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(photo credit: AP)
President Barack Obama said Saturday his administration will outline a new strategy in the coming days for spending billions of federal dollars to pull the nation out of an economic crisis he described as "devastating."
Obama and his top advisers are weighing how to structure the remaining $350 billion that Congress approved last year to save financial institutions and lenders from collapse. The new president also warned there is no single action that would allow his administration to fix the struggling US economy, a stark statement at the end of a week that saw hundreds of thousands of Americans lose their jobs.
"No one bill, no matter how comprehensive, can cure what ails our economy," Obama said in his weekly radio and Internet address. "So just as we jump-start job creation, we must also ensure that markets are stable, credit is flowing and families can stay in their homes."
Obama and his aides spent his first two weeks in power working on the nation's economic troubles. The final three months of last year sent the economy into its worst downhill slide in a quarter-century. The economy stumbled backward at a 3.8 percent pace, government economists said Friday; that rate could accelerate to 5 percent or more this quarter.
Treasury Secretary Timothy Geithner met with the administration's top officials and advisers in recent days, trying to finish a plan to overhaul the $700 billion bailout program that is already half gone. Geithner previously said the administration is weighing the possibility of using a government-run "bad bank" to buy up toxic assets that are weighing on the books of financial institutions, but some officials now say that option is gone because of potential costs.
Many of the measures under consideration could end up costing taxpayers hundreds of billions of dollars beyond the original $700 billion price tag. Aides would not rule out the possibility of the administration's asking for more than the $350 billion already allocated.
Obama didn't commit his administration to any decision Saturday but broadly described his ideal final package.
"Soon my treasury secretary, Tim Geithner, will announce a new strategy for reviving our financial system that gets credit flowing to businesses and families," Obama said. "We'll help lower mortgage costs and extend loans to small businesses so they can create jobs. We'll ensure that CEOs are not draining funds that should be advancing our recovery."
"And we will insist on unprecedented transparency, rigorous oversight and clear accountability so taxpayers know how their money is being spent and whether it is achieving results."
Obama's message - largely repackaged from a week of White House statements - was as much for the country as it was for lawmakers: Pass the separate American Recovery and Reinvestment Plan or things are going to get worse.
"Rarely in history has our country faced economic problems as devastating as this crisis," the president said. "Now is the time for those of us in Washington to live up to our responsibilities."
Obama last week won passage of a separate $825 billion economic stimulus plan in the House - without a single Republican vote. It now heads to the Senate, where Vice President Joe Biden predicts the measure will fare better among Republican lawmakers.
Republicans pledged on Saturday to work with Obama, although leaders cautioned against treating government spending like a "trillion-dollar Christmas list" and renewed their opposition to much of the bill's spending.
"A problem that started on Wall Street is reaching deeper and deeper into Main Street. And the president is counting on members of Congress to come together in a spirit of bipartisanship to act," Senate Minority Leader Mitch McConnell, said in the Republican's radio address. "Unfortunately, the plan that Democrats in Congress put forward this week falls far short of the president's vision for a bill that creates jobs and puts us on a path to long-term economic health."
Obama has signaled his willingness to compromise on the bill; his chief spokesman said the president hoped to "strengthen" the bill as it headed toward a Senate vote late this week.
Republicans said they hope the administration takes into account their wishes.
"Every day brings more news of layoffs, home foreclosures and shuttered businesses," McConnell said. "And across the country, employers are cutting to the bone even at businesses that most Americans never thought were vulnerable."
Republicans, however, kept putting forward their own plans. McConnell promoted a mortgage program for creditworthy borrowers, offering fixed-rate 4 percent loans designed to increase housing demands and lending.