Partial Text of President Obama's Remarks on the Economy, April 10, 2012

Text from President Obama's remarks on the economy at Florida Atlantic University, Boca Raton, Florida, April 10, 2012.



I know this is a busy time of year. Some of you are less than a month away from graduation. (Applause.) Some seniors in the house. (Applause.) Pretty soon, you’ll be closing the books at Wimberly for the last time. Maybe you’ll be making that one last trip to the beach or Coyote Jack’s. (Applause.) You’ll be picking up that diploma that you worked so hard for. Your parents will be there -- they'll be beaming, full of pride. And then comes what folks call the real world.



Now, I actually think college is part of the real world. But obviously there's a transition that will take place as you leave college. And some of you may go on to post-graduate degrees, but some of you are going to be out there looking for work. College is the single-most important investment you can make in your future. (Applause.) So I'm proud that you've made it and you've seen it through.



But I also know that the future can be uncertain. Now, we've gone through the three toughest years in our lifetimes, economically -- worst financial crisis, worst economic crisis. Our economy is now recovering but it's not yet where it needs to be. Too many of your friends and too many of your neighbors are still hurting out there. They're still looking for work. Too many of your families are still searching for that sense of security that started slipping away long before this recession hit.



AUDIENCE MEMBER: Amen! (Laughter.)



THE PRESIDENT: Got the "Amen" corner here. (Laughter.)



So at a time like this, we've got to ask ourselves a central, fundamental question as a nation: What do we have to do to make sure that America is a place where, if you work hard, if you're responsible, that that hard work and that responsibility pays off? (Applause.) And the reason it's important to ask this question right now is because there are alternative theories.



There's a debate going on in this country right now: Could we succeed as a nation where a shrinking number of people are doing really, really well, but a growing number are struggling to get by?



AUDIENCE: No!



THE PRESIDENT: Or are we better off when everybody gets a fair shot -- (applause) -- and everybody does a fair share, and everybody plays by the same set of rules? (Applause.)



That’s what the debate in America is about right now. This is not just another run-of-the-mill gabfest in Washington. This is the defining issue of our time. This is a make-or-break moment for the middle class and everybody who's aspiring to get into the middle class. And we’ve got two very different visions of our future. And the choice between them could not be clearer.



Now keep in mind, I start from the belief that government cannot and should not try to solve every single problem that we've got. Government is not the answer to everything. My first job in Chicago, when I wasn't much older than most of you, was working with a group of Catholic churches on the South Side of Chicago in low-income neighborhoods to try to figure out how could we improve the schools, and how could we strengthen neighborhoods and strengthen families. And I saw that the work that some of these churches did did more good for people in their communities than any government program could. (Applause.)



In those same communities, I saw that no education policy, no matter how well crafted it is, no matter how well funded it is, can take the place of a parent’s love and attention. And I also believe that since government is funded by you that it has an obligation to be efficient and effective. (Applause.) And that's why we’ve eliminated dozens of programs that weren’t working, announced hundreds of regulatory reforms to save businesses and taxpayers billions of dollars. We’ve put annual domestic spending on a path to become the smallest share of our economy since Eisenhower was in the White House, which is before I was born much less you being born. (Laughter.)



I believe the free market is the greatest force for economic progress in human history. (Applause.) But here’s the thing. I also agree with our first Republican President -- a guy from my home state, a guy with a beard, named Abraham Lincoln. (Applause.) And what Lincoln said was that through our government, we should do together what we cannot do as well for ourselves. (Applause.) That's the definition of a smart government.



And that’s the reason why we have a strong military, to keep us safe -- because I suppose each of us could just grab whatever is around the house and try to defend our country, but we do better when we do it together. And we’ve got the best military in the history of the world, with the greatest men and women in uniform. We pay for that. (Applause.)



That's why we have public schools to educate our children. (Applause.) If we didn't have public schools, there would still be some families who would do very well. They could afford private schools or some would home-school. But there would be a lot of kids who would fall through the cracks. So we do that together.



It’s one of the reasons that we’ve laid down railroads and highways. We can't build a highway for ourselves. We got to get our neighbors and our friends to say let’s go build a road. That's why we supported the research and the technology that saved lives and created entire industries. The Internet, GPS -- all those things were created by us together, not by ourselves.



It’s the reason why we contribute to programs like Medicare and Medicaid and Social Security and unemployment insurance. (Applause.) Because we understand that no matter how responsibly we live our lives, we know that eventually we’re going to get older. We know that at any point, one of us might face hard times, or bad luck, or a crippling illness, or a layoff. And the idea that together we build this safety net, this base of support, that allows all of us to take risks and to try new things, and maybe try -- get a new job -- because we know that there’s this base that we can draw on.



So these investments -- in things like education and research and health care -- they haven’t been made as some grand scheme to redistribute wealth from one group to another. This is not some socialist dream. They have been made by Democrats and Republicans for generations, because they benefit all of us and they lead to strong and durable economic growth. That’s why we’ve made these investments. (Applause.)



If you’re here at FAU because you got financial aid -- (applause) -- or a student loan, a scholarship -- which, by the way, was how I was able to help finance my college education. That’s how Michelle got her college education. That doesn’t just benefit you. It benefits whatever company might end up hiring you and profiting from your skills. If one of you goes on to become the next Steve Jobs or Mark Zuckerberg, or one of you discovers the next medical breakthrough, think about all the people whose lives will be changed for the better. We made an investment in you; we’ll get a return on the investment. (Applause.)



When we guarantee basic security for the elderly or the sick or those who are actively looking for work, that doesn’t make us weak. What makes us weak is when fewer Americans can afford to buy the products that businesses are selling, when fewer people are willing to take risks and start their new business, because if it doesn’t work out they worry about feeding their families. What drags our entire economy down is when the benefits of economic growth and productivity go only to the few, which is what’s been happening for over a decade now, and gap between those at the very, very top and everybody else keeps growing wider and wider and wider and wider.



In this country, prosperity has never trickled down from the wealthy few. Prosperity has always come from the bottom up, from a strong and growing middle class. (Applause.) That’s how a generation who went to college on the GI Bill -- including my grandfather -- helped build the most prosperous economy that the world has ever known. That’s why a CEO like Henry Ford made a point to pay his workers enough money so that they could buy the cars that they were building. (Applause.) Because he understood, look, there’s no point in me having all this and then nobody can buy my cars. I’ve got to pay my workers enough so that they buy the cars, and that in turn creates more business and more prosperity for everybody.



This is not about a few people doing well. We want people to do well. That’s great. But it’s about giving everybody the chance to do well. (Applause.) That’s the essence of America. That’s what the American Dream is about. That’s why immigrants have come to our shores, because the idea was, you know what, it doesn’t matter what your name is, what you look like -- you can be named Obama -- (laughter) -- you can still make it if you try. (Applause.)



And yet, we keep on having the same argument with folks who don’t seem to understand how it is that America got built. And let me just say, the folks that we have political arguments with, they’re Americans who love their country. Democrats, Republicans, independents, everybody -- we all love this country. But there is a fundamental difference in how we think we move this country forward.



These folks, they keep telling us that if we just weaken regulations that keep our air or our water clean or protect our consumers, if we would just convert these investments that we’re making through our government in education and research and health care -- if we just turned those into tax cuts, especially for the wealthy, then somehow the economy is going to grow stronger. That’s the theory.



And here’s the news: We tried this for eight years before I took office. We tried it. (Applause.) It’s not like we didn’t try it. (Laughter.) At the beginning of the last decade, the wealthiest Americans got two huge tax cuts -- 2001, 2003. Meanwhile, insurance companies, financial institutions -- they were all allowed to write their own rules, or find their way around rules. We were told the same thing we’re being told now -- this is going to lead to faster job growth. This is going to lead to greater prosperity for everybody.



Guess what -- it didn’t. (Laughter.) Yes, the rich got much richer. Corporations made big profits. But we also had the slowest job growth in half a century. The typical American family actually saw their incomes fall by about 6 percent even though the economy was growing, because more and more of that growth was just going to a few, and the average middle-class American wasn't seeing it in their paychecks. Health care premiums skyrocketed. Financial institutions started making bets with other people's money that were reckless. And then our entire financial system almost collapsed. You remember that?



AUDIENCE: Yes!



THE PRESIDENT: It wasn't that long ago. I know you guys are young, but it was pretty recent. (Laughter.)



Now, some of you may be science majors in here. (Applause.) I like that. We need more scientists, need more engineers. Now, I was not a science major myself, but I enjoyed science when I was young. And if I recall correctly, if an experiment fails badly -- (laughter) -- you learn from that, right? Sometimes you can learn from failure. That’s part of the data that teaches you stuff, that expands our knowledge. But you don’t then just keep on doing the same thing over and over again.



AUDIENCE: No!



THE PRESIDENT: You go back to the drawing board. You try something different. But that’s not what's been happening with these folks in Washington.



AUDIENCE: No!



THE PRESIDENT: A lot of the folks who were peddling these same trickle-down theories -- including members of Congress and some people who are running for a certain office right now, who shall not be named -- (laughter and applause) -- they're doubling down on these old broken-down theories. Instead of moderating their views even slightly, instead of saying, you know what, what we did really didn’t work and we almost had a second Great Depression, and maybe we should try something different, they have doubled down.



They proposed a budget that showers the wealthiest Americans with even more tax cuts, and then pays for these tax cuts by gutting investments in education and medical research and clean energy, in health care.



AUDIENCE: Booo --



THE PRESIDENT: Now, these are the facts. If the cuts they're proposing are spread out evenly across the budget, then 10 million college students -- including some of you -- would see your financial aid cut by an average of more than $1,000 each.



AUDIENCE: Booo!



THE PRESIDENT: Now, thousands of medical research grants for things like Alzheimer’s and cancer and AIDS would be eliminated. Tens of thousands of researchers and students and teachers could lose their jobs. Our investments in clean energy that are making us less dependent on imported oil would be cut by nearly a fifth.



AUDIENCE MEMBER: That's wrong!



THE PRESIDENT: By the time you retire, instead of being enrolled in Medicare like today’s seniors are, you’d get a voucher to pay for your health care plan. But here’s the problem. If health care costs rise faster than the amount of the voucher, like they have been for decades, the rest of it comes out of your pockets. If the voucher isn’t enough to buy a plan with the specific doctors and care that you need, you’re out of luck. And by the middle of the next century -- by the middle of this century -- excuse me -- by about 2050, at a time when most of you will have families of your own, funding for most of the investments I’ve talked about today would have been almost completely eliminated altogether.



Now, this is not an exaggeration. This is math. And when I said this about a week ago, the Republicans objected. They said, we didn't specify all these cuts. Well, right, you didn't because you knew that people wouldn’t accept them. So you just gave a big number and so what we’ve done is we’ve just done the math. This is what it would it mean.



They say, well, we didn't specifically propose to cut student loans. Okay, if you don't cut student loans, then that means you’ve got to cut basic research even more. The money has got to come from somewhere. You can't give over $4 trillion worth of additional tax cuts, including to folks like me who don't need them and weren’t asking for them, and it just comes from some magic tree somewhere. (Laughter.)



So if you hear them saying, well, the President is making this stuff up -- no, we’re doing the math. If they want to dispute anything that I’ve said right now, they should show us specifically where they would make those cuts. (Applause.) They should show us. They should show us. Because, by the way, they're not proposing to cut defense, they're actually proposing to increase defense spending, so it’s not coming out of there. So show me.



Look, America has always been a place where anybody who's willing to work and play by the rules can make it. A place where prosperity doesn’t trickle down from the top, it grows from the bottom; it grows outward from the heart of a vibrant middle class. (Applause.)



And I believe that we cannot stop investing in the things that help create that middle class; that create real, long-lasting, broad-based growth in this country. And we certainly shouldn’t be doing it just so the richest Americans can get another tax cut. (Applause.) We should be strengthening those investments. We should be making college more affordable. (Applause.) We should be expanding our investment in clean energy. (Applause.)



Now, here’s the other thing that the Republicans will tell you. They’ll say, well, we’ve got to make all these drastic cuts because our deficit is too high. Our deficit is too high. And their argument might actually have a shred of credibility to it if you didn’t find out that they wanted to spend $4.6 trillion on lower tax rates. I don’t know how many of you are math majors, business majors -- you can’t pay down a deficit by taking in $4.6 trillion of less money, especially when you’re denying that you’re going to be making all these cuts. It doesn’t add up. It doesn’t make sense.



And keep in mind, more than a trillion dollars of the tax cuts they propose would be going to people who make more than $250,000 a year. That is an average of at least $150,000 -- again, we’re just taking the numbers with the details they’ve given us and you spread it out -- that averages to at least $150,000 for every millionaire, billionaire in the country. Each millionaire and billionaire, on average, would get $150,000. Some folks would get a lot more.



So we did some math of our own. We added up all the investments $150,000 could pay for. All right? So let’s say a tax break that I might get that I really don’t need -- I’ve got -- treated pretty well in this life. (Laughter.) So right now, I’m going to be okay. Malia, Sasha, they’re going to be able to go to college. (Applause.) Michelle is doing fine. (Applause.) So understand what this means.



Here's what $150,000 means -- $150,000, this is what each millionaire and billionaire would get, on average. This could pay for a tax credit that would make a year of college more affordable for students like you. (Applause.) Plus a year's worth of financial aid for students like you. (Applause.) Plus a year's worth of prescription drug savings for one of your grandparents. (Applause.) Plus a new computer lab for this school. (Applause.) Plus a year of medical care for a veteran in your family who went to war and risked their lives fighting for this country. (Applause.) Plus a medical research grant for a chronic disease. (Applause.) Plus a year's salary for a firefighter or police officer -- $150,000 could pay for all of these things combined. Think about that.



So let me ask you what's the better way to make our economy stronger? Do we give another $50,000 [sic] in tax breaks to every millionaire and billionaire in the country?



AUDIENCE: No!



THE PRESIDENT: Or should we make investments in education and research and health care and our veterans? (Applause.)



And I just want to emphasize again -- look, I want folks to get rich in this country. I think it's wonderful when people are successful. That’s part of the American Dream. It is great that you make a product, you create a service, you do it better than anybody else -- that’s what our system is all about. But understand, the share of our national income going to the top 1 percent has climbed to levels we haven't seen since the 1920s. The folks who are benefitting from this are paying taxes at one of the lowest rates in 50 years.



You might have heard of this, but Warren Buffett is paying a lower tax rate than his secretary. Now, that’s wrong. That’s not fair. And so we've got to choose which direction we want this country to go in. Do we want to keep giving those tax breaks to folks like me who don’t need them, or give them to Warren Buffet -- he definitely doesn’t need them -- (laughter) -- or Bill Gates -- he's already said, I don’t need them. Or do we want to keep investing in those things that keep our economy growing and keep us secure? That’s the choice. (Applause.)



And, Florida, I’ve told you where I stand. So now it’s time for members of Congress to tell you where they stand. In the next few weeks, we’re going to vote on something called the Buffett Rule -- very simple: If you make more than $1 million a year -- now, I’m not saying you have a million dollars -- right? I’m not saying you saved up all your money and you made smart investments and now you’ve got your nest egg and you’re preparing for retirement. I’m saying, you’re bringing in a million bucks or more a year. Then, what the rule says is you should pay the same percentage of your income in taxes as middle-class families do. (Applause.) You shouldn’t get special tax breaks. You shouldn’t be able to get special loopholes. (Applause.)



And if we do that, then it makes it affordable for us to be able to say for those people who make under $250,000 a year -- like 98 percent of American families do -- then your taxes don’t go up. (Applause.) And we can still make those investments in things like student loans and college and science and infrastructure and all the things that make this country great.



And this is where you come in. This is why I came to see you. I mean, it’s nice to see you. The weather is nice; you guys have been a wonderful audience. (Applause.) I learned about the burrowing owl. (Applause.) So there were all kinds of reasons for me to want to come down here. But one of the reasons I came was I want you to call your members of Congress. I want you to write them an email. I want you to tweet them. (Laughter.) Tell them don’t give tax breaks to folks like me who don’t need them. Tell them to start investing in the things that will help the economy grow. Tell them if we want to bring down our deficit sensibly, then we’ve got to do it in a balanced way that’s fair for everybody. Remind them who they work for. Tell them to do the right thing. (Applause.)



As I look out across this gymnasium, everybody here -- from all different backgrounds, from all different parts of the country -- each of us is here because somebody, somewhere, felt responsibility for other people. Our parents, obviously, our grandparents, great grandparents, the sacrifices they made -- some of them took enormous risks coming to this country with nothing because they wanted to give a better life to their kids and their grandkids. (Applause.) A lot of them did without so that you could benefit. But they weren't just thinking about their families. They were thinking about their communities. They were thinking about their country.



That's what responsibility means. It means that as you have greater and greater opportunity, then the scope of you being able to help more people and think about the future expands. And so you’re not just thinking about yourself; you’re thinking about your kids, your spouse, your family, your grandkids, your neighborhood, your state, your nation. You’re thinking about the future.



And now it’s our turn to be responsible. Now it’s our turn to preserve the American Dream for future generations. Now it’s our turn to rebuild, to make the investments that will assure our future, to make sure that we’ve got the most competitive workforce on Earth, to make sure that we’ve got clean energy that can help clean the planet and help fuel our economy. (Applause.)



It’s our turn. It’s our turn to rebuild our roads and our bridges and our airports and our ports. It’s our turn to make sure that everybody here, every child born in whatever neighborhood in this country it is, that if they're willing to dream big dreams and put some blood, sweat and tears behind it, they can make it. (Applause.)



I know we can do that. I know we can do it because of you. You’re here because you believe in your future. (Applause.) You’re working hard. Some of you are balancing a job or a family on the side.



AUDIENCE: Four more years! Four more years!



THE PRESIDENT: You have faith in America. You know it’s not going to be easy, but you don't give up. That's the spirit we need right now, because here in America we don’t give up. (Applause.) Here in America, we look out for one another. Here in America, we help each other get ahead. Here in America, we have a sense of common purpose. Here in America, we can meet any challenge. Here in America, we can seize any moment. We can make this century another great American century. (Applause.)



Thank you. God bless you. God bless the United States of America. (Applause.)



END 3:39 P.M. EDT

AUDIO of Pres Obama Commenting on Rising Gas Prices

Federal Reserve's Statement on Why It Plans to Keep Interest Rates Low Through 2014

Information received since the Federal Open Market Committee met in December suggests that the economy has been expanding moderately, notwithstanding some slowing in global growth. While indicators point to some further improvement in overall labor market conditions, the unemployment rate remains elevated. Household spending has continued to advance, but growth in business fixed investment has slowed, and the housing sector remains depressed. Inflation has been subdued in recent months, and longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects economic growth over coming quarters to be modest and consequently anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate. Strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee also anticipates that over coming quarters, inflation will run at levels at or below those consistent with the Committee’s dual mandate.

To support a stronger economic recovery and to help ensure that inflation, over time, is at levels consistent with the dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions–including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.

The Committee also decided to continue its program to extend the average maturity of its holdings of securities as announced in September. The Committee is maintaining its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate to promote a stronger economic recovery in a context of price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Sarah Bloom Raskin; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker, who preferred to omit the description of the time period over which economic conditions are likely to warrant exceptionally low levels of the federal funds rate.

December Jobs Report Shows non-Farm Payroll created 200,000 New Jobs

The economy create 200,000 jobs in December and lowered the unemployment rate from 8.7% to 8.5%. One can slice and dice this a lot. December is a particularly odd month for employment due to the Christmas season and temporary hiring. But it is fair to say the economy is better off today than it was 3 years ago.

What is open for discussion, is whether the economy is improving despite the federal govt, or because of it. And -- whether we might have lowered unemployment much faster had the first focus been on the economy instead of passing the healthcare bill. But no doubt the President will be crowing about this improvement in job creation. Today's employment report now makes Feb and March the more important to see if this a trend.

Text of President Obama's Remarks in Kansas on the Economy

Osawatomie High School

Osawatomie, Kansas


12:59 P.M. CST


THE PRESIDENT: Thank you, everybody. Please, please have a seat. Thank you so much. Thank you. Good afternoon, everybody.


AUDIENCE: Good afternoon.



THE PRESIDENT: Well, I want to start by thanking a few folks who’ve joined us today. We’ve got the mayor of Osawatomie, Phil Dudley is here. (Applause.) We have your superintendent Gary French in the house. (Applause.) And we have the principal of Osawatomie High, Doug Chisam. (Applause.) And I have brought your former governor, who is doing now an outstanding job as Secretary of Health and Human Services -- Kathleen Sebelius is in the house. (Applause.) We love Kathleen.


Well, it is great to be back in the state of Tex -- (laughter) -- state of Kansas. I was giving Bill Self a hard time, he was here a while back. As many of you know, I have roots here. (Applause.) I’m sure you’re all familiar with the Obamas of Osawatomie. (Laughter.) Actually, I like to say that I got my name from my father, but I got my accent -- and my values -- from my mother. (Applause.) She was born in Wichita. (Applause.) Her mother grew up in Augusta. Her father was from El Dorado. So my Kansas roots run deep.

My grandparents served during World War II. He was a soldier in Patton’s Army; she was a worker on a bomber assembly line. And together, they shared the optimism of a nation that triumphed over the Great Depression and over fascism. They believed in an America where hard work paid off, and responsibility was rewarded, and anyone could make it if they tried -- no matter who you were, no matter where you came from, no matter how you started out. (Applause.)

And these values gave rise to the largest middle class and the strongest economy that the world has ever known. It was here in America that the most productive workers, the most innovative companies turned out the best products on Earth. And you know what? Every American shared in that pride and in that success -- from those in the executive suites to those in middle management to those on the factory floor. (Applause.) So you could have some confidence that if you gave it your all, you’d take enough home to raise your family and send your kids to school and have your health care covered, put a little away for retirement.


Today, we’re still home to the world’s most productive workers. We’re still home to the world’s most innovative companies. But for most Americans, the basic bargain that made this country great has eroded. Long before the recession hit, hard work stopped paying off for too many people. Fewer and fewer of the folks who contributed to the success of our economy actually benefited from that success. Those at the very top grew wealthier from their incomes and their investments -- wealthier than ever before. But everybody else struggled with costs that were growing and paychecks that weren’t -- and too many families found themselves racking up more and more debt just to keep up.


Now, for many years, credit cards and home equity loans papered over this harsh reality. But in 2008, the house of cards collapsed. We all know the story by now: Mortgages sold to people who couldn’t afford them, or even sometimes understand them. Banks and investors allowed to keep packaging the risk and selling it off. Huge bets -- and huge bonuses -- made with other people’s money on the line. Regulators who were supposed to warn us about the dangers of all this, but looked the other way or didn’t have the authority to look at all.


It was wrong. It combined the breathtaking greed of a few with irresponsibility all across the system. And it plunged our economy and the world into a crisis from which we’re still fighting to recover. It claimed the jobs and the homes and the basic security of millions of people -- innocent, hardworking Americans who had met their responsibilities but were still left holding the bag.


And ever since, there’s been a raging debate over the best way to restore growth and prosperity, restore balance, restore fairness. Throughout the country, it’s sparked protests and political movements -- from the tea party to the people who’ve been occupying the streets of New York and other cities. It’s left Washington in a near-constant state of gridlock. It’s been the topic of heated and sometimes colorful discussion among the men and women running for president. (Laughter.)


But, Osawatomie, this is not just another political debate. This is the defining issue of our time. This is a make-or-break moment for the middle class, and for all those who are fighting to get into the middle class. Because what’s at stake is whether this will be a country where working people can earn enough to raise a family, build a modest savings, own a home, secure their retirement.


Now, in the midst of this debate, there are some who seem to be suffering from a kind of collective amnesia. After all that’s happened, after the worst economic crisis, the worst financial crisis since the Great Depression, they want to return to the same practices that got us into this mess. In fact, they want to go back to the same policies that stacked the deck against middle-class Americans for way too many years. And their philosophy is simple: We are better off when everybody is left to fend for themselves and play by their own rules.


I am here to say they are wrong. (Applause.) I’m here in Kansas to reaffirm my deep conviction that we’re greater together than we are on our own. I believe that this country succeeds when everyone gets a fair shot, when everyone does their fair share, when everyone plays by the same rules. (Applause.) These aren’t Democratic values or Republican values. These aren’t 1 percent values or 99 percent values. They’re American values. And we have to reclaim them. (Applause.)


You see, this isn’t the first time America has faced this choice. At the turn of the last century, when a nation of farmers was transitioning to become the world’s industrial giant, we had to decide: Would we settle for a country where most of the new railroads and factories were being controlled by a few giant monopolies that kept prices high and wages low? Would we allow our citizens and even our children to work ungodly hours in conditions that were unsafe and unsanitary? Would we restrict education to the privileged few? Because there were people who thought massive inequality and exploitation of people was just the price you pay for progress.

Theodore Roosevelt disagreed. He was the Republican son of a wealthy family. He praised what the titans of industry had done to create jobs and grow the economy. He believed then what we know is true today, that the free market is the greatest force for economic progress in human history. It’s led to a prosperity and a standard of living unmatched by the rest of the world.


But Roosevelt also knew that the free market has never been a free license to take whatever you can from whomever you can. (Applause.) He understood the free market only works when there are rules of the road that ensure competition is fair and open and honest. And so he busted up monopolies, forcing those companies to compete for consumers with better services and better prices. And today, they still must. He fought to make sure businesses couldn’t profit by exploiting children or selling food or medicine that wasn’t safe. And today, they still can’t.

And in 1910, Teddy Roosevelt came here to Osawatomie and he laid out his vision for what he called a New Nationalism. “Our country,” he said, “…means nothing unless it means the triumph of a real democracy…of an economic system under which each man shall be guaranteed the opportunity to show the best that there is in him.” (Applause.)


Now, for this, Roosevelt was called a radical. He was called a socialist -- (laughter) -- even a communist. But today, we are a richer nation and a stronger democracy because of what he fought for in his last campaign: an eight-hour work day and a minimum wage for women -- (applause) -- insurance for the unemployed and for the elderly, and those with disabilities; political reform and a progressive income tax. (Applause.)


Today, over 100 years later, our economy has gone through another transformation. Over the last few decades, huge advances in technology have allowed businesses to do more with less, and it’s made it easier for them to set up shop and hire workers anywhere they want in the world. And many of you know firsthand the painful disruptions this has caused for a lot of Americans.

Factories where people thought they would retire suddenly picked up and went overseas, where workers were cheaper. Steel mills that needed 100 -- or 1,000 employees are now able to do the same work with 100 employees, so layoffs too often became permanent, not just a temporary part of the business cycle. And these changes didn’t just affect blue-collar workers. If you were a bank teller or a phone operator or a travel agent, you saw many in your profession replaced by ATMs and the Internet.


Today, even higher-skilled jobs, like accountants and middle management can be outsourced to countries like China or India. And if you’re somebody whose job can be done cheaper by a computer or someone in another country, you don’t have a lot of leverage with your employer when it comes to asking for better wages or better benefits, especially since fewer Americans today are part of a union.


Now, just as there was in Teddy Roosevelt’s time, there is a certain crowd in Washington who, for the last few decades, have said, let’s respond to this economic challenge with the same old tune. “The market will take care of everything,” they tell us. If we just cut more regulations and cut more taxes -- especially for the wealthy -- our economy will grow stronger. Sure, they say, there will be winners and losers. But if the winners do really well, then jobs and prosperity will eventually trickle down to everybody else. And, they argue, even if prosperity doesn’t trickle down, well, that’s the price of liberty.


Now, it’s a simple theory. And we have to admit, it’s one that speaks to our rugged individualism and our healthy skepticism of too much government. That’s in America’s DNA. And that theory fits well on a bumper sticker. (Laughter.) But here’s the problem: It doesn’t work. It has never worked. (Applause.) It didn’t work when it was tried in the decade before the Great Depression. It’s not what led to the incredible postwar booms of the ‘50s and ‘60s. And it didn’t work when we tried it during the last decade. (Applause.) I mean, understand, it’s not as if we haven’t tried this theory.


Remember in those years, in 2001 and 2003, Congress passed two of the most expensive tax cuts for the wealthy in history. And what did it get us? The slowest job growth in half a century. Massive deficits that have made it much harder to pay for the investments that built this country and provided the basic security that helped millions of Americans reach and stay in the middle class -- things like education and infrastructure, science and technology, Medicare and Social Security.


Remember that in those same years, thanks to some of the same folks who are now running Congress, we had weak regulation, we had little oversight, and what did it get us? Insurance companies that jacked up people’s premiums with impunity and denied care to patients who were sick, mortgage lenders that tricked families into buying homes they couldn’t afford, a financial sector where irresponsibility and lack of basic oversight nearly destroyed our entire economy.

We simply cannot return to this brand of “you’re on your own” economics if we’re serious about rebuilding the middle class in this country. (Applause.) We know that it doesn’t result in a strong economy. It results in an economy that invests too little in its people and in its future. We know it doesn’t result in a prosperity that trickles down. It results in a prosperity that’s enjoyed by fewer and fewer of our citizens.

Look at the statistics. In the last few decades, the average income of the top 1 percent has gone up by more than 250 percent to $1.2 million per year. I’m not talking about millionaires, people who have a million dollars. I’m saying people who make a million dollars every single year. For the top one hundredth of 1 percent, the average income is now $27 million per year. The typical CEO who used to earn about 30 times more than his or her worker now earns 110 times more. And yet, over the last decade the incomes of most Americans have actually fallen by about 6 percent.


Now, this kind of inequality -- a level that we haven’t seen since the Great Depression -- hurts us all. When middle-class families can no longer afford to buy the goods and services that businesses are selling, when people are slipping out of the middle class, it drags down the entire economy from top to bottom. America was built on the idea of broad-based prosperity, of strong consumers all across the country. That’s why a CEO like Henry Ford made it his mission to pay his workers enough so that they could buy the cars he made. It’s also why a recent study showed that countries with less inequality tend to have stronger and steadier economic growth over the long run.

Inequality also distorts our democracy. It gives an outsized voice to the few who can afford high-priced lobbyists and unlimited campaign contributions, and it runs the risk of selling out our democracy to the highest bidder. (Applause.) It leaves everyone else rightly suspicious that the system in Washington is rigged against them, that our elected representatives aren’t looking out for the interests of most Americans.

But there’s an even more fundamental issue at stake. This kind of gaping inequality gives lie to the promise that’s at the very heart of America: that this is a place where you can make it if you try. We tell people -- we tell our kids -- that in this country, even if you’re born with nothing, work hard and you can get into the middle class. We tell them that your children will have a chance to do even better than you do. That’s why immigrants from around the world historically have flocked to our shores.

And yet, over the last few decades, the rungs on the ladder of opportunity have grown farther and farther apart, and the middle class has shrunk. You know, a few years after World War II, a child who was born into poverty had a slightly better than 50-50 chance of becoming middle class as an adult. By 1980, that chance had fallen to around 40 percent. And if the trend of rising inequality over the last few decades continues, it’s estimated that a child born today will only have a one-in-three chance of making it to the middle class -- 33 percent.


It’s heartbreaking enough that there are millions of working families in this country who are now forced to take their children to food banks for a decent meal. But the idea that those children might not have a chance to climb out of that situation and back into the middle class, no matter how hard they work? That’s inexcusable. It is wrong. (Applause.) It flies in the face of everything that we stand for. (Applause.)


Now, fortunately, that’s not a future that we have to accept, because there’s another view about how we build a strong middle class in this country -- a view that’s truer to our history, a vision that’s been embraced in the past by people of both parties for more than 200 years.


It’s not a view that we should somehow turn back technology or put up walls around America. It’s not a view that says we should punish profit or success or pretend that government knows how to fix all of society’s problems. It is a view that says in America we are greater together -- when everyone engages in fair play and everybody gets a fair shot and everybody does their fair share. (Applause.)


So what does that mean for restoring middle-class security in today’s economy? Well, it starts by making sure that everyone in America gets a fair shot at success. The truth is we’ll never be able to compete with other countries when it comes to who’s best at letting their businesses pay the lowest wages, who’s best at busting unions, who’s best at letting companies pollute as much as they want. That’s a race to the bottom that we can’t win, and we shouldn’t want to win that race. (Applause.) Those countries don’t have a strong middle class. They don’t have our standard of living.


The race we want to win, the race we can win is a race to the top -- the race for good jobs that pay well and offer middle-class security. Businesses will create those jobs in countries with the highest-skilled, highest-educated workers, the most advanced transportation and communication, the strongest commitment to research and technology.


The world is shifting to an innovation economy and nobody does innovation better than America. Nobody does it better. (Applause.) No one has better colleges. Nobody has better universities. Nobody has a greater diversity of talent and ingenuity. No one’s workers or entrepreneurs are more driven or more daring. The things that have always been our strengths match up perfectly with the demands of the moment.


But we need to meet the moment. We’ve got to up our game. We need to remember that we can only do that together. It starts by making education a national mission -- a national mission. (Applause.) Government and businesses, parents and citizens. In this economy, a higher education is the surest route to the middle class. The unemployment rate for Americans with a college degree or more is about half the national average. And their incomes are twice as high as those who don’t have a high school diploma. Which means we shouldn’t be laying off good teachers right now -- we should be hiring them. (Applause.) We shouldn’t be expecting less of our schools –- we should be demanding more. (Applause.) We shouldn’t be making it harder to afford college -- we should be a country where everyone has a chance to go and doesn’t rack up $100,000 of debt just because they went. (Applause.)


In today’s innovation economy, we also need a world-class commitment to science and research, the next generation of high-tech manufacturing. Our factories and our workers shouldn’t be idle. We should be giving people the chance to get new skills and training at community colleges so they can learn how to make wind turbines and semiconductors and high-powered batteries. And by the way, if we don’t have an economy that’s built on bubbles and financial speculation, our best and brightest won’t all gravitate towards careers in banking and finance. (Applause.) Because if we want an economy that’s built to last, we need more of those young people in science and engineering. (Applause.) This country should not be known for bad debt and phony profits. We should be known for creating and selling products all around the world that are stamped with three proud words: Made in America. (Applause.)


Today, manufacturers and other companies are setting up shop in the places with the best infrastructure to ship their products, move their workers, communicate with the rest of the world. And that’s why the over 1 million construction workers who lost their jobs when the housing market collapsed, they shouldn’t be sitting at home with nothing to do. They should be rebuilding our roads and our bridges, laying down faster railroads and broadband, modernizing our schools -- (applause) -- all the things other countries are already doing to attract good jobs and businesses to their shores.


Yes, business, and not government, will always be the primary generator of good jobs with incomes that lift people into the middle class and keep them there. But as a nation, we’ve always come together, through our government, to help create the conditions where both workers and businesses can succeed. (Applause.) And historically, that hasn’t been a partisan idea. Franklin Roosevelt worked with Democrats and Republicans to give veterans of World War II -- including my grandfather, Stanley Dunham -- the chance to go to college on the G.I. Bill. It was a Republican President, Dwight Eisenhower, a proud son of Kansas -- (applause) -- who started the Interstate Highway System, and doubled down on science and research to stay ahead of the Soviets.


Of course, those productive investments cost money. They’re not free. And so we’ve also paid for these investments by asking everybody to do their fair share. Look, if we had unlimited resources, no one would ever have to pay any taxes and we would never have to cut any spending. But we don’t have unlimited resources. And so we have to set priorities. If we want a strong middle class, then our tax code must reflect our values. We have to make choices.


Today that choice is very clear. To reduce our deficit, I’ve already signed nearly $1 trillion of spending cuts into law and I’ve proposed trillions more, including reforms that would lower the cost of Medicare and Medicaid. (Applause.)

But in order to structurally close the deficit, get our fiscal house in order, we have to decide what our priorities are. Now, most immediately, short term, we need to extend a payroll tax cut that’s set to expire at the end of this month. (Applause.) If we don’t do that, 160 million Americans, including most of the people here, will see their taxes go up by an average of $1,000 starting in January and it would badly weaken our recovery. That’s the short term.


In the long term, we have to rethink our tax system more fundamentally. We have to ask ourselves: Do we want to make the investments we need in things like education and research and high-tech manufacturing -- all those things that helped make us an economic superpower? Or do we want to keep in place the tax breaks for the wealthiest Americans in our country? Because we can’t afford to do both. That is not politics. That’s just math. (Laughter and applause.)


Now, so far, most of my Republican friends in Washington have refused under any circumstance to ask the wealthiest Americans to go to the same tax rate they were paying when Bill Clinton was president. So let’s just do a trip down memory lane here.


Keep in mind, when President Clinton first proposed these tax increases, folks in Congress predicted they would kill jobs and lead to another recession. Instead, our economy created nearly 23 million jobs and we eliminated the deficit. (Applause.) Today, the wealthiest Americans are paying the lowest taxes in over half a century. This isn’t like in the early ‘50s, when the top tax rate was over 90 percent. This isn’t even like the early ‘80s, when the top tax rate was about 70 percent. Under President Clinton, the top rate was only about 39 percent. Today, thanks to loopholes and shelters, a quarter of all millionaires now pay lower tax rates than millions of you, millions of middle-class families. Some billionaires have a tax rate as low as 1 percent. One percent.


That is the height of unfairness. It is wrong. (Applause.) It’s wrong that in the United States of America, a teacher or a nurse or a construction worker, maybe earns $50,000 a year, should pay a higher tax rate than somebody raking in $50 million. (Applause.) It’s wrong for Warren Buffett’s secretary to pay a higher tax rate than Warren Buffett. (Applause.) And by the way, Warren Buffett agrees with me. (Laughter.) So do most Americans -- Democrats, independents and Republicans. And I know that many of our wealthiest citizens would agree to contribute a little more if it meant reducing the deficit and strengthening the economy that made their success possible.


This isn’t about class warfare. This is about the nation’s welfare. It’s about making choices that benefit not just the people who’ve done fantastically well over the last few decades, but that benefits the middle class, and those fighting to get into the middle class, and the economy as a whole.


Finally, a strong middle class can only exist in an economy where everyone plays by the same rules, from Wall Street to Main Street. (Applause.) As infuriating as it was for all of us, we rescued our major banks from collapse, not only because a full-blown financial meltdown would have sent us into a second Depression, but because we need a strong, healthy financial sector in this country.


But part of the deal was that we wouldn’t go back to business as usual. And that’s why last year we put in place new rules of the road that refocus the financial sector on what should be their core purpose: getting capital to the entrepreneurs with the best ideas, and financing millions of families who want to buy a home or send their kids to college.


Now, we’re not all the way there yet, and the banks are fighting us every inch of the way. But already, some of these reforms are being implemented.

If you’re a big bank or risky financial institution, you now have to write out a “living will” that details exactly how you’ll pay the bills if you fail, so that taxpayers are never again on the hook for Wall Street’s mistakes. (Applause.) There are also limits on the size of banks and new abilities for regulators to dismantle a firm that is going under. The new law bans banks from making risky bets with their customers’ deposits, and it takes away big bonuses and paydays from failed CEOs, while giving shareholders a say on executive salaries.


This is the law that we passed. We are in the process of implementing it now. All of this is being put in place as we speak. Now, unless you’re a financial institution whose business model is built on breaking the law, cheating consumers and making risky bets that could damage the entire economy, you should have nothing to fear from these new rules.


Some of you may know, my grandmother worked as a banker for most of her life -- worked her way up, started as a secretary, ended up being a vice president of a bank. And I know from her, and I know from all the people that I’ve come in contact with, that the vast majority of bankers and financial service professionals, they want to do right by their customers. They want to have rules in place that don’t put them at a disadvantage for doing the right thing. And yet, Republicans in Congress are fighting as hard as they can to make sure that these rules aren’t enforced.


I’ll give you a specific example. For the first time in history, the reforms that we passed put in place a consumer watchdog who is charged with protecting everyday Americans from being taken advantage of by mortgage lenders or payday lenders or debt collectors. And the man we nominated for the post, Richard Cordray, is a former attorney general of Ohio who has the support of most attorney generals, both Democrat and Republican, throughout the country. Nobody claims he’s not qualified.


But the Republicans in the Senate refuse to confirm him for the job; they refuse to let him do his job. Why? Does anybody here think that the problem that led to our financial crisis was too much oversight of mortgage lenders or debt collectors?


AUDIENCE: No!

THE PRESIDENT: Of course not. Every day we go without a consumer watchdog is another day when a student, or a senior citizen, or a member of our Armed Forces -- because they are very vulnerable to some of this stuff -- could be tricked into a loan that they can’t afford -- something that happens all the time. And the fact is that financial institutions have plenty of lobbyists looking out for their interests. Consumers deserve to have someone whose job it is to look out for them. (Applause.) And I intend to make sure they do. (Applause.) And I want you to hear me, Kansas: I will veto any effort to delay or defund or dismantle the new rules that we put in place. (Applause.)


We shouldn’t be weakening oversight and accountability. We should be strengthening oversight and accountability. I’ll give you another example. Too often, we’ve seen Wall Street firms violating major anti-fraud laws because the penalties are too weak and there’s no price for being a repeat offender. No more. I’ll be calling for legislation that makes those penalties count so that firms don’t see punishment for breaking the law as just the price of doing business. (Applause.)


The fact is this crisis has left a huge deficit of trust between Main Street and Wall Street. And major banks that were rescued by the taxpayers have an obligation to go the extra mile in helping to close that deficit of trust. At minimum, they should be remedying past mortgage abuses that led to the financial crisis. They should be working to keep responsible homeowners in their home. We’re going to keep pushing them to provide more time for unemployed homeowners to look for work without having to worry about immediately losing their house.


The big banks should increase access to refinancing opportunities to borrowers who haven’t yet benefited from historically low interest rates. And the big banks should recognize that precisely because these steps are in the interest of middle-class families and the broader economy, it will also be in the banks’ own long-term financial interest. What will be good for consumers over the long term will be good for the banks. (Applause.)


Investing in things like education that give everybody a chance to succeed. A tax code that makes sure everybody pays their fair share. And laws that make sure everybody follows the rules. That’s what will transform our economy. That’s what will grow our middle class again. In the end, rebuilding this economy based on fair play, a fair shot, and a fair share will require all of us to see that we have a stake in each other’s success. And it will require all of us to take some responsibility.


It will require parents to get more involved in their children’s education. It will require students to study harder. (Applause.) It will require some workers to start studying all over again. It will require greater responsibility from homeowners not to take out mortgages they can’t afford. They need to remember that if something seems too good to be true, it probably is.


It will require those of us in public service to make government more efficient and more effective, more consumer-friendly, more responsive to people’s needs. That’s why we’re cutting programs that we don’t need to pay for those we do. (Applause.) That’s why we’ve made hundreds of regulatory reforms that will save businesses billions of dollars. That’s why we’re not just throwing money at education, we’re challenging schools to come up with the most innovative reforms and the best results.

And it will require American business leaders to understand that their obligations don’t just end with their shareholders. Andy Grove, the legendary former CEO of Intel, put it best. He said, “There is another obligation I feel personally, given that everything I’ve achieved in my career, and a lot of what Intel has achieved…were made possible by a climate of democracy, an economic climate and investment climate provided by the United States.”


This broader obligation can take many forms. At a time when the cost of hiring workers in China is rising rapidly, it should mean more CEOs deciding that it’s time to bring jobs back to the United States -- (applause) -- not just because it’s good for business, but because it’s good for the country that made their business and their personal success possible. (Applause.)


I think about the Big Three auto companies who, during recent negotiations, agreed to create more jobs and cars here in America, and then decided to give bonuses not just to their executives, but to all their employees, so that everyone was invested in the company’s success. (Applause.)


I think about a company based in Warroad, Minnesota. It’s called Marvin Windows and Doors. During the recession, Marvin’s competitors closed dozens of plants, let hundreds of workers go. But Marvin’s did not lay off a single one of their 4,000 or so employees -- not one. In fact, they’ve only laid off workers once in over a hundred years. Mr. Marvin’s grandfather even kept his eight employees during the Great Depression.


Now, at Marvin’s when times get tough, the workers agree to give up some perks and some pay, and so do the owners. As one owner said, “You can’t grow if you’re cutting your lifeblood -- and that’s the skills and experience your workforce delivers.” (Applause.) For the CEO of Marvin’s, it’s about the community. He said, “These are people we went to school with. We go to church with them. We see them in the same restaurants. Indeed, a lot of us have married local girls and boys. We could be anywhere, but we are in Warroad.”

That’s how America was built. That’s why we’re the greatest nation on Earth. That’s what our greatest companies understand. Our success has never just been about survival of the fittest. It’s about building a nation where we’re all better off. We pull together. We pitch in. We do our part. We believe that hard work will pay off, that responsibility will be rewarded, and that our children will inherit a nation where those values live on. (Applause.)


And it is that belief that rallied thousands of Americans to Osawatomie -- (applause) -- maybe even some of your ancestors -- on a rain-soaked day more than a century ago. By train, by wagon, on buggy, bicycle, on foot, they came to hear the vision of a man who loved this country and was determined to perfect it.


“We are all Americans,” Teddy Roosevelt told them that day. “Our common interests are as broad as the continent.” In the final years of his life, Roosevelt took that same message all across this country, from tiny Osawatomie to the heart of New York City, believing that no matter where he went, no matter who he was talking to, everybody would benefit from a country in which everyone gets a fair chance. (Applause.)


And well into our third century as a nation, we have grown and we’ve changed in many ways since Roosevelt’s time. The world is faster and the playing field is larger and the challenges are more complex. But what hasn’t changed -- what can never change -- are the values that got us this far. We still have a stake in each other’s success. We still believe that this should be a place where you can make it if you try. And we still believe, in the words of the man who called for a New Nationalism all those years ago, “The fundamental rule of our national life,” he said, “the rule which underlies all others -- is that, on the whole, and in the long run, we shall go up or down together.” And I believe America is on the way up. (Applause.)


Thank you. God bless you. God bless the United States of America. (Applause.)


END 1:55 P.M. CST

Text of President Obama's Remarks on His Deficit Reduction Plan of Sept 19, 2011

from the White House Press Office


THE PRESIDENT: Good morning, everybody. Please have a seat.


A week ago today, I sent Congress the American Jobs Act. It’s a plan that will lead to new jobs for teachers, for construction workers, for veterans, and for the unemployed. It will cut taxes for every small business owner and virtually every working man and woman in America. And the proposals in this jobs bill are the kinds that have been supported by Democrats and Republicans in the past. So there shouldn’t be any reason for Congress to drag its feet. They should pass it right away. I'm ready to sign a bill. I've got the pens all ready.


Now, as I said before, Congress should pass this bill knowing that every proposal is fully paid for. The American Jobs Act will not add to our nation’s debt. And today, I’m releasing a plan that details how to pay for the jobs bill while also paying down our debt over time.


And this is important, because the health of our economy depends in part on what we do right now to create the conditions where businesses can hire and middle-class families can feel a basic measure of economic security. But in the long run, our prosperity also depends on our ability to pay down the massive debt we’ve accumulated over the past decade in a way that allows us to meet our responsibilities to each other and to the future.


During this past decade, profligate spending in Washington, tax cuts for multi-millionaires and billionaires, the cost of two wars, and the recession turned a record surplus into a yawning deficit, and that left us with a big pile of IOUs. If we don’t act, that burden will ultimately fall on our children’s shoulders. If we don’t act, the growing debt will eventually crowd out everything else, preventing us from investing in things like education, or sustaining programs like Medicare.


So Washington has to live within its means. The government has to do what families across this country have been doing for years. We have to cut what we can’t afford to pay for what really matters. We need to invest in what will promote hiring and economic growth now while still providing the confidence that will come with a plan that reduces our deficits over the long-term.


These principles were at the heart of the deficit framework that I put forward in April. It was an approach to shrink the deficit as a share of the economy, but not to do so so abruptly with spending cuts that would hamper growth or prevent us from helping small businesses and middle-class families get back on their feet.


It was an approach that said we need to go through the budget line-by-line looking for waste, without shortchanging education and basic scientific research and road construction, because those things are essential to our future. And it was an approach that said we shouldn't balance the budget on the backs of the poor and the middle class; that for us to solve this problem, everybody, including the wealthiest Americans and biggest corporations, have to pay their fair share.


Now, during the debt ceiling debate, I had hoped to negotiate a compromise with the Speaker of the House that fulfilled these principles and achieved the $4 trillion in deficit reduction that leaders in both parties have agreed we need -- a grand bargain that would have strengthened our economy, instead of weakened it. Unfortunately, the Speaker walked away from a balanced package. What we agreed to instead wasn’t all that grand. But it was a start -- roughly $1 trillion in cuts to domestic spending and defense spending.


Everyone knows we have to do more, and a special joint committee of Congress is assigned to find more deficit reduction. So, today, I’m laying out a set of specific proposals to finish what we started this summer -- proposals that live up to the principles I’ve talked about from the beginning. It’s a plan that reduces our debt by more than $4 trillion, and achieves these savings in a way that is fair -- by asking everybody to do their part so that no one has to bear too much of the burden on their own.


All told, this plan cuts $2 in spending for every dollar in new revenues. In addition to the $1 trillion in spending that we’ve already cut from the budget, our plan makes additional spending cuts that need to happen if we’re to solve this problem. We reform agricultural subsidies -- subsidies that a lot of times pay large farms for crops that they don't grow. We make modest adjustments to federal retirement programs. We reduce by tens of billions of dollars the tax money that goes to Fannie Mae and Freddie Mac. We also ask the largest financial firms -- companies saved by tax dollars during the financial crisis -- to repay the American people for every dime that we spent. And we save an additional $1 trillion as we end the wars in Iraq and Afghanistan.


These savings are not only counted as part of our plan, but as part of the budget plan that nearly every Republican on the House voted for.


Finally, this plan includes structural reforms to reduce the cost of health care in programs like Medicare and Medicaid. Keep in mind we've already included a number of reforms in the health care law, which will go a long way towards controlling these costs. But we're going to have to do a little more. This plan reduces wasteful subsidies and erroneous payments while changing some incentives that often lead to excessive health care costs. It makes prescriptions more affordable through faster approval of generic drugs. We’ll work with governors to make Medicaid more efficient and more accountable. And we’ll change the way we pay for health care. Instead of just paying for procedures, providers will be paid more when they improve results -- and such steps will save money and improve care.


These changes are phased in slowly to strengthen Medicare and Medicaid over time. Because while we do need to reduce health care costs, I’m not going to allow that to be an excuse for turning Medicare into a voucher program that leaves seniors at the mercy of the insurance industry. And I'm not going to stand for balancing the budget by denying or reducing health care for poor children or those with disabilities. So we will reform Medicare and Medicaid, but we will not abandon the fundamental commitment that this country has kept for generations.


And by the way, that includes our commitment to Social Security. I've said before, Social Security is not the primary cause of our deficits, but it does face long-term challenges as our country grows older. And both parties are going to need to work together on a separate track to strengthen Social Security for our children and our grandchildren.


So this is how we can reduce spending: by scouring the budget for every dime of waste and inefficiency, by reforming government spending, and by making modest adjustments to Medicare and Medicaid. But all these reductions in spending, by themselves, will not solve our fiscal problems. We can’t just cut our way out of this hole. It’s going to take a balanced approach. If we’re going to make spending cuts -- many of which we wouldn’t make if we weren’t facing such large budget deficits -- then it’s only right that we ask everyone to pay their fair share.


You know, last week, Speaker of the House John Boehner gave a speech about the economy. And to his credit, he made the point that we can’t afford the kind of politics that says it’s “my way or the highway.” I was encouraged by that. Here’s the problem: In that same speech, he also came out against any plan to cut the deficit that includes any additional revenues whatsoever. He said -- I'm quoting him -- there is “only one option.” And that option and only option relies entirely on cuts. That means slashing education, surrendering the research necessary to keep America’s technological edge in the 21st century, and allowing our critical public assets like highways and bridges and airports to get worse. It would cripple our competiveness and our ability to win the jobs of the future. And it would also mean asking sacrifice of seniors and the middle class and the poor, while asking nothing of the wealthiest Americans and biggest corporations.


So the Speaker says we can’t have it "my way or the highway," and then basically says, my way -- or the highway. (Laughter.) That’s not smart. It’s not right. If we’re going to meet our responsibilities, we have to do it together.


Now, I’m proposing real, serious cuts in spending. When you include the $1 trillion in cuts I’ve already signed into law, these would be among the biggest cuts in spending in our history. But they’ve got to be part of a larger plan that’s balanced –- a plan that asks the most fortunate among us to pay their fair share, just like everybody else.


And that’s why this plan eliminates tax loopholes that primarily go to the wealthiest taxpayers and biggest corporations –- tax breaks that small businesses and middle-class families don’t get. And if tax reform doesn't get done, this plan asks the wealthiest Americans to go back to paying the same rates that they paid during the 1990s, before the Bush tax cuts.


I promise it’s not because anybody looks forward to the prospects of raising taxes or paying more taxes. I don’t. In fact, I’ve cut taxes for the middle class and for small businesses, and through the American Jobs Act, we’d cut taxes again to promote hiring and put more money into the pockets of people. But we can’t afford these special lower rates for the wealthy -– rates, by the way, that were meant to be temporary. Back when these first -- these tax cuts, back in 2001, 2003, were being talked about, they were talked about temporary measures. We can’t afford them when we’re running these big deficits.


Now, I am also ready to work with Democrats and Republicans to reform our entire tax code, to get rid of the decades of accumulated loopholes, special interest carve-outs, and other tax expenditures that stack the deck against small business owners and ordinary families who can’t afford Washington lobbyists or fancy accountants. Our tax code is more than 10,000 pages long. If you stack up all the volumes, they’re almost five feet tall. That means that how much you pay often depends less on what you make and more on how well you can game the system, and that's especially true of the corporate tax code.


We’ve got one of the highest corporate tax rates in the world, but it’s riddled with exceptions and special interest loopholes. So some companies get out paying a lot of taxes, while the rest of them end up having to foot the bill. And this makes our entire economy less competitive and our country a less desirable place to do business.


That has to change. Our tax code shouldn’t give an advantage to companies with the best-connected lobbyists. It should give an advantage to companies that invest in the United States of America and create jobs in the United States of America. And we can lower the corporate rate if we get rid of all these special deals.


So I am ready, I am eager, to work with Democrats and Republicans to reform the tax code to make it simpler, make it fairer, and make America more competitive. But any reform plan will have to raise revenue to help close our deficit. That has to be part of the formula. And any reform should follow another simple principle: Middle-class families shouldn’t pay higher taxes than millionaires and billionaires. That’s pretty straightforward. It’s hard to argue against that. Warren Buffett’s secretary shouldn’t pay a higher tax rate than Warren Buffett. There is no justification for it.


It is wrong that in the United States of America, a teacher or a nurse or a construction worker who earns $50,000 should pay higher tax rates than somebody pulling in $50 million. Anybody who says we can’t change the tax code to correct that, anyone who has signed some pledge to protect every single tax loophole so long as they live, they should be called out. They should have to defend that unfairness -- explain why somebody who's making $50 million a year in the financial markets should be paying 15 percent on their taxes, when a teacher making $50,000 a year is paying more than that -- paying a higher rate. They ought to have to answer for it. And if they’re pledged to keep that kind of unfairness in place, they should remember, the last time I checked the only pledge that really matters is the pledge we take to uphold the Constitution.


Now, we’re already hearing the usual defenders of these kinds of loopholes saying this is just “class warfare.” I reject the idea that asking a hedge fund manager to pay the same tax rate as a plumber or a teacher is class warfare. I think it’s just the right the thing to do. I believe the American middle class, who've been pressured relentlessly for decades, believe it’s time that they were fought for as hard as the lobbyists and some lawmakers have fought to protect special treatment for billionaires and big corporations.

Nobody wants to punish success in America. What’s great about this country is our belief that anyone can make it and everybody should be able to try -– the idea that any one of us can open a business or have an idea and make us millionaires or billionaires. This is the land of opportunity. That’s great. All I’m saying is that those who have done well, including me, should pay our fair share in taxes to contribute to the nation that made our success possible. We shouldn’t get a better deal than ordinary families get. And I think most wealthy Americans would agree if they knew this would help us grow the economy and deal with the debt that threatens our future.


It comes down to this: We have to prioritize. Both parties agree that we need to reduce the deficit by the same amount -- by $4 trillion. So what choices are we going to make to reach that goal? Either we ask the wealthiest Americans to pay their fair share in taxes, or we’re going to have to ask seniors to pay more for Medicare. We can’t afford to do both.


Either we gut education and medical research, or we’ve got to reform the tax code so that the most profitable corporations have to give up tax loopholes that other companies don’t get. We can’t afford to do both.


This is not class warfare. It’s math. (Laughter.) The money is going to have to come from someplace. And if we’re not willing to ask those who've done extraordinarily well to help America close the deficit and we are trying to reach that same target of $4 trillion, then the logic, the math says everybody else has to do a whole lot more: We’ve got to put the entire burden on the middle class and the poor. We’ve got to scale back on the investments that have always helped our economy grow. We’ve got to settle for second-rate roads and second-rate bridges and second-rate airports, and schools that are crumbling.


That’s unacceptable to me. That’s unacceptable to the American people. And it will not happen on my watch. I will not support -- I will not support -- any plan that puts all the burden for closing our deficit on ordinary Americans. And I will veto any bill that changes benefits for those who rely on Medicare but does not raise serious revenues by asking the wealthiest Americans or biggest corporations to pay their fair share. We are not going to have a one-sided deal that hurts the folks who are most vulnerable.


None of the changes I’m proposing are easy or politically convenient. It’s always more popular to promise the moon and leave the bill for after the next election or the election after that. That’s been true since our founding. George Washington grappled with this problem. He said, “Towards the payment of debts, there must be revenue; that to have revenue there must be taxes; [and] no taxes can be devised which are not more or less inconvenient and unpleasant.” He understood that dealing with the debt is -- these are his words -- “always a choice of difficulties.” But he also knew that public servants weren’t elected to do what was easy; they weren’t elected to do what was politically advantageous. It’s our responsibility to put country before party. It’s our responsibility to do what’s right for the future.


And that’s what this debate is about. It’s not about numbers on a ledger; it’s not about figures on a spreadsheet. It’s about the economic future of this country, and it’s about whether we will do what it takes to create jobs and growth and opportunity while facing up to the legacy of debt that threatens everything we’ve built over generations.


And it’s also about fairness. It’s about whether we are, in fact, in this together, and we’re looking out for one another. We know what’s right. It’s time to do what’s right.


Thank you very much. (Applause.)

Column: Governments Are Destroying Democratic Capitalism

These are the personal views of Peter Morici, a professor at the University
of Maryland's Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

Democratic capitalism is in eclipse.

From Berlin to Tokyo, governments struggle to instigate enough growth to pay
their bills and gainfully employ workers. Meanwhile China enjoys breakneck
progress.

Democratic capitalism is not flawed. Rather, government policy makers are
destroying a system through deception, delusion and abuse that took mankind
from dark feudal superstitions to cracking the secrets of life.

From Athens to Sacramento, Calif., politicians have deceived voters by
telling them pension systems can be constructed allowing retirement at ages 55
or 60. Whether funded by savings and investments or taxes, no solvent pension
system is possible that permits educated professionals, unionized workers and
government employees, who get most of the income and benefits, to work only 30 or 35 years and retire for another 20 or 25 years.

In the U.S., President Barack Obama has convinced American families earning
less than $250,000 a year they can have guaranteed health care that costs 50%
more than what Germans and Canadians pay, and double what the British shell
out, without paying a dime in additional health insurance premiums and taxes.

To make that work, he will have to start selling shares in the Brooklyn
Bridge; thankfully New York Mayor Michael Bloomberg owns it.

Sadly, after Greece defaults the dominoes won't stop in Berlin but rather in
Washington.

Politicians have deluded themselves into believing an education system that
encourages young people to "find themselves," instead of "finding something
productive" will give society enough scientists and engineers to solve the
tough problems needed to perpetuate growth. They have deluded themselves into
thinking that professors spending six hours a week or less teaching and the
rest thinking great thoughts or verbally pistol-whipping the society that
supports them is somehow wealth-creating.

Finally, free markets can't be wholly free but from Tokyo to Berlin national
leaders have peculiar notions about who should compete, who should be regulated
and how.

Most national leaders, having been educated in squeaky-clean environs like
Harvard University, the University of Oxford and the University of Tokyo,
believe anything created by hand, other than through a computer keystroke or
cooking an exquisite meal, is somehow unworthy of Western postindustrial
society.

Hence, they have granted virtually free access to Western markets for
manufacturers from China. For its part, China maintains high tariffs and other
arcane import barriers on Western products, subsidizes exports through an
undervalued currency, and offers other inducements to keep Chinese products
artificially cheap on world markets. China grows at 10% a year, and the West
sheds millions of "unworthy" manufacturing jobs and stagnates.

Meanwhile, in New York, London and elsewhere 30-year-old MBAs pull down
bonuses of $1 million, $10 million and $20 million a year for trading
securities that really don't exist and creating havoc that has cost U.S. and
European governments upward of $4 trillion to clean up.

Simply, on Harvard Square and at King's College, where tenured professors
define our values, remember where Obama learned about law and economics. The
intelligentsia has decided IT entrepreneurs, financiers and Hollywood stars
should be paid more than God.

The rest of us, suffering this abuse, should be satisfied with low pay,
unemployment benefits and subsidized health care, all paid for by borrowing
from the Chinese.

From Obama to German Chancellor Angela Merkel the system is suffering from
delusions of grandeur, self-deception and good old-fashioned abuse by leaders
who address the world as Ivy League intellectuals think it should be, rather
than how the facts of physics, demography and economics define it.

Economy Shows Recovery is Underway

The Government reports the US economy grew 3.2% in the first quarter.

One concern -- but not the only one -- is that just as the private sector is recovering and starting to hire, we have state and local governments cutting back on spending and laying workers off.

Jobs Lost in February Are Fewer Than Expected

From the Wall Street Journal

The U.S. economy shed 36,000 jobs in February, fewer than expected. The unemployment rate, which is calculated using a different household survey, remained at 9.7%.

Employment fell in construction and information, while temporary-help services added jobs. The number of workers on government payroll fell by 18,000, while those on federal payroll were up 7,000.

Remarks by the President on Job Creation and Economic Growth (The Brrokings Institution, Washington, DC)

From the Office of the White House Press Secretary

Almost exactly one year ago, on a frigid winter's day, I met with my new economic team at the headquarters of my presidential transition offices in Chicago. And over the course of four hours, my advisors presented an analysis of where the economy at that time stood, accompanied by a chilling set of charts and graphs, predicting where we might end up. It was an unforgettable series of presentations.

Christy Romer -- who's here today -- tapped to head the Council of Economic Advisers, as well as Larry Summers, who I'd chosen to head the National Economic Council, described an imminent downturn comparable in its severity to almost nothing since the 1930s. Tim Geithner, my incoming Treasury Secretary, reported that the financial system, shaken by the subprime crisis, had halted almost all lending, which in turn threatened to pull the broader economy in a downward spiral. Peter Orszag, my incoming Budget Director, closed out the proceedings with an entirely dismal report on the fiscal health of the country, with growing deficits and debt stretching to the horizon. Having concluded that it was too late for me to request a recount -- I tasked my team with mapping out a plan to tackle the crisis on all fronts.

It wasn't long after that meeting, as we shaped this economic plan, that we began to see some of these forecasts materialize. Over the previous year, it was obvious that folks were facing hard times. As I traveled across the country during the long campaign, I would meet men and women bearing the brunt of not only a deepening recession, but also years -- even decades -- of growing strains on middle class families. But now the country was experiencing something far worse. Our gross domestic product -- the sum total of all that our economy produces -- fell at the fastest rate in a quarter century. Five trillion dollars of Americans' household wealth evaporated in just 12 weeks as stocks, pensions, and home values plummeted. We were losing an average of 700,000 jobs each month, equivalent to the population of the state of Vermont. That was true in December, January, February, March. The fear among economists across the political spectrum that was -- was that we were rapidly plummeting towards a second Great Depression.

So, in the weeks and months that followed, we undertook a series of difficult steps to prevent that outcome. And we were forced to take those steps largely without the help of an opposition party, which, unfortunately, after having presided over the decision-making that had led to the crisis, decided to hand it over to others to solve.

We acted to get lending flowing again so businesses could get loans to buy equipment, and ordinary Americans could get financing to buy homes and cars, to go to college, and to start or run businesses. We enacted measures to stem the tide of foreclosures in our housing market, helping responsible homeowners stay in their homes and helping to stop the broader decline in home values which was eating away at what tends to be a family's largest asset.

To achieve this, and to prevent economic collapse, we were forced to extend assistance to some of the very banks and financial institutions whose actions had helped precipitate the turmoil. We also took steps to prevent the rapid dissolution of the American auto industry -- which faced a crisis partly of its own making -- to prevent the loss of hundreds of thousands of jobs during an already fragile, shaky time. These were not decisions that were popular or satisfying; these were decisions that were necessary.

Now, even as we worked to address the crises in our banking sector, in our housing market, and in our auto industry, we also began attacking our economic crisis on a broader front. Less than one month after taking office we enacted the most sweeping economic recovery package in history: the American Recovery and Reinvestment Act.

The Recovery Act was divided into three parts. One-third went for tax relief for small businesses and 95 percent of working families. Another third was for emergency relief to help folks who've borne the brunt of this recession. We extended or increased unemployment benefits for more than 17 million Americans; made health insurance 65 percent cheaper for families relying on COBRA. And for state and local governments facing historic budget shortfalls as demand for services went up and revenues went down, we provided assistance that has saved the jobs of hundreds of thousands of teachers and public school workers, firefighters and police officers.

The last third of the Recovery Act is for investments to put Americans to work doing the work that America needs done: doubling our capacity in renewable energy like wind and solar; computerizing medical records to save money and lives; providing the largest boost to medical research in history; renovating classrooms and school laboratories; and upgrading roads and railways as part of the largest investment in infrastructure since the creation of the Interstate Highway System half a century ago.

And even as the Recovery Act has created jobs and spurred growth, we have not let up in our efforts to take every responsible action to get the economy growing and America working.

This fall, I signed into law more than $30 billion in tax cuts for struggling businesses, extended an effective tax credit for homebuyers, and provided additional unemployment insurance for one million Americans. And the Treasury is continuing to adapt our financial stability plan, helping to facilitate the flow of small credit to small businesses and families. In addition, we're working to break down barriers and open overseas markets so our companies can better compete globally, creating jobs in America by exporting our products around the world.

Now, partly as a result of these and other steps, we are in a very different place today than we were one year ago. We may forget, but we're in a very different place. We can safely say that we are no longer facing the potential collapse of our financial system and we've avoided the depression many feared. Our economy is growing for the first time in a year, and the swing from contraction to expansion since the beginning of the year is the largest in nearly three decades.

Finally, we're no longer seeing the severe deterioration in the job market that we once were. In fact we learned on Friday that the unemployment rate fell slightly last month. This is welcome news, and news made possible in part by the up to 1.6 million jobs that the Recovery Act has already created and saved according to the Congressional Budget Office.

But I'm here today because our work is far from done. For even though we've reduced the deluge of job losses to a relative trickle, we are not yet creating jobs at a pace to help all those families who've been swept up in the flood. There are more than 7 million fewer Americans with jobs today than when this recession began. That's a staggering figure, and one that reflects not only the depths of the hole from which we must ascend, but also a continuing human tragedy.

It was mentioned that I was in Allentown, Pennsylvania, this past weekend, and went to a job center where people were engaged in job search. And it ran the spectrum -- blacks, whites, Hispanics, young people who were just starting their careers, individuals 50, 60 years old, looking for a job. And they were putting a brave face on it, confident that eventually things would work out, but you could also see the sense of anxiety, the fear that perhaps this time it was different. Sometimes it's hard to break out of the bubble here in Washington and remind ourselves that behind these statistics are people's lives, their capacity to do right by their families. It speaks to an urgent need to accelerate job growth in the short term while laying a new foundation for lasting economic growth.

My economic team has been considering a full range of additional ideas to help accelerate the pace of private sector hiring. We held a jobs forum at the White House that brought together small business owners, CEOs, union members, economists, folks from non-profits, and state and local officials to talk about job creation. And I've asked people to lead forums in their own communities -- sending the results to me -- so we are hearing as many voices as possible as we refine our proposals. We've already heard a number of good ideas, and I know we'll learn of many more.

So today, I want to outline some of the broader steps that I believe should be at the heart of our effort to accelerate job growth -- those areas that will generate the greatest number of jobs while generating the greatest value for our economy.

First, we're proposing a series of steps to help small businesses grow and hire new staff. Over the past 15 years, small businesses have created roughly 65 percent of all new jobs in America. These are companies formed around kitchen tables in family meetings, formed when an entrepreneur takes a chance on a dream, formed when a worker decides it's time she became her own boss. These are also companies that drive innovation, producing 13 times more patents per employee than large companies. And it's worth remembering, every once in a while a small business becomes a big business -- and changes the world.

That's why it's so important that we help small business struggling to stay open, or struggling to open in the first place, during these difficult times. Building on the tax cuts in the Recovery Act, we're proposing a complete elimination of capital gains taxes on small business investment along with an extension of write-offs to encourage small businesses to expand in the coming year. And I believe it's worthwhile to create a tax incentive to encourage small businesses to add and keep employees, and I'm going to work with Congress to pass one.

Now, these steps will help, but we also have to address the continuing struggle of small businesses to get loans that they need to start up and grow. To that end, we're proposing to waive fees and increase the guarantees for SBA-backed loans. And I'm asking my Treasury Secretary to continue mobilizing the remaining TARP funds to facilitate lending to small businesses.

Second, we're proposing a boost in investment in the nation's infrastructure beyond what was included in the Recovery Act, to continue modernizing our transportation and communications networks. These are needed public works that engage private sector companies, spurring hiring all across the country.

Already, more than 10,000 of these projects have been funded through the Recovery Act. And by design, Recovery Act work on roads, bridges, water systems, Superfund sites, broadband networks, and clean energy projects will all be ramping up in the months ahead. It was planned this way for two reasons: so the impact would be felt over a two-year period; and, more importantly, because we wanted to do this right.

The potential for abuse in a program of this magnitude, while operating at such a fast pace, was enormous. So I asked Vice President Biden and others to make sure to the extent humanly possible that the investments were sound, the projects worthy, and the execution efficient. What this means is that we're going to see even more work -- and workers -- on recovery projects in the next six months than we saw in the last six months.

Even so, there are many more worthy projects than there were dollars to fund them. I recognize that by their nature these projects often take time, and will therefore create jobs over time. But the need for jobs will also last beyond next year and the benefits of these investments will last years beyond that. So adding to this initiative to rebuild America's infrastructure is the right thing to do.

Third, I'm calling on Congress to consider a new program to provide incentives for consumers who retrofit their homes to become more energy-efficient, which we know creates jobs, saves money for families, and reduces the pollution that threatens our environment. And I'm proposing that we expand select Recovery Act initiatives to promote energy efficiency and clean energy jobs which have been proven to be particularly popular and effective.

It's a positive sign that many of these programs drew so many applicants for funding that a lot of strong proposals -- proposals that will leverage private capital and create jobs quickly -- did not make the cut. With additional resources, in areas like advanced manufacturing of wind turbines and solar panels, for instance, we can help turn good ideas into good private sector jobs.

Finally, as we are moving forward in these areas, we should also extend the relief in the Recovery Act, including emergency assistance to seniors, unemployment insurance benefits, COBRA, and relief to states and localities to prevent layoffs. This will help folks weathering these storms, while boosting consumer spending and promoting job growth.

Of course, there's only so much government can do. Job creation will ultimately depend on the real job creators: businesses across America. We were encouraged today to hear from the Business Roundtable that their survey showed greater confidence and greater potential investment coming out of the business community.

Government can help lay the groundwork on which the private sector can better generate jobs, growth, and innovation. After all, small business tax relief is not a substitute for ingenuity and industriousness by our entrepreneurs -- but it can help those with good ideas to grow and expand. Incentives to promote energy efficiency and clean energy manufacturing don't automatically create jobs or lower carbon emissions -- but these steps provide a framework in which companies can compete and innovate to create those jobs and reduce energy consumption. And while modernizing the physical and virtual networks that connect us will create private-sector jobs, they'll do so while making it possible for companies to more easily and effectively move their products across this country and around the world, and that will create more jobs.

And given the challenges of accelerating the pace of hiring in the private sector, these targeted initiatives are right and they are needed. But with a fiscal crisis to match our economic crisis, we also must be prudent about how we fund it. So to help support these efforts, we are going to wind down the Troubled Asset Relief Program -- or TARP -- the fund created to stabilize the financial system so banks would lend again.

I don't think I have to tell you there has rarely been a less loved or more necessary emergency program than TARP, which -- as galling as the assistance to banks may have been -- indisputably helped prevent a collapse of the entire financial system. Launched hastily -- understandably, but hastily -- under the last administration, the TARP program was flawed, and we have worked hard to correct those flaws and manage it properly. And today, TARP has served its original purpose and at much lower cost than we expected.

In fact, because of our stewardship of this program, and the transparency and accountability we put in place, TARP is expected to cost the taxpayers at least $200 billion less than what was anticipated just this past summer. And the assistance to banks, once thought to cost taxpayers untold billions, is on track to actually reap billions in profits for the taxpaying public. So this gives us a chance to pay down the deficit faster than we thought possible and to shift funds that would have gone to help the banks on Wall Street to help create jobs on Main Street.

Small business, infrastructure, clean energy -- these are areas in which we can put Americans to work while putting our nation on a sturdier economic footing. That foundation for sustained economic growth -- that must be our continuing focus and our ultimate goal.

I've said this before. Even before this particular crisis, much of our growth for a decade or more had been fueled by unsustainable consumer debt and reckless financial speculation, while we ignored the fundamental challenges that hold the key to our economic prosperity. We cannot simply go back to the way things used to be. We can't go back to an economy that yielded cycle after cycle of speculative booms and painful busts. We can't continue to accept an education system in which our students trail their peers in other countries, and a health care system in which exploding costs put our businesses at a competitive disadvantage. And we cannot continue to ignore the clean energy challenge or cede global leadership in the emerging industries of the 21st century. And that's why, even as we strive to meet the crisis of the moment, we have insisted on laying a new foundation for the future.

Because an educated workforce is essential to a 21st century global economy, we've launched a competitive Race to the Top fund through the Recovery Act to reform our schools and raise achievement, especially in math and science. And we've made college more affordable, proposed a historic set of reforms and investments in community college, and set a goal of once again leading the world in producing college graduates by the year 2020.

Because even the best-trained worker in the world can't compete if our businesses are saddled with rapidly increasing health care costs, we are fighting to do what we have discussed in this country for generations -- finally reforming our nation's broken health insurance system and relieving this unsustainable burden.

Because our economic future depends on a financial system that encourages sound investments, honest dealings, and long-term growth, we've proposed the most ambitious financial reforms since the Great Depression. We'll set and enforce clear rules of the road, close loopholes in oversight, charge a new agency with protecting consumers and address the dangerous, systemic risks that brought us to the brink of disaster. These reforms are moving through Congress, we're working to keep those reforms strong, and I'm looking forward to signing them into law.

And because our economic future depends on our leadership in the industries of the future, we are investing in basic applied research, and working to create the incentives to build a new clean energy economy. For we know the nation that leads in clean energy will be the nation that leads the world. I want America to be that nation. I want America's prosperity to be powered by what we invent and pioneer -- not just what we borrow and what we consume. And I know that we can and will be that nation if we are willing to do what it takes to get there.

Now, there are those who claim we have to choose between paying down our deficits on the one hand, and investing in job creation and economic growth on the other. This is a false choice. Ensuring that economic growth and job creation are strong and sustained is critical to ensuring that we are increasing revenues and decreasing spending on things like unemployment insurance so that our deficits will start coming down. At the same time, instilling confidence in our commitment to being fiscally prudent gives the private sector the confidence to make long-term investments in our people and in America.

So one of the central goals of this administration is restoring fiscal responsibility. Even as we have had to spend our way out of this recession in the near term, we've begun to make the hard choices necessary to get our country on a more stable fiscal footing in the long run. So let me just be clear here. Despite what some have claimed, the cost of the Recovery Act is only a very small part of our current budget imbalance. In reality, the deficit had been building dramatically over the previous eight years. We have a structural gap between the money going out and the money coming in.

Folks passed tax cuts and expansive entitlement programs without paying for any of it -- even as health care costs kept rising, year after year. As a result, the deficit had reached $1.3 trillion when we walked into the White House. And I'd note: These budget-busting tax cuts and spending programs were approved by many of the same people who are now waxing political about fiscal responsibility, while opposing our efforts to reduce deficits by getting health care costs under control. It's a sight to see.

The fact is we have refused to go along with business as usual; we are taking responsibility for every dollar we spend. We've done what some said was impossible: preventing wasteful spending on outdated weapons systems that even the Pentagon said it didn't want. We've combed the budget, cutting waste and excess wherever we could. I'm still committed to halving the deficit we inherited by the end of my first term -- cutting it in half. And I made clear from day one that I would not sign a health insurance reform bill if it raised the deficit by one dime -- and neither the House, nor the Senate bill does. We've begun not only changing policies in Washington, we've also begun to change the culture in Washington.

In the end, the economic crisis of the past year was not just the result of weaknesses in our economy. It was also the result of weaknesses in our political system, because for decades, too many in Washington put off the hard decisions. For decades, we've watched as efforts to solve tough problems have fallen prey to the bitterness of partisanship, to prosaic concerns of politics, to ever-quickening news cycles, to endless campaigns focused on scoring points instead of meeting our common challenges.

We've seen the consequences of this failure of responsibility. The American people have paid a heavy price. And the question we'll have to answer now is if we're going to learn from our past, or if -- even in the aftermath of disaster -- we're going to repeat those same mistakes. As the alarm bells fade, the din of Washington rises, as the forces of the status quo marshal their resources, we can be sure that answering this question will be a fight to the finish. But I have every hope and expectation that we can rise to this moment, that we can transcend the failures of the past, that we can once again take responsibility for our future.

Every night I read letters and e-mails sent to me from people across America -- ordinary folks, people who share their hopes and their hardships, their faith in this country, their frustration with what's happened in this economy. I hear from small business owners worried about making payroll, keeping their doors open. I hear from mothers and fathers, sons and daughters, who've seen one or two or more family members out of work. The toughest letters are in children's handwriting -- kids write to me, my dad just lost a job; my grandma is sick, she can't afford health insurance -- kids who can't just be kids because they're worried about mom having her hours cut or dad losing a job, or a family without health insurance.

These folks aren't looking for a handout, they're not looking for a bailout -- just like those people I visited in Allentown -- all they're looking for is a chance to make their own way, to work, to succeed using their talents and skills. And they're looking for folks in Washington to have a seriousness of purpose that matches the reality of their struggle.

Everywhere I've gone, every stop I've made, there are people like this, men and women who have faced misfortune, but who stand ready to build a better future: students ready to learn, workers eager to work, scientists on the brink of discovery, entrepreneurs seeking the chance to open a small business. Everywhere I go, there are once-shuttered factories just waiting to whir back to life in burgeoning industries. There is a nation ready to meet the challenges of this new age and to lead the world in this new century. And as we look back on the progress of the past year, and look forward to the work ahead, I have every confidence that we will do exactly that.

These have been a tough two years. And there will no doubt be difficult months ahead. But the storms of the past are receding. The skies are brightening. And the horizon is beckoning once more.

Thank you very much.