Since being sworn in as the 44th president of the United States, Barack Obama has been bombarded by a series of challenges that no other chief executive of this nation has had to face with less than a month in office. He seeks to meet his major test — restoring an economy ravaged by an unmerciful recession, a severe credit crunch and rising unemployment — with the passage of his mammoth American Economic Recovery and Reinvestment Act. Through this economic recovery proposal, the president plans to create as many as four million jobs over the next few years through, among other measures, a mix of “shovel-ready†infrastructure projects and long-term development of the sustainable energy industry. He also plans to jolt the economy by boosting consumer spending through a series of tax breaks and such measures as unemployment insurance relief.
What has stalled the Obama Administration’s ambitious program, however, has been recent political wrangling within the House and Senate over various provisions in the bill. For instance, the $819 billion House version, which did not receive a single Republican vote, focuses on spending for state education aid, health insurance for the unemployed and the repair of highways and bridges. In the $827 billion Senate version, Republican senators slashed spending provisions citing them as “wasteful†while expanding tax breaks, including fixing the alternative minimum tax that impacts upper-income households and making car loan interest deductible. After the Senate votes on the measure — which has so far gained support from only three Republicans, just enough to get the 60 votes needed for passage — the legislation goes to conference committee for reconciliation of the House and Senate versions of the package. Both houses then vote on the measure again.
President Obama holds a town hall meeting in Fort Myers, Florida, Tuesday. (Source: Getty Images)
After making overtures to Republicans in a bid for bipartisanship, Obama has now gone on the offensive to get this critical measure passed. This week, he is taking his case to the American people through town halls in Elkhart, Indiana, and Fort Myers, Florida; his first presidential press conference; and an address to both houses of Congress.
In an exclusive one—on-one interview with Black Enterprise magazine Editor-In-Chief Derek T, Dingle, the president discussed the importance of swift passage of the recovery package, reviewed his expansive economic agenda, and detailed his administration’s plans to provide jobs, relief and entrepreneurial opportunities to millions of Americans — including our readership.
Black Enterprise: How would you characterize your first few weeks in office?
President Barack Obama: Obviously we have some enormous challenges but I’m very confident about the team that I’ve put in place. I think the economic recovery and reinvestment package that is working its way through Congress is one critical component of an overall recovery package. We’re also going to have to strengthen the banking system so that credit is going to businesses again. We’re also going to have to deal with housing and the foreclosure issue. We’ve got to lay the groundwork for some long-term investment in energy, healthcare and education that can ensure long-term economic growth. So, we’ve got the worst financial crisis since the Great Depression and obviously the jobs numbers that we’ve been seeing confirms how it’s affecting ordinary families all across America. But I’m confident that if we handle this properly that we can use it as an opportunity to put our economy on firmer footing for the long-term.
There are significant differences between the House and Senate versions of the stimulus package, related to state aid, education, health care and taxes. As the legislation goes to conference, are there any areas the Obama administration views as nonnegotiable in terms of the final bill?
What is nonnegotiable is four million jobs that need to be created. We are losing jobs at a rapid clip, 3.6 million last year but we’ve lost almost half of those jobs in the last three months alone. So, the problem is accelerating, not getting better. We can’t have a package that is too small to deal with the magnitude of the problem. Within the package that is needed, I’m happy to negotiate and work with members of Congress around what the right balance is, tax cuts versus key investments, but that 4 million job number is nonnegotiable.
In the Senate version of the package, some $40 billion has been cut from state aid. That is one of the areas you want to target to ensure that jobs are created right away.
State governments are seeing their budgets hemorrhage and we’re going to have to give them help so that they don’t lay off workers who, in turn, stop spending which, in turn, has enormous impact on the private sector. And I think it is very important for us to make sure that we’re getting these countercyclical payments in place to ensure that teachers, police officers and firefighters aren’t being laid off and that states can absorb the increased numbers of people who require unemployment insurance as well as healthcare support.
In terms of unemployment, last Friday, we witnessed the unemployment rate increase to 7.6% and African American unemployment jumped to 12.6%. When are workers expected to gain employment from the first round of jobs? How will you measure the impact of the overall success of the stimulus package going forward?
If we invest in areas like
clean energy and weatherizing homes, just to take an example, then not only are we creating immediate jobs for people who may have been in the housing sector or young people who are currently out of work and need to be trained in the construction trades, we’re also helping to save the families, whose home is weatherized, [money on] their electricity bill or energy bills. We are also weaning ourselves off of Middle Eastern oil. Those kinds of combinations of measures that deal with the short-term crisis, but also lay the foundation for long-term economic growth, are absolutely critical. That is going to be what I’m going to be pushing for over the next few days as we complete the process to get this bill passed.In terms of the economic stimulus bill, there is a focus on extending unemployment benefits and health-care benefits for unemployed workers. In terms of the financial stabilization proposal from Treasury Secretary Timothy Geithner, there is a focus on providing homeowners with relief in the form of loan modifications. How soon will those programs be available to individuals who need immediate relief?
Those things that we can do administratively, we’re going to do right away. Obviously on housing, for example, we’ve got to make sure that we get it right and help actually gets to homeowners. There are a lot of complexities involved in terms of figuring out how mortgages that are now with service providers as opposed to being held by a bank are negotiated. So we’ve got to get it right but we intend to get help out of the door as fast as possible. With respect to the recovery package, it’s going to depend on Congress moving quickly. One of the things that I’m trying to emphasize is that speed matters when you’ve got jobs being shed at the pace of half a million a month. The sooner we can get the program up and running, the sooner people can get real help.
How do you answer critics who say that the economic stimulus package tries to do too much, that it’s too big?
Keep in mind that there are other critics who say it’s too small and doesn’t do enough. But, here’s the bottom line, is that we are going to be losing about $2 trillion worth of output over the next two years if we do nothing. For us to have less than an $800 billion package means that we are going to be losing even more jobs or not saving jobs that have to be saved in order to keep this economy moving. So, to the critics I would just say talk to Democratic and Republican economists,
conservative and liberal economists, from every school of economic thought, there is almost uniform consensus that not only do we need a stimulus package but it needs to be big enough to actually jolt the economy in place.You’ve said the economic stimulus is the first plank of the economic plan. Next is financial stabilization. What is the timetable for rolling out your overall economic agenda?
The economic recovery package, we hope to test this week. We’re going to be announcing this week as well the approach we’re taking with respect to financial stabilization. We expect to have a housing plan rolled out in the next several weeks as a complement to these overall efforts. We’re going to also be rolling out an approach to financial regulation, long-term, so that we don’t find ourselves in this crisis again. All of those are going to be one piece in this bigger puzzle of how to get the economy moving again. We’re still going to have to deal with health care, energy and education as long-term challenges to ensure economic growth. But we can get some important down payments on those critical areas if we pass this economic recovery plan which is my priority right now.
What do you tell our readers, many of whom are hurting and anxious? What should they do while they wait for all of these programs to roll out?
Don’t wait. People have to continue to innovate, look for new customers, try to find creative ways to turn crisis into opportunity, retool for the future. But I want them to know that help is on the way.
Small and minority business have always been engines of job creation and innovation. Related to the portion of the economic recovery package that focuses on state aid, how do you ensure minority businesses gain a portion of the contracts? What mechanism is going to be put in place to monitor how state aid is used?
Most states, if not all the states, have provisions in place to ensure minority, women and small businesses participation. We expect states to abide by their local rules. Obviously, federal rules are going to pertain as well when it comes to, for example, making federal buildings more energy efficient. Should that be part of the package, we’re going to be very clear about making sure that goals are set that ensure participation of every type of business imaginable.
You’ve mentioned an oversight board of Democrats and Republicans. Would that also include oversight of the business aspect of the state aid as well?
Yes. We want to make sure that we have an independent board that is providing transparency, accountability and oversight for this process
before the money goes back out the door and while the money is being spent. We’re also going to set up a website called Recovery.gov that will provide people with means of accessing the White House to report back on how this money is being impacted in the community. People are going to be able to track who is getting the money, how it’s being spent and how many jobs are being created in particular communities around the country. We think it’s very important that this is a completely open process. This can lay the framework for how we proceed on a whole host of other projects in the future in a way that builds trust in our government.Specifically, how would the Obama administration operate the SBA and Minority Business Development Agency (MBDA) differently than previous administrations? And how would Treasury’s financial rescue proposal support those efforts?
I’ve committed to revamping the SBA. It’s become an afterthought agency. It has not been as focused as it needs to be on its mission which is helping small businesses grow and helping startups. We’ve got a terrific new director of the SBA who is going to be very aggressive in getting out of federal buildings and reaching out to the business community to figure out exactly what they need in terms of help. Obviously the biggest problem small businesses have right now is access to credit. And so, as part of our financial rollout, Treasury Secretary Tim Geithner will be talking about a series of measures working with Treasury as well as the Federal Reserve Bank, FDIC and other institutions to open up credit flows to small businesses. We’re also going to expand and hope to use some of the SBA programs that are currently in place for emergency situations and open those up so that small businesses have a place to go to keep their doors open to deal with all the problems that they’re having making payroll.
Just as you’ve had town halls in Elkhart, Indiana and Fort Myers, Florida, do you envision a small business-specific town hall, say, in Detroit where a number of automotive suppliers are getting hit pretty hard?
I don’t want to make any commitments beyond those that are already scheduled this week. I guarantee you we’re going to make sure that during the course of this next year that we are going to try to get out of Washington with great frequency because I think one of the most important things I can do is to highlight what is happening outside of Washington so that the folks who are in Washington understand who they are working for.