope that you will allow me to single out for special mention today one of your most distinguished Senators, known in every continent and a great friend. Northern Ireland is today at peace, more Americans have health care, more children around the world are going to school, and for all those things we owe a great debt to the life and courage of, Senator Edward Kennedy.

And so today, having talked to him last night, I want to announce that Her Majesty The Queen, has awarded an honorary Knighthood for Sir Edward Kennedy.

Madam Speaker, Mr Vice-President, I come in friendship to renew, for new times, our special relationship founded upon our shared history, our shared values and, I believe, our shared futures.

I grew up in the 1960s as America, led by President Kennedy, looked to the heavens and saw not the endless void of the unknown, but a new frontier to dare to discover and explore. People said it couldn’t be done – but America did it.

And 20 years later, in the 1980’s, America led by President Reagan refused to accept the fate of millions trapped behind an Iron Curtain, and insisted instead that the people of Eastern Europe be allowed to join the ranks of nations which live safe, strong and free. People said it would never happen in our lifetime but it did, and the Berlin Wall was torn down brick by brick.

So early in my life I came to understand that America is not just the indispensible nation, it is the irrepressible nation.

Throughout your history Americans have led insurrections in the human imagination, have summoned revolutionary times through your belief that there is no such thing as an impossible endeavour. It is never possible to come here without having your faith in the future renewed.

Throughout a whole century the American people stood liberty’s ground not just in one world war but in two.

And I want you to know that we will never forget the sacrifice and service of the American soldiers who gave their lives for people whose names they never knew, and whose faces they never saw, and yet people who have lived in freedom thanks to the bravery and valour of the Americans who gave the “last full measure of devotion”.

Cemetery after cemetery across Europe honours the memory of American soldiers, resting row upon row – often alongside comrades-in-arms from Britain. There is no battlefield of liberty on which there is not a piece of land that is marked out as American and there is no day of remembrance in Britain that is not also a commemoration of American courage and sacrifice far from home.

In the hardest days of the last century, faith in the future kept America alive and I tell you that America kept faith in the future alive for all the world.

Almost every family in Britain has a tie that binds them to America. So I want you to know that whenever a young American soldier or marine, sailor or airman is killed in conflict anywhere in the world, we, the people of Britain, grieve with you. Know that your loss is our loss; your families’ sorrow is our families’ sorrow and your nation’s determination is our nation’s determination that they shall not have died in vain.

And let me pay tribute to the soldiers, yours and ours, who again fight side by side in the plains of Afghanistan and the streets of Iraq, just as their forefathers fought side by side in the sands of Tunisia, on the beaches of Normandy and then on the bridges over the Rhine.

And after that terrible September morning when your homeland was attacked, the Coldstream Guards at Buckingham Palace played the Star Spangled Banner. Our own British tribute as we wept for our friends in the land of the free and the home of the brave.

And let me promise you our continued support to ensure there is no hiding place for terrorists, no safe haven for terrorism. You should be proud that in the hard years since 2001 you have shown that while terrorists may destroy buildings and even, tragically, lives, they have not, and will not ever, destroy the American spirit.

So let it be said of the friendship between our two countries; that it is in times of trial – true, in the face of fear – faithful and amidst the storms of change – constant.

And let it be said of our friendship – formed and forged over two tumultuous centuries, a friendship tested in war and strengthened in peace – that it has not just endured but is renewed in each generation to better serve our shared values and fulfil the hopes and dreams of the day. Not an alliance of convenience, but a partnership of purpose.

Alliances can wither or be destroyed, but partnerships of purpose are indestructible. Friendships can be shaken, but our friendship is unshakeable. Treaties can be broken but our partnership is unbreakable. And I know there is no power on earth than can drive us apart.

We will work tirelessly with you as partners for peace in the Middle East: for a two state solution that provides for nothing less than a secure Israel safe within its borders existing side by side with a viable Palestinian state.

And our shared message to Iran is simple – we are ready for you to rejoin the world community. But first, you must cease your threats and suspend your nuclear programme. And we will work tirelessly with all those in the international community who are ready to reduce the threat of nuclear proliferation.

Past British Prime Ministers have travelled to this Capitol building in times of war to talk of war. I come now to talk of new and different battles we must fight together; to speak of a global economy in crisis and a planet imperilled.

These are new priorities for our new times.

And let us be honest – tonight too many parents, after they put their children to bed, will speak of their worries about losing their jobs or the need to sell the house. Too many will share stories of friends or neighbours already packing up their homes, and too many will talk of a local store or business that has already gone to the wall.

For me, this global recession is not to be measured just in statistics, or in graphs or in figures on a balance sheet. Instead I see one individual with their own aspirations and increasingly their own apprehensions, and then another, and then another.

Each with their own stars to reach for.

Each part of a family, each at the heart of a community now in need of help and hope.

And when banks have failed and markets have faltered, we the representatives of the people have to be the people’s last line of defence.

And that’s why there is no financial orthodoxy so entrenched, no conventional thinking so engrained, no special interest so strong that it should ever stand in the way of the change that hard-working families need.

We have learned through this world downturn that markets should be free but never values-free, that the risks people take should never be separated from the responsibilities they meet.

And if perhaps some once thought it beyond our power to shape global markets to meet the needs of people, we know now that is our duty; we cannot and must not stand aside.

In our families and workplaces and places of worship, we celebrate men and women of integrity who work hard, treat people fairly, take responsibility and look out for others.

If these are the principles we live by in our families and neighbourhoods, they should also be the principles that guide and govern our economic life too.

In these days the world has learned that what makes for the good economy makes for the good society.

My father was a Minister of the church and I have learned again what I was taught by him: that wealth must help more than the wealthy, good fortune must serve more than the fortunate and riches must enrich not just some of us but all.

And these enduring values are the values we need for these new times.

We tend to think of the sweep of destiny as stretching across many months and years before culminating in decisive moments we call history.

But sometimes the reality is that defining moments of history come suddenly and without warning. And the task of leadership then is to define them, shape them and move forward into the new world they demand.

An economic hurricane has swept the world, creating a crisis of credit and of confidence.

History has brought us now to a point where change is essential. We are summoned not just to manage our times but to transform them.

Our task is to rebuild prosperity and security in a wholly different economic world, where competition is no longer local but global and banks are no longer just national but international.

And we need to understand what went wrong in this crisis, that the very financial instruments that were designed to diversify risk across the banking system instead spread contagion across the globe. And today’s financial institutions are so interwoven that a bad bank anywhere is a threat to good banks everywhere.

So should we succumb to a race to the bottom and a protectionism that history tells us that, in the end, protects no-one? No. We should have the confidence that we can seize the opportunities ahead and make the future work for us.

Why?

Because while today people are anxious and feel insecure, over the next two decades literally billions of people in other continents will move from being simply producers of their goods to being consumers of our goods and in this way our world economy will double in size.

Twice as many opportunities for business, twice as much prosperity, and the biggest expansion of middle class incomes and jobs the world has ever seen.

And America and Britain will succeed and lead if we tap into the talents of our people, unleash the genius of our scientists and set free the drive of our entrepreneurs. We will win the race to the top if we can develop the new high value products and services and the new green technologies that the rising numbers of hard-working families across our globe will want to buy.

So we must educate our way out of the downturn, invest and invent our way out of the downturn and re-tool and re-skill our way out of the downturn.

And this is not blind optimism or synthetic confidence to console people; it is the practical affirmation for our times of our faith in a better future.

Every time we rebuild a school we demonstrate our faith in the future. Every time we send more young people to university, every time we invest more in our new digital infrastructure, every time we increase support to our scientists, we demonstrate our faith in the future.

And so I say to this Congress and this country, something that runs deep in your character and is woven in your history, we conquer our fear of the future through our faith in the future.

And it is this faith in the future that means we must commit to protecting the planet for generations that will come long after us.

As the Greek proverb says, why does anybody plant the seeds of a tree whose shade they will never see?

The answer is because they look to the future.

And I believe that you, the nation that had the vision to put a man on the moon, are also the nation with the vision to protect and preserve our planet earth.

And it is only by investing in environmental technology that we can end the dictatorship of oil, and it is only by tackling climate change that we create the millions of new green jobs we need.

For the lesson of this crisis is that we cannot just wait for tomorrow today. We cannot just think of tomorrow today. We cannot merely plan for tomorrow today. Our task must be to build tomorrow today.

And America knows from its history that its reach goes far beyond its geography. For a century you have carried upon your shoulders the greatest of responsibilities: to work with and for the rest of the world. And let me tell you that now more than ever the rest of the world wants to work with you.

And if these times have shown us anything it is that the major challenges we all face are global. No matter where it starts, an economic crisis does not stop at the water’s edge. It ripples across the world. Climate change does not honour passport control. Terrorism has no respect for borders. And modern communications instantly span every continent. The new frontier is that there is no frontier, the new shared truth is that global problems need global solutions.

And let me say that you now have the most pro-American European leadership in living memory. A leadership that wants to cooperate more closely together, in order to cooperate more closely with you. There is no old Europe, no new Europe, there is only your friend Europe.

So once again I say we should seize the moment – because never before have I seen a world so willing to come together. Never before has that been more needed. And never before have the benefits of cooperation been so far-reaching.

So when people here and in other countries ask what more can we do now to bring an end to this downturn, let me say this: we can achieve more working together. And just think of what we can do if we combine not just in a partnership for security but in a new partnership for prosperity too.

On jobs, you the American people through your stimulus proposals could create or save at least 3 million jobs. We in Britain are acting with similar determination. How much nearer an end to this downturn would we be if the whole of the world resolved to do the same?

And you are also restructuring your banks. So are we. But how much safer would everybody’s savings be if the whole world finally came together to outlaw shadow banking systems and offshore tax havens?

Just think how each of our actions, if combined, could mean a whole, much greater than the sum of the parts

- all and not just some banks stabilised

- on fiscal stimulus: the impact multiplied because everybody does it

- rising demand in all our countries creating jobs in each of our countries

- and trade once again the engine of prosperity, the wealth of nations restored.

No one should forget that it was American visionaries who over half a century ago, coming out of the deepest of depressions and the worst of wars, produced the boldest of plans for global economic cooperation because they recognised prosperity was indivisible and concluded that to be sustained it had to be shared.

And I believe that ours too is a time for renewal, for a plan for tackling recession and building for the future. Every continent playing their part in a global new deal, a plan for prosperity that can benefit us all.

First, so that the whole of the worldwide banking system serves our prosperity rather than risks it, let us agree rules and standards for accountability, transparency, and reward that will mean an end to the excesses and will apply to every bank, everywhere, and all the time.

Second, America and a few countries cannot be expected to bear the burden of the fiscal and interest rate stimulus alone. We must share it globally. So let us work together for the worldwide reduction of interest rates and a scale of stimulus round the world equal to the depth of the recession and the dimensions of the recovery we must make.

Third, let us together renew our international economic cooperation, helping the emerging markets rebuild their banks. And let us work together for a low carbon recovery worldwide. And I am confident that this President, this Congress and the peoples of the world can come together in Copenhagen this December to reach a historic agreement on climate change.

And let us not forget the poorest. As we strive to spread the values of peace, political liberty, and the hope for better lives across the world, perhaps the greatest gift our generation could give to the future, the gift of America and Britain to the world could be, for every child in every country of the world, the chance millions do not have today; the chance to go to school.

For let us remember there is a common bond that unites us as human beings across different beliefs, cultures and nationalities. It is at the core of my convictions, the essence of America’s spirit and the heart of all faiths.

And it must be at the centre of our response to the crisis of today. At their best, our values tell us that we cannot be wholly content while others go without, cannot be fully comfortable while millions go without comfort, cannot be truly happy while others grieve alone.

And this too is true. All of us know that in a recession the wealthiest, the most powerful and the most privileged can find a way through for themselves.

So we do not value the wealthy less when we say that our first duty is to help the not so wealthy. We do not value the powerful less when we say that our first responsibility is to help the powerless. And we do not value those who are secure less when we say that our first priority must be to help the insecure.

These recent events have forced us all to think anew. And while I have learnt many things, I keep returning to something I first learned in my father’s church as a child. In this most modern of crises I am drawn to the most ancient of truths; wherever there is hardship, wherever there is suffering, we cannot, we will not, pass by on the other side.

But working together there is no challenge to which we are not equal, no obstacle that we cannot overcome, no aspiration so high that it cannot be achieved.

In the depths of the Depression, when Franklin Roosevelt did battle with fear itself, it was not simply by the power of his words, his personality and his example that he triumphed.

Yes, all these things mattered. But what mattered more was this enduring truth: that you, the American people, at your core, were, as you remain, every bit as optimistic as your Roosevelts, your Reagans and your Obamas.

This is the faith in the future that has always been the story and promise of America. So at this defining moment in history let us renew our special relationship for our generation and our times. Let us restore prosperity and protect this planet and, with faith in the future, let us together build tomorrow today.

As Prepared for Delivery

Chairman Conrad, Senator Gregg, and members of the Committee, I am pleased to be here today to offer my views on current economic and financial conditions, the federal budget, and related issues.

Recent Financial and Economic Developments and the Policy Responses
Over the past 18 months, the global economy has experienced a period of extraordinary turbulence. The collapse of a global credit boom, triggered by the end of housing booms in the United States and other countries and the associated problems in mortgage markets, has led to a deterioration of asset values and credit conditions and taken a heavy toll on business and consumer confidence.

The financial crisis intensified considerably in the fall. In the United States, the government-sponsored enterprises, Fannie Mae and Freddie Mac, were placed into conservatorship, and Lehman Brothers Holdings and several other large financial institutions either failed, nearly failed, or were acquired by competitors under distressed circumstances. Losses at money market mutual funds led to large withdrawals by their investors, and those outflows undermined both the stability of short-term funding markets, particularly the commercial paper market, and confidence in wholesale bank funding markets.

In early October, the loss of investor confidence in financial institutions around the world raised the prospect of an international financial collapse, an event that would have been devastating for global economic prospects. Using authorities granted by the Emergency Economic Stabilization Act, on October 14, the Treasury announced a plan to inject $250 billion in capital into U.S. financial institutions. The Treasury’s actions were complemented by the Federal Deposit Insurance Corporation’s expansion of bank liability guarantees and by the expansive provision of liquidity by the Federal Reserve. Together with similar measures in other countries, these steps averted a collapse and restored a degree of stability to the financial system. Nevertheless, the cumulative effect of the financial stress was to precipitate a sharp downturn in economic activity around the world.

The Federal Reserve responded forcefully to the significant deterioration in financial market conditions and the substantial worsening of the economic outlook by continuing to ease monetary policy aggressively late last year. By December, the Federal Open Market Committee (FOMC) had brought its target for the federal funds rate to a historically low range of 0 to 1/4 percent, where it remains today. The FOMC anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.

With the federal funds rate close to zero, the Federal Reserve has focused on alternative tools to ease conditions in credit markets. We have established new lending facilities and expanded existing facilities that aim to enhance the flow of credit to businesses and households: We increased the size of the Term Auction Facility to help ensure that banks could obtain the funds they need to provide credit to their customers; we expanded our network of swap lines with foreign central banks to help ease conditions in global dollar markets that were spilling over into our own funding markets; we established facilities to promote the functioning of money market mutual funds and the commercial paper market; and we introduced the Term Asset-Backed Securities Loan Facility, or TALF, which is designed to facilitate the renewed issuance of consumer and small business asset-backed securities. In addition, to improve the functioning of the mortgage market and to support housing markets and economic activity more broadly, the Federal Reserve has begun to purchase large amounts of agency debt and agency mortgage-backed securities.

The measures taken since September by the Federal Reserve, other U.S. government entities, and foreign governments have helped improve conditions in some financial markets. In particular, strains in short-term funding markets have eased notably since last fall, and London interbank offered rates, or Libor–which influence the interest rates faced by many U.S. households and businesses–have decreased sharply. Conditions in the commercial paper market also have improved, even for lower-rated borrowers, and the sharp outflows from money market mutual funds in September have been replaced by modest inflows. In the market for conforming mortgages, interest rates have fallen nearly 1 percentage point since the announcement of our intention to purchase agency debt and agency mortgage-backed securities. Corporate risk spreads have also declined somewhat from extraordinarily high levels, although bond spreads remain elevated by historical standards. Likely spurred by the improvements in pricing and liquidity, issuance of investment-grade corporate bonds has been strong, and speculative-grade issuance, which was near zero in the fourth quarter, has picked up somewhat more recently. Nevertheless, significant stresses persist in many markets. For example, most securitization markets remain closed, and some financial institutions remain under pressure.

As I noted, the ongoing stresses in the financial markets have been accompanied by a sharp contraction in economic activity. After edging down during the summer, real gross domestic product (GDP) is reported by the Commerce Department to have declined at an annual rate of 6.2 percent in the fourth quarter of last year, with nearly every major category of final sales contributing to the drop.

The recent near-term indicators show little sign of improvement. Businesses shed 600,000 jobs in January, about the same pace of job loss as in November and December, and the unemployment rate jumped to 7.6 percent. Moreover, the number of claims for unemployment insurance has moved higher since mid-January, suggesting that labor market conditions may have worsened further in recent weeks. In reaction to the deteriorating job market, the sizable losses of equity and housing wealth, and the tightening of credit conditions, households have continued to rein in their spending. Home sales and new construction have continued to decline despite lower mortgage rates, reflecting the uncertain economic environment and the expectation of many potential buyers that home prices have further to fall.

The manufacturing sector has also deteriorated further so far this year. Manufacturing output fell sharply again in January, bringing the rate of capacity utilization to its lowest level in the post-World War II period. Orders and shipments of durable goods, which dropped in the fourth quarter, fell markedly further in January, and most survey-based measures of business conditions are at or near record low levels. Given the weak economic environment, many businesses have apparently cut back their plans for capital expenditures significantly. Moreover, exports, which had provided a welcome offset to the weakness in domestic demand through the middle of 2008, fell sharply in the final months of last year, and the incoming news suggests a widespread contraction in activity abroad.

Despite the considerable decline in final demand in the United States, businesses have managed to trim inventories in recent quarters. Still, with sales anticipated to remain poor for a while longer, many businesses are carrying more inventories than they desire and, consequently, are likely to cut production further in the months ahead.

Meanwhile, overall consumer price inflation has slowed considerably, primarily because of the steep drop in energy prices in the second half of last year. The PCE price index was up just 0.7 percent in January from its year-earlier level, after having risen 3-1/2 percent over the preceding 12-month period. Core PCE price inflation, which excludes the direct effects of food and energy prices, has also slowed, decreasing to 1-1/2 percent for the 12 months ending in January from 2-1/4 percent in the year-earlier period. Wide margins of economic slack and reduced cost pressures suggest that inflation is likely to remain quite low over the next couple of years.

Although the near-term outlook for the economy is weak, over time, a number of factors should promote the return of solid gains in economic activity in the context of low and stable inflation. The effectiveness of the policy actions taken by the Federal Reserve, the Treasury, and other government entities in restoring a reasonable degree of financial stability will be critical determinants of the timing and strength of the recovery. If financial conditions improve, the economy will be increasingly supported by fiscal and monetary stimulus, the beneficial effects of the steep decline in energy prices since last summer, and the better alignment of business inventories and final sales, as well as the increased availability of credit.

Fiscal Policy in the Current Economic and Financial Environment
As you are well aware, the Congress recently passed a major fiscal package, which is aimed at strengthening near-term economic activity. The package includes personal tax cuts and increases in transfer payments intended to stimulate household spending, incentives for business investment, federal grants for state and local governments to reduce their need to cut services or cancel building projects, and increases in federal purchases. By supporting public and private spending, the fiscal package should provide a boost to demand and production over the next two years as well as mitigate the overall loss of employment and income that would otherwise occur.

That said, the timing and the magnitude of the macroeconomic effects of the fiscal program are subject to considerable uncertainty, reflecting both the state of economic knowledge and the unusual economic circumstances that we face. For example, households confronted with declining incomes and limited access to credit might be expected to spend most of their tax cuts; then again, heightened economic uncertainties and the desire to increase precautionary saving or pay down debt might reduce households’ propensity to spend. Likewise, it is difficult to judge how quickly funds dedicated to infrastructure needs and other longer-term projects will be spent and how large any follow-on effects will be. The Congressional Budget Office (CBO) has constructed a range of estimates of the effects of the stimulus package on real GDP and employment that appropriately reflects these uncertainties. According to the CBO’s estimates, the effect of the stimulus package on the level of real GDP at the end of 2010 could range from about 1 percent to a little more than 3 percent, relative to a baseline forecast that does not include the stimulus. They estimate that these effects on output would leave the corresponding unemployment rate between 1/2 percentage point and 2 percentage points lower at the end of next year than in the baseline forecast.

The goal of the fiscal package is not just to provide a one-time boost to the economy, but to lay the groundwork for a self-sustaining, broad-based recovery. Historical experience strongly suggests that without a reasonable degree of financial stability, a sustainable recovery will not occur. Although progress has been made on the financial front since last fall, more needs to be done. As you know, in response to ongoing concerns about the health of financial institutions, the Treasury recently announced plans for further steps to ensure the strength and soundness of the financial system and to promote a more smooth flow of credit to households and businesses. The plan would use the remaining resources appropriated to the Treasury under the Emergency Economic Stabilization Act–approximately $350 billion–and also involve additional spending to support the activities of Fannie Mae and Freddie Mac. Whether further funds will be needed depends on the results of the current supervisory assessment of banks, the evolution of the economy, and other factors. The Administration has included a placeholder in its budget for more funding for financial stabilization, should it be necessary.

Unfortunately, the spending for financial stabilization, the increases in spending and reductions in taxes associated with the fiscal package, and the losses in revenues and increases in income-support payments associated with the weak economy will widen the federal budget deficit substantially this year. Taking into account these factors, the Administration recently submitted a proposed budget that projects the federal deficit to increase to about $1.8 trillion this fiscal year and to remain around $1 trillion in 2010 and 2011. As a consequence of this elevated level of borrowing, the ratio of federal debt held by the public to nominal GDP is likely to move up from about 40 percent before the onset of the financial crisis to more than 60 percent over the next several years–its highest level since the early 1950s, in the years following the massive debt buildup during World War II.

Of course, all else equal, this is a development that all of us would have preferred to avoid. But our economy and financial markets face extraordinary challenges, and a failure by policymakers to address these challenges in a timely way would likely be more costly in the end. We are better off moving aggressively today to solve our economic problems; the alternative could be a prolonged episode of economic stagnation that would not only contribute to further deterioration in the fiscal situation, but would also imply lower output, employment, and incomes for an extended period.

With such large near-term deficits, it may seem too early to be contemplating the necessary return to fiscal sustainability. To the contrary, maintaining the confidence of the financial markets requires that we begin planning now for the restoration of fiscal balance. As the economy recovers and resources become more fully employed, we will need to withdraw the temporary components of the fiscal stimulus. Spending on financial stabilization also must wind down; if all goes well, the disposition of assets acquired by the Treasury in the process of stabilization will be a source of added revenue for the Treasury in the out years. Determining the pace of fiscal normalization will entail some difficult judgments. In particular, the Congress will need to weigh the costs of running large budget deficits for a time against the possibility of a premature removal of fiscal stimulus that could blunt the recovery. We at the Federal Reserve will face similar difficult judgment calls regarding monetary policy.

As I mentioned earlier, the President has recently submitted a budget, and it proposes an ambitious agenda, including new initiatives for energy, health care, education, and tax policy. These are all complex policy issues in which the specific design of each program is as important as the budgetary amount allocated to it. The Congress will have considerable work in evaluating how to proceed in each of these areas.

As part of that evaluation, it will be critical to consider the formidable challenges and tradeoffs needed to simultaneously achieve an economic and financial recovery, fiscal responsibility, and program reforms that accomplish their desired goals effectively and efficiently. In particular, policymakers must remain prepared to take the actions necessary in the near term to restore stability to the financial system and to put the economy on a sustainable path to recovery. But the near-term imperative of achieving economic recovery and the longer-run desire to achieve programmatic objectives should not be allowed to hinder timely consideration of the steps needed to address fiscal imbalances. Without fiscal sustainability, in the longer term we will have neither financial stability nor healthy economic growth.

In at least a rudimentary way, I’ve understood what Mr. Keynes had to say about business cycles and the need for the government to prime the pump from time to time since my 12th grade economics teacher drilled it into me.  So, the economic stimulus package makes all the sense in the world to me.

What hasn’t made sense is the unfairness of the hundreds of billions going to people who so greedily and so recklessly took us all down this economic road to ruin.  I’m talking about the investment banks, brokerages, insurance companies and others in the financial services industry who leveraged America’s future to hell and back.  Tonight, the president reassured me, and hopefully others, that his Administration will deal with these fools differently:

I understand that when the last administration asked this Congress to provide assistance for struggling banks, Democrats and Republicans alike were infuriated by the mismanagement and results that followed. So were the American taxpayers. So was I.

So I know how unpopular it is to be seen as helping banks right now, especially when everyone is suffering in part from their bad decisions. I promise you – I get it.

But I also know that in a time of crisis, we cannot afford to govern out of anger, or yield to the politics of the moment. My job – our job – is to solve the problem. Our job is to govern with a sense of responsibility. I will not spend a single penny for the purpose of rewarding a single Wall Street executive, but I will do whatever it takes to help the small business that can’t pay its workers or the family that has saved and still can’t get a mortgage.

Remarks of President Barack Obama – As Prepared for Delivery
Address to Joint Session of Congress
Tuesday, February 24th, 2009

Madame Speaker, Mr. Vice President, Members of Congress, and the First Lady of the United States:

I’ve come here tonight not only to address the distinguished men and women in this great chamber, but to speak frankly and directly to the men and women who sent us here.

I know that for many Americans watching right now, the state of our economy is a concern that rises above all others.  And rightly so.  If you haven’t been personally affected by this recession, you probably know someone who has – a friend; a neighbor; a member of your family.  You don’t need to hear another list of statistics to know that our economy is in crisis, because you live it every day.  It’s the worry you wake up with and the source of sleepless nights.  It’s the job you thought you’d retire from but now have lost; the business you built your dreams upon that’s now hanging by a thread; the college acceptance letter your child had to put back in the envelope.  The impact of this recession is real, and it is everywhere.

But while our economy may be weakened and our confidence shaken; though we are living through difficult and uncertain times, tonight I want every American to know this:

We will rebuild, we will recover, and the United States of America will emerge stronger than before.

The weight of this crisis will not determine the destiny of this nation.  The answers to our problems don’t lie beyond our reach.  They exist in our laboratories and universities; in our fields and our factories; in the imaginations of our entrepreneurs and the pride of the hardest-working people on Earth.  Those qualities that have made America the greatest force of progress and prosperity in human history we still possess in ample measure.  What is required now is for this country to pull together, confront boldly the challenges we face, and take responsibility for our future once more.

Now, if we’re honest with ourselves, we’ll admit that for too long, we have not always met these responsibilities – as a government or as a people.  I say this not to lay blame or look backwards, but because it is only by understanding how we arrived at this moment that we’ll be able to lift ourselves out of this predicament.

The fact is, our economy did not fall into decline overnight.  Nor did all of our problems begin when the housing market collapsed or the stock market sank.  We have known for decades that our survival depends on finding new sources of energy.  Yet we import more oil today than ever before.  The cost of health care eats up more and more of our savings each year, yet we keep delaying reform.  Our children will compete for jobs in a global economy that too many of our schools do not prepare them for.  And though all these challenges went unsolved, we still managed to spend more money and pile up more debt, both as individuals and through our government, than ever before.

In other words, we have lived through an era where too often, short-term gains were prized over long-term prosperity; where we failed to look beyond the next payment, the next quarter, or the next election.  A surplus became an excuse to transfer wealth to the wealthy instead of an opportunity to invest in our future.  Regulations were gutted for the sake of a quick profit at the expense of a healthy market.  People bought homes they knew they couldn’t afford from banks and lenders who pushed those bad loans anyway.  And all the while, critical debates and difficult decisions were put off for some other time on some other day.

Well that day of reckoning has arrived, and the time to take charge of our future is here.

Now is the time to act boldly and wisely – to not only revive this economy, but to build a new foundation for lasting prosperity.  Now is the time to jumpstart job creation, re-start lending, and invest in areas like energy, health care, and education that will grow our economy, even as we make hard choices to bring our deficit down.  That is what my economic agenda is designed to do, and that’s what I’d like to talk to you about tonight.

It’s an agenda that begins with jobs.

As soon as I took office, I asked this Congress to send me a recovery plan by President’s Day that would put people back to work and put money in their pockets.  Not because I believe in bigger government – I don’t.  Not because I’m not mindful of the massive debt we’ve inherited – I am.  I called for action because the failure to do so would have cost more jobs and caused more hardships.  In fact, a failure to act would have worsened our long-term deficit by assuring weak economic growth for years.  That’s why I pushed for quick action.  And tonight, I am grateful that this Congress delivered, and pleased to say that the American Recovery and Reinvestment Act is now law.

Over the next two years, this plan will save or create 3.5 million jobs.  More than 90% of these jobs will be in the private sector – jobs rebuilding our roads and bridges; constructing wind turbines and solar panels; laying broadband and expanding mass transit.

Because of this plan, there are teachers who can now keep their jobs and educate our kids.  Health care professionals can continue caring for our sick.  There are 57 police officers who are still on the streets of Minneapolis tonight because this plan prevented the layoffs their department was about to make.

Because of this plan, 95% of the working households in America will receive a tax cut – a tax cut that you will see in your paychecks beginning on April 1st.

Because of this plan, families who are struggling to pay tuition costs will receive a $2,500 tax credit for all four years of college.  And Americans who have lost their jobs in this recession will be able to receive extended unemployment benefits and continued health care coverage to help them weather this storm.

I know there are some in this chamber and watching at home who are skeptical of whether this plan will work.  I understand that skepticism.  Here in Washington, we’ve all seen how quickly good intentions can turn into broken promises and wasteful spending.  And with a plan of this scale comes enormous responsibility to get it right.

That is why I have asked Vice President Biden to lead a tough, unprecedented oversight effort – because nobody messes with Joe.  I have told each member of my Cabinet as well as mayors and governors across the country that they will be held accountable by me and the American people for every dollar they spend.  I have appointed a proven and aggressive Inspector General to ferret out any and all cases of waste and fraud.  And we have created a new website called recovery.gov so that every American can find out how and where their money is being spent.

So the recovery plan we passed is the first step in getting our economy back on track.  But it is just the first step.  Because even if we manage this plan flawlessly, there will be no real recovery unless we clean up the credit crisis that has severely weakened our financial system.

I want to speak plainly and candidly about this issue tonight, because every American should know that it directly affects you and your family’s well-being.  You should also know that the money you’ve deposited in banks across the country is safe; your insurance is secure; and you can rely on the continued operation of our financial system.  That is not the source of concern.

The concern is that if we do not re-start lending in this country, our recovery will be choked off before it even begins.

You see, the flow of credit is the lifeblood of our economy.  The ability to get a loan is how you finance the purchase of everything from a home to a car to a college education; how stores stock their shelves, farms buy equipment, and businesses make payroll.

But credit has stopped flowing the way it should.  Too many bad loans from the housing crisis have made their way onto the books of too many banks.  With so much debt and so little confidence, these banks are now fearful of lending out any more money to households, to businesses, or to each other.  When there is no lending, families can’t afford to buy homes or cars.  So businesses are forced to make layoffs.  Our economy suffers even more, and credit dries up even further.

That is why this administration is moving swiftly and aggressively to break this destructive cycle, restore confidence, and re-start lending.

We will do so in several ways.  First, we are creating a new lending fund that represents the largest effort ever to help provide auto loans, college loans, and small business loans to the consumers and entrepreneurs who keep this economy running.

Second, we have launched a housing plan that will help responsible families facing the threat of foreclosure lower their monthly payments and re-finance their mortgages.  It’s a plan that won’t help speculators or that neighbor down the street who bought a house he could never hope to afford, but it will help millions of Americans who are struggling with declining home values – Americans who will now be able to take advantage of the lower interest rates that this plan has already helped bring about.  In fact, the average family who re-finances today can save nearly $2000 per year on their mortgage.

Third, we will act with the full force of the federal government to ensure that the major banks that Americans depend on have enough confidence and enough money to lend even in more difficult times.  And when we learn that a major bank has serious problems, we will hold accountable those responsible, force the necessary adjustments, provide the support to clean up their balance sheets, and assure the continuity of a strong, viable institution that can serve our people and our economy.

I understand that on any given day, Wall Street may be more comforted by an approach that gives banks bailouts with no strings attached, and that holds nobody accountable for their reckless decisions.  But such an approach won’t solve the problem.  And our goal is to quicken the day when we re-start lending to the American people and American business and end this crisis once and for all.

I intend to hold these banks fully accountable for the assistance they receive, and this time, they will have to clearly demonstrate how taxpayer dollars result in more lending for the American taxpayer.  This time, CEOs won’t be able to use taxpayer money to pad their paychecks or buy fancy drapes or disappear on a private jet.  Those days are over.

Still, this plan will require significant resources from the federal government – and yes, probably more than we’ve already set aside.  But while the cost of action will be great, I can assure you that the cost of inaction will be far greater, for it could result in an economy that sputters along for not months or years, but perhaps a decade.  That would be worse for our deficit, worse for business, worse for you, and worse for the next generation.  And I refuse to let that happen.

I understand that when the last administration asked this Congress to provide assistance for struggling banks, Democrats and Republicans alike were infuriated by the mismanagement and results that followed.  So were the American taxpayers.  So was I.

So I know how unpopular it is to be seen as helping banks right now, especially when everyone is suffering in part from their bad decisions.  I promise you – I get it.

But I also know that in a time of crisis, we cannot afford to govern out of anger, or yield to the politics of the moment.  My job – our job – is to solve the problem.  Our job is to govern with a sense of responsibility.  I will not spend a single penny for the purpose of rewarding a single Wall Street executive, but I will do whatever it takes to help the small business that can’t pay its workers or the family that has saved and still can’t get a mortgage.

That’s what this is about.  It’s not about helping banks – it’s about helping people.  Because when credit is available again, that young family can finally buy a new home.  And then some company will hire workers to build it.  And then those workers will have money to spend, and if they can get a loan too, maybe they’ll finally buy that car, or open their own business.  Investors will return to the market, and American families will see their retirement secured once more.  Slowly, but surely, confidence will return, and our economy will recover.

So I ask this Congress to join me in doing whatever proves necessary.  Because we cannot consign our nation to an open-ended recession.  And to ensure that a crisis of this magnitude never happens again, I ask Congress to move quickly on legislation that will finally reform our outdated regulatory system.  It is time to put in place tough, new common-sense rules of the road so that our financial market rewards drive and innovation, and punishes short-cuts and abuse.

The recovery plan and the financial stability plan are the immediate steps we’re taking to revive our economy in the short-term.  But the only way to fully restore America’s economic strength is to make the long-term investments that will lead to new jobs, new industries, and a renewed ability to compete with the rest of the world. The only way this century will be another American century is if we confront at last the price of our dependence on oil and the high cost of health care; the schools that aren’t preparing our children and the mountain of debt they stand to inherit.  That is our responsibility.

In the next few days, I will submit a budget to Congress.  So often, we have come to view these documents as simply numbers on a page or laundry lists of programs.  I see this document differently.  I see it as a vision for America – as a blueprint for our future.

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.

Given these realities, everyone in this chamber – Democrats and Republicans – will have to sacrifice some worthy priorities for which there are no dollars.  And that includes me.

But that does not mean we can afford to ignore our long-term challenges.  I reject the view that says our problems will simply take care of themselves; that says government has no role in laying the foundation for our common prosperity.

For history tells a different story.  History reminds us that at every moment of economic upheaval and transformation, this nation has responded with bold action and big ideas.  In the midst of civil war, we laid railroad tracks from one coast to another that spurred commerce and industry.  From the turmoil of the Industrial Revolution came a system of public high schools that prepared our citizens for a new age.  In the wake of war and depression, the GI Bill sent a generation to college and created the largest middle-class in history.  And a twilight struggle for freedom led to a nation of highways, an American on the moon, and an explosion of technology that still shapes our world.

In each case, government didn’t supplant private enterprise; it catalyzed private enterprise.  It created the conditions for thousands of entrepreneurs and new businesses to adapt and to thrive.

We are a nation that has seen promise amid peril, and claimed opportunity from ordeal.  Now we must be that nation again.  That is why, even as it cuts back on the programs we don’t need, the budget I submit will invest in the three areas that are absolutely critical to our economic future:  energy, health care, and education.

It begins with energy.

We know the country that harnesses the power of clean, renewable energy will lead the 21st century.  And yet, it is China that has launched the largest effort in history to make their economy energy efficient.  We invented solar technology, but we’ve fallen behind countries like Germany and Japan in producing it.  New plug-in hybrids roll off our assembly lines, but they will run on batteries made in Korea.

Well I do not accept a future where the jobs and industries of tomorrow take root beyond our borders – and I know you don’t either.  It is time for America to lead again.

Thanks to our recovery plan, we will double this nation’s supply of renewable energy in the next three years.  We have also made the largest investment in basic research funding in American history – an investment that will spur not only new discoveries in energy, but breakthroughs in medicine, science, and technology.

We will soon lay down thousands of miles of power lines that can carry new energy to cities and towns across this country.  And we will put Americans to work making our homes and buildings more efficient so that we can save billions of dollars on our energy bills.

But to truly transform our economy, protect our security, and save our planet from the ravages of climate change, we need to ultimately make clean, renewable energy the profitable kind of energy.  So I ask this Congress to send me legislation that places a market-based cap on carbon pollution and drives the production of more renewable energy in America.  And to support that innovation, we will invest fifteen billion dollars a year to develop technologies like wind power and solar power; advanced biofuels, clean coal, and more fuel-efficient cars and trucks built right here in America.

As for our auto industry, everyone recognizes that years of bad decision-making and a global recession have pushed our automakers to the brink.  We should not, and will not, protect them from their own bad practices.  But we are committed to the goal of a re-tooled, re-imagined auto industry that can compete and win.  Millions of jobs depend on it.  Scores of communities depend on it.  And I believe the nation that invented the automobile cannot walk away from it.

None of this will come without cost, nor will it be easy.  But this is America.  We don’t do what’s easy.  We do what is necessary to move this country forward.

For that same reason, we must also address the crushing cost of health care.

This is a cost that now causes a bankruptcy in America every thirty seconds.  By the end of the year, it could cause 1.5 million Americans to lose their homes.  In the last eight years, premiums have grown four times faster than wages.  And in each of these years, one million more Americans have lost their health insurance.  It is one of the major reasons why small businesses close their doors and corporations ship jobs overseas.  And it’s one of the largest and fastest-growing parts of our budget.

Given these facts, we can no longer afford to put health care reform on hold.

Already, we have done more to advance the cause of health care reform in the last thirty days than we have in the last decade.  When it was days old, this Congress passed a law to provide and protect health insurance for eleven million American children whose parents work full-time.  Our recovery plan will invest in electronic health records and new technology that will reduce errors, bring down costs, ensure privacy, and save lives.  It will launch a new effort to conquer a disease that has touched the life of nearly every American by seeking a cure for cancer in our time.  And it makes the largest investment ever in preventive care, because that is one of the best ways to keep our people healthy and our costs under control.

This budget builds on these reforms.  It includes an historic commitment to comprehensive health care reform – a down-payment on the principle that we must have quality, affordable health care for every American.  It’s a commitment that’s paid for in part by efficiencies in our system that are long overdue.  And it’s a step we must take if we hope to bring down our deficit in the years to come.

Now, there will be many different opinions and ideas about how to achieve reform, and that is why I’m bringing together businesses and workers, doctors and health care providers, Democrats and Republicans to begin work on this issue next week.

I suffer no illusions that this will be an easy process.  It will be hard.  But I also know that nearly a century after Teddy Roosevelt first called for reform, the cost of our health care has weighed down our economy and the conscience of our nation long enough.  So let there be no doubt: health care reform cannot wait, it must not wait, and it will not wait another year.

The third challenge we must address is the urgent need to expand the promise of education in America.

In a global economy where the most valuable skill you can sell is your knowledge, a good education is no longer just a pathway to opportunity – it is a pre-requisite.

Right now, three-quarters of the fastest-growing occupations require more than a high school diploma.  And yet, just over half of our citizens have that level of education.  We have one of the highest high school dropout rates of any industrialized nation.  And half of the students who begin college never finish.

This is a prescription for economic decline, because we know the countries that out-teach us today will out-compete us tomorrow.  That is why it will be the goal of this administration to ensure that every child has access to a complete and competitive education – from the day they are born to the day they begin a career.

Already, we have made an historic investment in education through the economic recovery plan.  We have dramatically expanded early childhood education and will continue to improve its quality, because we know that the most formative learning comes in those first years of life.  We have made college affordable for nearly seven million more students.  And we have provided the resources necessary to prevent painful cuts and teacher layoffs that would set back our children’s progress.

But we know that our schools don’t just need more resources.  They need more reform.  That is why this budget creates new incentives for teacher performance; pathways for advancement, and rewards for success.  We’ll invest in innovative programs that are already helping schools meet high standards and close achievement gaps.  And we will expand our commitment to charter schools.

It is our responsibility as lawmakers and educators to make this system work.  But it is the responsibility of every citizen to participate in it.  And so tonight, I ask every American to commit to at least one year or more of higher education or career training.  This can be community college or a four-year school; vocational training or an apprenticeship.  But whatever the training may be, every American will need to get more than a high school diploma.  And dropping out of high school is no longer an option.  It’s not just quitting on yourself, it’s quitting on your country – and this country needs and values the talents of every American.  That is why we will provide the support necessary for you to complete college and meet a new goal:  by 2020, America will once again have the highest proportion of college graduates in the world.

I know that the price of tuition is higher than ever, which is why if you are willing to volunteer in your neighborhood or give back to your community or serve your country, we will make sure that you can afford a higher education.  And to encourage a renewed spirit of national service for this and future generations, I ask this Congress to send me the bipartisan legislation that bears the name of Senator Orrin Hatch as well as an American who has never stopped asking what he can do for his country – Senator Edward Kennedy.

These education policies will open the doors of opportunity for our children.  But it is up to us to ensure they walk through them.  In the end, there is no program or policy that can substitute for a mother or father who will attend those parent/teacher conferences, or help with homework after dinner, or turn off the TV, put away the video games, and read to their child.  I speak to you not just as a President, but as a father when I say that responsibility for our children’s education must begin at home.

There is, of course, another responsibility we have to our children.  And that is the responsibility to ensure that we do not pass on to them a debt they cannot pay.  With the deficit we inherited, the cost of the crisis we face, and the long-term challenges we must meet, it has never been more important to ensure that as our economy recovers, we do what it takes to bring this deficit down.

I’m proud that we passed the recovery plan free of earmarks, and I want to pass a budget next year that ensures that each dollar we spend reflects only our most important national priorities.

Yesterday, I held a fiscal summit where I pledged to cut the deficit in half by the end of my first term in office.  My administration has also begun to go line by line through the federal budget in order to eliminate wasteful and ineffective programs.  As you can imagine, this is a process that will take some time.  But we’re starting with the biggest lines.  We have already identified two trillion dollars in savings over the next decade.

In this budget, we will end education programs that don’t work and end direct payments to large agribusinesses that don’t need them.  We’ll eliminate the no-bid contracts that have wasted billions in Iraq, and reform our defense budget so that we’re not paying for Cold War-era weapons systems we don’t use.  We will root out the waste, fraud, and abuse in our Medicare program that doesn’t make our seniors any healthier, and we will restore a sense of fairness and balance to our tax code by finally ending the tax breaks for corporations that ship our jobs overseas.

In order to save our children from a future of debt, we will also end the tax breaks for the wealthiest 2% of Americans.  But let me perfectly clear, because I know you’ll hear the same old claims that rolling back these tax breaks means a massive tax increase on the American people:  if your family earns less than $250,000 a year, you will not see your taxes increased a single dime.  I repeat: not one single dime.  In fact, the recovery plan provides a tax cut – that’s right, a tax cut – for 95% of working families.  And these checks are on the way.

To preserve our long-term fiscal health, we must also address the growing costs in Medicare and Social Security.  Comprehensive health care reform is the best way to strengthen Medicare for years to come.  And we must also begin a conversation on how to do the same for Social Security, while creating tax-free universal savings accounts for all Americans.

Finally, because we’re also suffering from a deficit of trust, I am committed to restoring a sense of honesty and accountability to our budget.  That is why this budget looks ahead ten years and accounts for spending that was left out under the old rules – and for the first time, that includes the full cost of fighting in Iraq and Afghanistan.  For seven years, we have been a nation at war.  No longer will we hide its price.

We are now carefully reviewing our policies in both wars, and I will soon announce a way forward in Iraq that leaves Iraq to its people and responsibly ends this war.

And with our friends and allies, we will forge a new and comprehensive strategy for Afghanistan and Pakistan to defeat al Qaeda and combat extremism.  Because I will not allow terrorists to plot against the American people from safe havens half a world away.

As we meet here tonight, our men and women in uniform stand watch abroad and more are readying to deploy. To each and every one of them, and to the families who bear the quiet burden of their absence, Americans are united in sending one message: we honor your service, we are inspired by your sacrifice, and you have our unyielding support.  To relieve the strain on our forces, my budget increases the number of our soldiers and Marines. And to keep our sacred trust with those who serve, we will raise their pay, and give our veterans the expanded health care and benefits that they have earned.

To overcome extremism, we must also be vigilant in upholding the values our troops defend – because there is no force in the world more powerful than the example of America. That is why I have ordered the closing of the detention center at Guantanamo Bay, and will seek swift and certain justice for captured terrorists – because living our values doesn’t make us weaker, it makes us safer and it makes us stronger.  And that is why I can stand here tonight and say without exception or equivocation that the United States of America does not torture.

In words and deeds, we are showing the world that a new era of engagement has begun.  For we know that America cannot meet the threats of this century alone, but the world cannot meet them without America.  We cannot shun the negotiating table, nor ignore the foes or forces that could do us harm.  We are instead called to move forward with the sense of confidence and candor that serious times demand.

To seek progress toward a secure and lasting peace between Israel and her neighbors, we have appointed an envoy to sustain our effort.  To meet the challenges of the 21st century – from terrorism to nuclear proliferation; from pandemic disease to cyber threats to crushing poverty – we will strengthen old alliances, forge new ones, and use all elements of our national power.

And to respond to an economic crisis that is global in scope, we are working with the nations of the G-20 to restore confidence in our financial system, avoid the possibility of escalating protectionism, and spur demand for American goods in markets across the globe.  For the world depends on us to have a strong economy, just as our economy depends on the strength of the world’s.

As we stand at this crossroads of history, the eyes of all people in all nations are once again upon us – watching to see what we do with this moment; waiting for us to lead.

Those of us gathered here tonight have been called to govern in extraordinary times.  It is a tremendous burden, but also a great privilege – one that has been entrusted to few generations of Americans.  For in our hands lies the ability to shape our world for good or for ill.

I know that it is easy to lose sight of this truth – to become cynical and doubtful; consumed with the petty and the trivial.

But in my life, I have also learned that hope is found in unlikely places; that inspiration often comes not from those with the most power or celebrity, but from the dreams and aspirations of Americans who are anything but ordinary.

I think about Leonard Abess, the bank president from Miami who reportedly cashed out of his company, took a $60 million bonus, and gave it out to all 399 people who worked for him, plus another 72 who used to work for him.  He didn’t tell anyone, but when the local newspaper found out, he simply said, ”I knew some of these people since I was 7 years old.  I didn’t feel right getting the money myself.”

I think about Greensburg, Kansas, a town that was completely destroyed by a tornado, but is being rebuilt by its residents as a global example of how clean energy can power an entire community – how it can bring jobs and businesses to a place where piles of bricks and rubble once lay.  “The tragedy was terrible,” said one of the men who helped them rebuild.  “But the folks here know that it also provided an incredible opportunity.”

And I think about Ty’Sheoma Bethea, the young girl from that school I visited in Dillon, South Carolina – a place where the ceilings leak, the paint peels off the walls, and they have to stop teaching six times a day because the train barrels by their classroom.  She has been told that her school is hopeless, but the other day after class she went to the public library and typed up a letter to the people sitting in this room.  She even asked her principal for the money to buy a stamp.  The letter asks us for help, and says, “We are just students trying to become lawyers, doctors, congressmen like yourself and one day president, so we can make a change to not just the state of South Carolina but also the world.  We are not quitters.”

We are not quitters.

These words and these stories tell us something about the spirit of the people who sent us here.  They tell us that even in the most trying times, amid the most difficult circumstances, there is a generosity, a resilience, a decency, and a determination that perseveres; a willingness to take responsibility for our future and for posterity.

Their resolve must be our inspiration.  Their concerns must be our cause.  And we must show them and all our people that we are equal to the task before us.

I know that we haven’t agreed on every issue thus far, and there are surely times in the future when we will part ways.  But I also know that every American who is sitting here tonight loves this country and wants it to succeed.  That must be the starting point for every debate we have in the coming months, and where we return after those debates are done.  That is the foundation on which the American people expect us to build common ground.

And if we do – if we come together and lift this nation from the depths of this crisis; if we put our people back to work and restart the engine of our prosperity; if we confront without fear the challenges of our time and summon that enduring spirit of an America that does not quit, then someday years from now our children can tell their children that this was the time when we performed, in the words that are carved into this very chamber, “something worthy to be remembered.”  Thank you, God Bless you, and may God Bless the United States of America.

Meanwhile, in a NYT-CBS Poll released today, Obama is still showing broad support from Americans of all stripes.  It’s like everyone in the country has put the election behind them while we work on a huge economic crisis except for the Republican National Committee and its toadies like Jindal.

Jindal = politics as usual while Obama tries to reach across the aisle and get everyone involved in solving problems.  Here are some interesting numbers from today’s NYT-CBS Poll:

• 74% believe Obama is trying to work with Republicans in Congress; Only 31% believe Republicans in Congress are trying to work with Obama.
• 65% believe Obama has the same priorities for the country as they do; 83% think that Obama cares a lot or some about the problems of people like them.
• 77% believe Obama is bringing change to the way things are done in Washington
• 63% believe Republicans in Congress opposed the stimulus bill for political reasons rather than because the legislation would be bad for the economy.
• 79% believe working with Obama and Democrats in Congress should be the priority for Republicans over “sticking to Republican policies.”

Who do Republicans think wins the war with hope and constructive action on side and cynical politicking on the other?

What Drudge does is show he’s in the tank for the Republicans when he runs a picture like the one to the left “above the fold” all weekend with the following headline: What’s the rush? ‘Urgent’ stimulus on hold for Obama’s weekend off …

First of all, no president of the U.S. has a “weekend off.” Not even George W. Bush, although some may say he took years off.

This is a potshot – Drudge urging the producers over at Fox News to beat up on the president.

But, despite Drudge’s partisanship, he points out a real problem with Republican and now Democrat management of the U.S. economic crisis.  Our politicians are scaring us silly and ramming TARPs, assorted bailouts and stimulii through the government machine with very little transparency and even less accountability.

Back in the Fall when the Troubled Asset Relief Program, aka $700 billion bailout, was rammed through Congress there was lots of scary talk about meltdowns and companies so big and far-reaching that we couldn’t possibly let them fail.  $350 billion of that bailout went out to the banks and Wall Street.  We still have barely working credit markets.  They’ve loosened up a bit, but nothing much has changed in the past several months.  We also know that a lot of our tax dollars were wasted on bonuses, exorbitant compensation for failing management teams, mergers and acquisitions.

No one really took the time to adequately explain what the risk is in letting AIG or Bank of America fail.  Pols in both parties – who receive lots of wonderful campaign cash from the financial services industry – used words like cataclysmic on Wednesday, hastily wrote a bill over a weekend and passed it the following week.  American workers and the middle class, 0; Wall Street and the investment class, 1.

When there was a bailout needed for GM and Chrysler, Congress and the Bush Administration waited until the last possible moment and then carved out a paltry $18 billion to keep blue collar guys and gals working.  (Actually many of those guys and gals are on temporary layoffs.)

Next came the biggest single government spending bill in history.  About three weeks was spent on the $789 billion economic stimulus bill.  I worked on Capitol Hill during President Clinton’s first term in office.  He came into office on the heels of a recession and proposed a $19 billion stimulus bill.  If memory serves, we spent weeks if not months sweating that thing through both houses of Congress.  Sixteen years later, mere days spent on nearly a trillion dollar baby.

Democrats also left themselves wide open to criticism in their approach to stimulus.  Rather than do it the way I think Obama would have done it – a clean, targeted bill aimed at job creation, that hot mess of House Speaker Nancy Pelosi brought Hollywood and family planning to the table.  If today’s Republican Party were not so bereft of ideas and such a menace to society, I would say they were right to object.  Instead, I’ll just admit that they’ve got more material for their 2010 campaign commercials.

Here again, what could have been a rational government response to a difficult societal problem became a food fight.  It’s because we rushed it.

At the beginning of this process, the President and Congress said that there would be at least five days for public review of this.  This bill is at least twice as many pages as that which was originally introduced in the U.S. House of Representatives, and longer than what came out of the U.S. Senate.  This is the reconciling of those two versions, known as a Conference Report.  This is the actual bill.  Nancy Pelosi, according to reports today, has announced that she has to leave for a trip to Europe at 6 p.m. tonight, so this monster needs to be voted on NOW.  Public review of the final bill will have amounted to mere hours – not five days.

They failed us last fall with the first enactment of the TARP – the $700 billion bailout – and they’re failing us again.  Only now it hurts worse because the folks failing us are the ones who inspired hope and promised change.

I had a fantasy that change would mean a different approach in handling the greed and inequity which hide behind the  corporate ramparts.  I thought change would mean a president taking advice from the likes of Krugman and Galbraith and instead we’ve got Summers and Geithner.  Where the problem with Krugman and Galbraith may be that they’re too “liberal” for a president trying to be non partisan and centrist, the answers to our problems do not lie with “the establishment,” represented by Summers and Geithner.

I’m angry, there are lots of people angry, and we don’t want to be told any reckless business is “too big to fail.”

On Tuesday, Geithner was still singing, Too Big to Fail.  He didn’t tell us much, but he did tell us Washington is still willing to pull out the stops for the investment class.  Congress is no better.  When it comes to the financial services sector, Congress is operating in the irrelevant sector.

What we do still have a chance at here is change.  Some players need to be thrown out of the game, and their survival shouldn’t have anything to do with how far their tentacles reach into the larger economy or the campaign accounts of our elected officials.

So, here’s another fantasy … Perhaps Treasury Secretary Timothy Geithner’s announcement Tuesday was only a trial baloon.  Maybe he and Larry Summers were on the phone with Robert Rubin and Alan Greenspan and thought they might be able to rig the game one more time for Wall Street.  Geithner may have said, “Boys, I just don’t know, I think we’ve run our string, but I’ll try for one more – but I’m telling you, if there’s blowback, this president is different than the last two …”

That’s my fantasy anyway.