For news coverage to be "fair and balanced," there has to be a line separating news and legitimate commentary from political activism and demagoguery.
Fox News Sunday host Chris Wallace has repeatedly characterized his network as "fair and balanced," and as one that should be taken seriously. However, several recent actions on Fox News illustrate that the network is contributing to a culture of conservative paranoia and anti-Obama political activism.
Recent events undermine the argument that Fox News should be treated as a credible, "fair and balanced" news outlet. For example, since launching his Fox News show, Glenn Beck, who has emerged as a prominent player in the network's lineup of weekday programs, has engaged in increasingly outrageous rhetoric that promotes a culture of conservative paranoia. His recent actions include:
Imitating President Obama pouring gasoline onto the "average American": On April 9, Beck responded to, among other things, reports that President Obama will pursue immigration reform by imitating Obama pouring gasoline onto the "average American." After lighting and extinguishing a match, Beck asked: "President Obama, why don't you just set us on fire?"
Mocking Obama's aunt's "limp": On April 2, Beck -- using a cane as a prop -- devoted large portions of a segment to mocking Obama's aunt's "limp."
Portraying Obama and Democrats as vampires: On March 30, Beck portrayed Obama and Democrats as vampires "going after the blood of our businesses" and suggested "driv[ing] a stake through the heart of the bloodsuckers."
Also, in recent weeks, Beck and Fox News have engaged in anti-Obama political activism through their aggressive promotion of the upcoming tea party protests, which the network has portrayed as a response to Obama's fiscal policies. In addition to repeatedly airing graphics describing the protests as "FNC TAX DAY TEA PARTIES," Fox News has run advertisements promoting them, listed information about the parties on its various websites, and aired graphics touting the date, time, location, and website of specific tea parties. And Fox News hosts such as Beck have encouraged viewers to attend the protests.
If Wallace wants to continue to portray his network and influential Sunday show as a credible source of news, he owes it to his viewers to speak out publicly against Fox News' recent behavior.
In the past, Wallace has criticized his Fox News colleagues when they have undermined his network's credibility. In March 2008, when he confronted the hosts of Fox & Friends for distorting Obama's words during what he described as "two hours of Obama bashing," he said that "one of the things that's great about Fox News is that we don't all follow talking points and we disagree about things." Following that incident, he said that "we really are, despite the sniffing or dismissals of our liberal critics, 'fair and balanced' at Fox News" and said that the news network does not "espouse" a "conservative point of view." The recent actions of his colleagues suggest otherwise.
If Wallace wants to repair the damage done to his network's credibility, he needs to speak out publicly against the recent political actions by his colleagues on Fox News.
Eric Burns
Media Matters for America
Tuesday, April 14, 2009
Obama’s Remarks on the Economy 4-14/09
Obama’s Remarks on the Economy
Following are President Obama’s remarks on the economy at the Georgetown University, as provided by the White House.
It has now been twelve weeks since my administration began. And I think even our critics would agree that at the very least, we've been busy. In just under three months, we have responded to an extraordinary set of economic challenges with extraordinary action – action that has been unprecedented in both its scale and its speed.
I know that some have accused us of taking on too much at once. Others believe we haven't done enough. And many Americans are simply wondering how all of our different programs and policies fit together in a single, overarching strategy that will move this economy from recession to recovery and ultimately to prosperity.
So today, I want to step back for a moment and explain our strategy as clearly as I can. I want to talk about what we've done, why we've done it, and what we have left to do. I want to update you on the progress we've made, and be honest about the pitfalls that may lie ahead.
And most of all, I want every American to know that each action we take and each policy we pursue is driven by a larger vision of America's future – a future where sustained economic growth creates good jobs and rising incomes; a future where prosperity is fueled not by excessive debt, reckless speculation, and fleeing profit, but is instead built by skilled, productive workers; by sound investments that will spread opportunity at home and allow this nation to lead the world in the technologies, innovations, and discoveries that will shape the 21st century. That is the America I see. That is the future I know we can have.
To understand how we get there, we first need to understand how we got here.
Recessions are not uncommon. Markets and economies naturally ebb and flow, as we have seen many times in our history. But this recession is different. This recession was not caused by a normal downturn in the business cycle. It was caused by a perfect storm of irresponsibility and poor decision-making that stretched from Wall Street to Washington to Main Street.
As has been widely reported, it started in the housing market. During the course of the decade, the formula for buying a house changed: instead of saving their pennies to buy their dream house, many Americans found they could take out loans that by traditional standards their incomes just could not support. Others were tricked into signing these subprime loans by lenders who were trying to make a quick profit. And the reason these loans were so readily available was that Wall Street saw big profits to be made. Investment banks would buy and package together these questionable mortgages into securities, arguing that by pooling the mortgages, the risks had been reduced. And credit agencies that are supposed to help investors determine the soundness of various investments stamped the securities with their safest rating when they should have been labeled "Buyer Beware."
No one really knew what the actual value of these securities were, but since the housing market was booming and prices were rising, banks and investors kept buying and selling them, always passing off the risk to someone else for a greater profit without having to take any of the responsibility. Banks took on more debt than they could handle. The government-chartered companies Fannie Mae and Freddie Mac, whose traditional mandate was to help support traditional mortgages, decided to get in on the action by buying and holding billions of dollars of these securities. AIG, the biggest insurer in the world, decided to make profits by selling billions of dollars of complicated financial instruments that supposedly insured these securities. Everybody was making record profits – except the wealth created was real only on paper. And as the bubble grew, there was almost no accountability or oversight from anyone in Washington.
Then the housing bubble burst. Home prices fell. People began defaulting on their subprime mortgages. The value of all those loans and securities plummeted. Banks and investors couldn't find anyone to buy them. Greed gave way to fear. Investors pulled their money out of the market. Large financial institutions that didn't have enough money on hand to pay off all their obligations collapsed. Other banks held on tight to the money they did have and simply stopped lending.
This is when the crisis spread from Wall Street to Main Street. After all, the ability to get a loan is how you finance the purchase of everything from a home to a car to a college education. It's how stores stock their shelves, farms buy equipment, and businesses make payroll. So when banks stopped lending money, businesses started laying off workers. When laid off workers had less money to spend, businesses were forced to lay off even more workers. When people couldn't get car loans, a bad situation at the auto companies became even worse. When people couldn't get home loans, the crisis in the housing market only deepened. Because the infected securities were being traded worldwide and other nations also had weak regulations, this recession soon became global. And when other nations can't afford to buy our goods, it slows our economy even further.
This is the situation we confronted on the day we took office. And so our most urgent task has been to clear away the wreckage, repair the immediate damage to the economy, and do everything we can to prevent a larger collapse. And since the problems we face are all working off each other to feed a vicious economic downturn, we've had no choice but to attack all fronts of our economic crisis at once.
The first step was to fight a severe shortage of demand in the economy. The Federal Reserve did this by dramatically lowering interest rates last year in order to boost investment. And my administration and Congress boosted demand by passing the largest recovery plan in our nation's history. It's a plan that is already in the process of saving or creating 3.5 million jobs over the next two years. It is putting money directly in people's pockets with a tax cut for 95% of working families that is now showing up in paychecks across America. And to cushion the blow of this recession, we also provided extended unemployment benefits and continued health care coverage to Americans who have lost their jobs through no fault of their own.
Now, some have argued that this recovery plan is a case of irresponsible government spending; that it is somehow to blame for our long-term deficit projections, and that the federal government should be cutting instead of increasing spending right now. So let me tackle this argument head on.
To begin with, economists on both the left and right agree that the last thing a government should do in the middle of a recession is to cut back on spending. You see, when this recession began, many families sat around their kitchen table and tried to figure out where they could cut back. So do many businesses. That is a completely responsible and understandable reaction. But if every family in America cuts back, then no one is spending any money, which means there are more layoffs, and the economy gets even worse. That's why the government has to step in and temporarily boost spending in order to stimulate demand. And that's exactly what we're doing right now.
Second of all, I absolutely agree that our long-term deficit is a major problem that we have to fix. But the fact is that this recovery plan represents only a tiny fraction of that long-term deficit. As I will discuss in a moment, the key to dealing with our deficit and debt is to get a handle on out-of-control health care costs – not to stand idly by as the economy goes into free fall.
So the recovery plan has been the first step in confronting this economic crisis. The second step has been to heal our financial system so that credit is once again flowing to the businesses and families who rely on it.
The heart of this financial crisis is that too many banks and other financial institutions simply stopped lending money. In a climate of fear, banks were unable to replace their losses by raising new capital on their own, and they were unwilling to lend the money they did have because they were afraid that no one would pay it back. It is for this reason that the last administration used the Troubled Asset Relief Program, or TARP, to provide these banks with temporary financial assistance in order to get them lending again.
Now, I don't agree with some of the ways the TARP program was managed, but I do agree with the broader rationale that we must provide banks with the capital and the confidence necessary to start lending again. That is the purpose of the stress tests that will soon tell us how much additional capital will be needed to support lending at our largest banks. Ideally, these needs will be met by private investors. But where this is not possible, and banks require substantial additional resources from the government, we will hold accountable those responsible, force the necessary adjustments, provide the support to clean up their balance sheets, and assure the continuity of a strong, viable institution that can serve our people and our economy.
Of course, there are some who argue that the government should stand back and simply let these banks fail – especially since in many cases it was their bad decisions that helped create the crisis in the first place. But whether we like it or not, history has repeatedly shown that when nations do not take early and aggressive action to get credit flowing again, they have crises that last years and years instead of months and months – years of low growth, low job creation, and low investment that cost those nations far more than a course of bold, upfront action. And although there are a lot of Americans who understandably think that government money would be better spent going directly to families and businesses instead of banks – "where's our bailout?," they ask – the truth is that a dollar of capital in a bank can actually result in eight or ten dollars of loans to families and businesses, a multiplier effect that can ultimately lead to a faster pace of economic growth.
On the other hand, there have been some who don't dispute that we need to shore up the banking system, but suggest that we have been too timid in how we go about it. They say that the federal government should have already preemptively stepped in and taken over major financial institutions the way that the FDIC currently intervenes in smaller banks, and that our failure to do so is yet another example of Washington coddling Wall Street. So let me be clear – the reason we have not taken this step has nothing to do with any ideological or political judgment we've made about government involvement in banks, and it's certainly not because of any concern we have for the management and shareholders whose actions have helped cause this mess.
Rather, it is because we believe that preemptive government takeovers are likely to end up costing taxpayers even more in the end, and because it is more likely to undermine than to create confidence. Governments should practice the same principle as doctors: first do no harm. So rest assured – we will do whatever is necessary to get credit flowing again, but we will do so in ways that minimize risks to taxpayers and to the broader economy. To that end, in addition to the program to provide capital to the banks, we have launched a plan that will pair government resources with private investment in order to clear away the old loans and securities – the so-called toxic assets – that are also preventing our banks from lending money.
Now, what we've also learned during this crisis is that our banks aren't the only institutions affected by these toxic assets that are clogging the financial system. A.I.G., for example, is not a bank. And yet because it chose to insure trillions of dollars worth of risky assets, its failure could threaten the entire financial system and freeze lending even further. This is why, as frustrating as it is – and I promise you, nobody is more frustrated than me – we've had to provide support for A.I.G. It's also why we need new legal authority so that we have the power to intervene in such financial institutions, just like a bankruptcy court does with businesses that hit hard times, so that we can restructure these businesses in an orderly way that does not induce panic – and can restructure inappropriate bonus contracts without creating a perception that government can just change compensation rules on a whim.
This is also why we're moving aggressively to unfreeze markets and jumpstart lending outside the banking system, where more than half of all lending in America actually takes place. To do this, we've started a program that will increase guarantees for small business loans and unlock the market for auto loans and student loans. And to stabilize the housing market, we've launched a plan that will save up to four million responsible homeowners from foreclosure and help many millions more re-finance.
In a few weeks, we will also reassess the state of Chrysler and General Motors, two companies with an important place in our history and a large footprint in our economy – but two companies that have also fallen on hard times.
Late last year, the companies were given transitional loans by the previous administration to tide them over as they worked to develop viable business plans. But the plans they developed fell short, and so we have given them some additional time to work these complex issues through. We owed that, not to the executives whose bad bets contributed to the weakening of their companies, but to the hundreds of thousands of workers whose livelihoods hang in the balance.
It is our fervent hope that in the coming weeks, Chrysler will find a viable business partner and that GM will develop a business plan that will put it on a path to profitability without endless support from the American taxpayer. In the meantime, we are taking steps to spur demand for American cars and provide relief to autoworkers and their communities. And we will continue to reaffirm this nation's commitment to a 21st century American auto industry that creates new jobs and builds the fuel-efficient cars and trucks that will carry us toward a clean energy future.
Finally, to coordinate a global response to this global recession, I went to the meeting of the G20 nations in London the other week. Each nation has undertaken significant stimulus to spur demand. All agreed to pursue tougher regulatory reforms. We also agreed to triple the lending capacity of the International Monetary Fund, an international financial institution supported by all the major economies, and provide direct assistance to developing nations and vulnerable populations – because America's success depends on whether other nations have the ability to buy what we sell. We pledged to avoid the trade barriers and protectionism that hurts us all in the end. And we decided to meet again in the fall to gauge our progress and take additional steps if necessary.
So all of these actions – the Recovery Act, the bank capitalization program, the housing plan, the strengthening of the non-bank credit market, the auto plan, and our work at the G20 – have been necessary pieces of the recovery puzzle. They have been designed to increase aggregate demand, get credit flowing again to families and businesses, and help them ride out the storm. And taken together, these actions are starting to generate signs of economic progress. Because of our recovery plan, schools and police departments have cancelled planned layoffs. Clean energy companies and construction companies are re-hiring workers to build everything from energy efficient windows to new roads and highways. Our housing plan has helped lead to a spike in the number of homeowners who are taking advantage of historically-low mortgage rates by refinancing, which is like putting a $2,000 tax cut in your in pocket. Our program to support the market for auto loans and student loans has started to unfreeze this market and securitize more of this lending in the last few weeks. And small businesses are seeing a jump in loan activity for the first time in months.
This is all welcome and encouraging news, but it does not mean that hard times are over. 2009 will continue to be a difficult year for America's economy. The severity of this recession will cause more job loss, more foreclosures, and more pain before it ends. The market will continue to rise and fall. Credit is still not flowing nearly as easily as it should. The process for restructuring AIG and the auto companies will involve difficult and sometimes unpopular choices. All of this means that there is much more work to be done. And all of this means that you can continue to expect an unrelenting, unyielding, day-by-day effort from this administration to fight for economic recovery on all fronts.
But even as we continue to clear away the wreckage and address the immediate crisis, it is my firm belief that our next task is to make sure such a crisis never happens again. Even as we clean up balance sheets and get credit flowing; even as people start spending and business start hiring – we have to realize that we cannot go back to the bubble and bust economy that led us to this point.
It is simply not sustainable to have a 21st century financial system that is governed by 20th century rules and regulations that allowed the recklessness of a few to threaten the entire economy. It is not sustainable to have an economy where in one year, 40% of our corporate profits came from a financial sector that was based too much on inflated home prices, maxed out credit cards, overleveraged banks and overvalued assets; or an economy where the incomes of the top 1% have skyrocketed while the typical working household has seen their income decline by nearly $2,000.
For even as too many were chasing ever-bigger bonuses and short-term profits over the last decade, we continued to neglect the long-term threats to our prosperity: the crushing burden that the rising cost of health care is placing on families and businesses; the failure of our education system to prepare our workers for a new age; the progress that other nations are making on clean energy industries and technologies while we remain addicted to foreign oil; the growing debt that we're passing on to our children. And even after we emerge from the current recession, these challenges will still represent major obstacles that stand in the way of our success in the 21st century.
There is a parable at the end of the Sermon on the Mount that tells the story of two men. The first built his house on a pile of sand, and it was destroyed as soon as the storm hit. But the second is known as the wise man, for when "…the rain descended, and the floods came, and the winds blew, and beat upon that house…it fell not: for it was founded upon a rock."
We cannot rebuild this economy on the same pile of sand. We must build our house upon a rock. We must lay a new foundation for growth and prosperity – a foundation that will move us from an era of borrow and spend to one where we save and invest; where we consume less at home and send more exports abroad.
It's a foundation built upon five pillars that will grow our economy and make this new century another American century: new rules for Wall Street that will reward drive and innovation; new investments in education that will make our workforce more skilled and competitive; new investments in renewable energy and technology that will create new jobs and industries; new investments in health care that will cut costs for families and businesses; and new savings in our federal budget that will bring down the debt for future generations. That is the new foundation we must build. That must be our future – and my Administration's policies are designed to achieve that future.
The first step we will take to build this foundation is to reform the outdated rules and regulations that allowed this crisis to happen in the first place. It is time to lay down tough new rules of the road for Wall Street to ensure that we never find ourselves here again. Rules that punish short-cuts and abuse. Rules that tie someone's pay to their actual job performance. Rules that protect typical American families when they buy a home, get a credit card or invest in a 401k. We have already begun to work with Congress to shape this new regulatory framework – and I expect a bill to arrive on my desk for signature before the year is out.
The second pillar of this new foundation is an education system that finally prepares our workers for a 21st century economy. In the 20th century, the GI Bill sent a generation to college, and for decades, we led the world in education and economic growth. But in this new economy, we trail the world's leaders in graduation rates and achievement. That is why we have set a goal that will greatly enhance our ability to compete for the high-wage, high-tech jobs of the 21st century: by 2020, America will once more have the highest proportion of college graduates in the world.
To meet that goal, we have already dramatically expanded early childhood education. We are investing in innovative programs that have proven to help schools meet high standards and close achievement gaps. We are creating new rewards tied to teacher performance and new pathways for advancement. I have asked every American to commit to at least one year or more of higher education or career training, and we have provided tax credits to make a college education more affordable for every American.
The third pillar of this new foundation is to harness the renewable energy that can create millions of new jobs and new industries. We all know that the country that harnesses this energy will lead the 21st century. Yet we have allowed other countries to outpace us on this race to the future.
Well, I do not accept a future where the jobs and industries of tomorrow take root beyond our borders. It is time for America to lead again.
The investments we made in the Recovery Act will double this nation's supply of renewable energy in the next three years. And we are putting Americans to work making our homes and buildings more efficient so that we can save billions on our energy bills and grow our economy at the same time.
But the only way to truly spark this transformation is through a gradual, market-based cap on carbon pollution, so that clean energy is the profitable kind of energy. Some have argued that we shouldn't attempt such a transition until the economy recovers, and they are right that we have to take the costs of transition into account. But we can no longer delay putting a framework for a clean energy economy in place. If businesses and entrepreneurs know today that we are closing this carbon pollution loophole, they will start investing in clean energy now. And pretty soon, we'll see more companies constructing solar panels, and workers building wind turbines, and car companies manufacturing fuel-efficient cars. Investors will put some money into a new energy technology, and a small business will open to start selling it. That's how we can grow this economy, enhance our security, and protect our planet at the same time.
The fourth pillar of the new foundation is a 21st century health care system where families, businesses, and government budgets aren't dragged down by skyrocketing insurance premiums.
One and a half million Americans could lose their homes this year just because of a medical crisis. Major American corporations are struggling to compete with their foreign counterparts, and small businesses are closing their doors. We cannot allow the cost of health care to strangle our economy any longer.
That's why our Recovery Act will invest in electronic health records with strict privacy standards that will save money and lives. We've also made the largest investment ever in preventive care, because that is one of the best ways to keep costs under control. And included in the budgets that just passed Congress is an historic commitment to reform that will finally make quality health care affordable for every American. So I look forward to working with both parties in Congress to make this reform a reality in the coming months.
Fixing our health care system will certainly require resources, but in my budget, we've made a commitment to fully pay for reform without increasing the deficit, and we've identified specific savings that will make the health care system more efficient and reduce costs for us all.
In fact, we have undertaken an unprecedented effort to find this kind of savings in every corner of the budget, because the final pillar in building our new foundation is restoring fiscal discipline once this economy recovers. Already, we have identified two trillion dollars in deficit-reductions over the next decade. We have announced procurement reform that will greatly reduce no-bid contracts and save the government $40 billion. Secretary Gates recently announced a courageous set of reforms that go right at the hundreds of billions of dollars in waste and cost overruns that have bloated our defense budget without making America safer. We will end education programs that don't work, and root out waste, fraud, and abuse in our Medicare program.
Altogether, this budget will reduce discretionary spending for domestic programs as share of the economy by more than 10% over the next decade to the lowest level since we began keeping records nearly half a century ago. And as we continue to go through the federal budget line by line, we will be announcing additional savings, secured by eliminating and consolidating programs we don't need so that we can make room for the things we do need.
Now, I realize that for some, this isn't enough. I know there is a criticism out there that my administration has somehow been spending with reckless abandon, pushing a liberal social agenda while mortgaging our children's future.
Well let me make three points.
First, as I said earlier, the worst thing that we could do in a recession this severe is to try to cut government spending at the same time as families and businesses around the world are cutting back on their spending. So as serious as our deficit and debt problems are – and they are very serious – major efforts to deal with them have to focus on the medium and long-term budget picture.
Second, in tackling the deficit issue, we simply cannot sacrifice the long-term investments that we so desperately need to generate long-term prosperity. Just as a cash-strapped family may cut back on luxuries but will insist on spending money to get their children through college, so we as a country have to make current choices with an eye on the future. If we don't invest now in renewable energy or a skilled workforce or a more affordable health care system, this economy simply won't grow at the pace it needs to in two or five or ten years down the road. If we don't lay this new foundation, it won't be long before we are right back where we are today. And I can assure you that chronically slow growth will not help our long-term budget situation.
Third, the problem with our deficit and debt is not new. It has been building dramatically over the past eight years, largely because big tax cuts combined with increased spending on two wars and the increased costs of government health care programs. This structural gap in our budget, between the amount of money coming in and the amount going out, will only get worse as Baby Boomers age, and will in fact lead us down an unsustainable path. But let's not kid ourselves and suggest that we can do it by trimming a few earmarks or cutting the budget for the National Endowment for the Arts. Along with defense and interest on the national debt, the biggest costs in our budget are entitlement programs like Medicare, Medicaid, and Social Security that get more and more expensive every year. So if we want to get serious about fiscal discipline – and I do – then we are going to not only have to trim waste out of our discretionary budget, a process we have already begun – but we will also have to get serious about entitlement reform.
Nothing will be more important to this goal than passing health care reform that brings down costs across the system, including in Medicare and Medicaid. Make no mistake: health care reform is entitlement reform. That's not just my opinion – that was the conclusion of a wide range of participants at the Fiscal Responsibility Summit we held at the White House in February, and that's one of the reasons why I firmly believe we need to get health care reform done this year.
Once we tackle rising health care costs, we must also work to put Social Security on firmer footing. It is time for both parties to come together and find a way to keep the promise of a sound retirement for future generations. And we should restore a sense of fairness and balance to our tax code by shutting down corporate loopholes and ensuring that everyone pays what they owe.
All of these efforts will require tough choices and compromises. But the difficulties can't serve as an excuse for inaction. Not anymore.
This brings up one final point I'd like to make today. I've talked a lot about the fundamental weakness in our economy that led us to this day of reckoning. But we also arrived here because of a fundamental weakness in our political system.
For too long, too many in Washington put off hard decisions for some other time on some other day. There's been a tendency to score political points instead of rolling up sleeves to solve real problems. There is also an impatience that characterizes this town – an attention span that has only grown shorter with the twenty-four hour news cycle, and insists on instant gratification in the form of immediate results or higher poll numbers. When a crisis hits, there's all too often a lurch from shock to trance, with everyone responding to the tempest of the moment until the furor has died away and the media coverage has moved on, instead of confronting the major challenges that will shape our future in a sustained and focused way.
This can't be one of those times. The challenges are too great. The stakes are too high. I know how difficult it is for Members of Congress in both parties to grapple with some of the big decisions we face right now. It's more than most congresses and most presidents have to deal with in a lifetime.
But we have been called to govern in extraordinary times. And that requires an extraordinary sense of responsibility – to ourselves, to the men and women who sent us here, and to the many generations whose lives will be affected for good or for ill because of what we do here.
There is no doubt that times are still tough. By no means are we out of the woods just yet. But from where we stand, for the very first time, we are beginning to see glimmers of hope. And beyond that, way off in the distance, we can see a vision of an America's future that is far different than our troubled economic past. It's an America teeming with new industry and commerce; humming with new energy and discoveries that light the world once more. A place where anyone from anywhere with a good idea or the will to work can live the dream they've heard so much about.
It is that house upon the rock. Proud, sturdy, and unwavering in the face of the greatest storm. We will not finish it in one year or even many, but if we use this moment to lay that new foundation; if we come together and begin the hard work of rebuilding; if we persist and persevere against the disappointments and setbacks that will surely lie ahead, then I have no doubt that this house will stand and the dream of our founders will live on in our time. Thank you, God Bless you, and may God Bless the United States of America.
Following are President Obama’s remarks on the economy at the Georgetown University, as provided by the White House.
It has now been twelve weeks since my administration began. And I think even our critics would agree that at the very least, we've been busy. In just under three months, we have responded to an extraordinary set of economic challenges with extraordinary action – action that has been unprecedented in both its scale and its speed.
I know that some have accused us of taking on too much at once. Others believe we haven't done enough. And many Americans are simply wondering how all of our different programs and policies fit together in a single, overarching strategy that will move this economy from recession to recovery and ultimately to prosperity.
So today, I want to step back for a moment and explain our strategy as clearly as I can. I want to talk about what we've done, why we've done it, and what we have left to do. I want to update you on the progress we've made, and be honest about the pitfalls that may lie ahead.
And most of all, I want every American to know that each action we take and each policy we pursue is driven by a larger vision of America's future – a future where sustained economic growth creates good jobs and rising incomes; a future where prosperity is fueled not by excessive debt, reckless speculation, and fleeing profit, but is instead built by skilled, productive workers; by sound investments that will spread opportunity at home and allow this nation to lead the world in the technologies, innovations, and discoveries that will shape the 21st century. That is the America I see. That is the future I know we can have.
To understand how we get there, we first need to understand how we got here.
Recessions are not uncommon. Markets and economies naturally ebb and flow, as we have seen many times in our history. But this recession is different. This recession was not caused by a normal downturn in the business cycle. It was caused by a perfect storm of irresponsibility and poor decision-making that stretched from Wall Street to Washington to Main Street.
As has been widely reported, it started in the housing market. During the course of the decade, the formula for buying a house changed: instead of saving their pennies to buy their dream house, many Americans found they could take out loans that by traditional standards their incomes just could not support. Others were tricked into signing these subprime loans by lenders who were trying to make a quick profit. And the reason these loans were so readily available was that Wall Street saw big profits to be made. Investment banks would buy and package together these questionable mortgages into securities, arguing that by pooling the mortgages, the risks had been reduced. And credit agencies that are supposed to help investors determine the soundness of various investments stamped the securities with their safest rating when they should have been labeled "Buyer Beware."
No one really knew what the actual value of these securities were, but since the housing market was booming and prices were rising, banks and investors kept buying and selling them, always passing off the risk to someone else for a greater profit without having to take any of the responsibility. Banks took on more debt than they could handle. The government-chartered companies Fannie Mae and Freddie Mac, whose traditional mandate was to help support traditional mortgages, decided to get in on the action by buying and holding billions of dollars of these securities. AIG, the biggest insurer in the world, decided to make profits by selling billions of dollars of complicated financial instruments that supposedly insured these securities. Everybody was making record profits – except the wealth created was real only on paper. And as the bubble grew, there was almost no accountability or oversight from anyone in Washington.
Then the housing bubble burst. Home prices fell. People began defaulting on their subprime mortgages. The value of all those loans and securities plummeted. Banks and investors couldn't find anyone to buy them. Greed gave way to fear. Investors pulled their money out of the market. Large financial institutions that didn't have enough money on hand to pay off all their obligations collapsed. Other banks held on tight to the money they did have and simply stopped lending.
This is when the crisis spread from Wall Street to Main Street. After all, the ability to get a loan is how you finance the purchase of everything from a home to a car to a college education. It's how stores stock their shelves, farms buy equipment, and businesses make payroll. So when banks stopped lending money, businesses started laying off workers. When laid off workers had less money to spend, businesses were forced to lay off even more workers. When people couldn't get car loans, a bad situation at the auto companies became even worse. When people couldn't get home loans, the crisis in the housing market only deepened. Because the infected securities were being traded worldwide and other nations also had weak regulations, this recession soon became global. And when other nations can't afford to buy our goods, it slows our economy even further.
This is the situation we confronted on the day we took office. And so our most urgent task has been to clear away the wreckage, repair the immediate damage to the economy, and do everything we can to prevent a larger collapse. And since the problems we face are all working off each other to feed a vicious economic downturn, we've had no choice but to attack all fronts of our economic crisis at once.
The first step was to fight a severe shortage of demand in the economy. The Federal Reserve did this by dramatically lowering interest rates last year in order to boost investment. And my administration and Congress boosted demand by passing the largest recovery plan in our nation's history. It's a plan that is already in the process of saving or creating 3.5 million jobs over the next two years. It is putting money directly in people's pockets with a tax cut for 95% of working families that is now showing up in paychecks across America. And to cushion the blow of this recession, we also provided extended unemployment benefits and continued health care coverage to Americans who have lost their jobs through no fault of their own.
Now, some have argued that this recovery plan is a case of irresponsible government spending; that it is somehow to blame for our long-term deficit projections, and that the federal government should be cutting instead of increasing spending right now. So let me tackle this argument head on.
To begin with, economists on both the left and right agree that the last thing a government should do in the middle of a recession is to cut back on spending. You see, when this recession began, many families sat around their kitchen table and tried to figure out where they could cut back. So do many businesses. That is a completely responsible and understandable reaction. But if every family in America cuts back, then no one is spending any money, which means there are more layoffs, and the economy gets even worse. That's why the government has to step in and temporarily boost spending in order to stimulate demand. And that's exactly what we're doing right now.
Second of all, I absolutely agree that our long-term deficit is a major problem that we have to fix. But the fact is that this recovery plan represents only a tiny fraction of that long-term deficit. As I will discuss in a moment, the key to dealing with our deficit and debt is to get a handle on out-of-control health care costs – not to stand idly by as the economy goes into free fall.
So the recovery plan has been the first step in confronting this economic crisis. The second step has been to heal our financial system so that credit is once again flowing to the businesses and families who rely on it.
The heart of this financial crisis is that too many banks and other financial institutions simply stopped lending money. In a climate of fear, banks were unable to replace their losses by raising new capital on their own, and they were unwilling to lend the money they did have because they were afraid that no one would pay it back. It is for this reason that the last administration used the Troubled Asset Relief Program, or TARP, to provide these banks with temporary financial assistance in order to get them lending again.
Now, I don't agree with some of the ways the TARP program was managed, but I do agree with the broader rationale that we must provide banks with the capital and the confidence necessary to start lending again. That is the purpose of the stress tests that will soon tell us how much additional capital will be needed to support lending at our largest banks. Ideally, these needs will be met by private investors. But where this is not possible, and banks require substantial additional resources from the government, we will hold accountable those responsible, force the necessary adjustments, provide the support to clean up their balance sheets, and assure the continuity of a strong, viable institution that can serve our people and our economy.
Of course, there are some who argue that the government should stand back and simply let these banks fail – especially since in many cases it was their bad decisions that helped create the crisis in the first place. But whether we like it or not, history has repeatedly shown that when nations do not take early and aggressive action to get credit flowing again, they have crises that last years and years instead of months and months – years of low growth, low job creation, and low investment that cost those nations far more than a course of bold, upfront action. And although there are a lot of Americans who understandably think that government money would be better spent going directly to families and businesses instead of banks – "where's our bailout?," they ask – the truth is that a dollar of capital in a bank can actually result in eight or ten dollars of loans to families and businesses, a multiplier effect that can ultimately lead to a faster pace of economic growth.
On the other hand, there have been some who don't dispute that we need to shore up the banking system, but suggest that we have been too timid in how we go about it. They say that the federal government should have already preemptively stepped in and taken over major financial institutions the way that the FDIC currently intervenes in smaller banks, and that our failure to do so is yet another example of Washington coddling Wall Street. So let me be clear – the reason we have not taken this step has nothing to do with any ideological or political judgment we've made about government involvement in banks, and it's certainly not because of any concern we have for the management and shareholders whose actions have helped cause this mess.
Rather, it is because we believe that preemptive government takeovers are likely to end up costing taxpayers even more in the end, and because it is more likely to undermine than to create confidence. Governments should practice the same principle as doctors: first do no harm. So rest assured – we will do whatever is necessary to get credit flowing again, but we will do so in ways that minimize risks to taxpayers and to the broader economy. To that end, in addition to the program to provide capital to the banks, we have launched a plan that will pair government resources with private investment in order to clear away the old loans and securities – the so-called toxic assets – that are also preventing our banks from lending money.
Now, what we've also learned during this crisis is that our banks aren't the only institutions affected by these toxic assets that are clogging the financial system. A.I.G., for example, is not a bank. And yet because it chose to insure trillions of dollars worth of risky assets, its failure could threaten the entire financial system and freeze lending even further. This is why, as frustrating as it is – and I promise you, nobody is more frustrated than me – we've had to provide support for A.I.G. It's also why we need new legal authority so that we have the power to intervene in such financial institutions, just like a bankruptcy court does with businesses that hit hard times, so that we can restructure these businesses in an orderly way that does not induce panic – and can restructure inappropriate bonus contracts without creating a perception that government can just change compensation rules on a whim.
This is also why we're moving aggressively to unfreeze markets and jumpstart lending outside the banking system, where more than half of all lending in America actually takes place. To do this, we've started a program that will increase guarantees for small business loans and unlock the market for auto loans and student loans. And to stabilize the housing market, we've launched a plan that will save up to four million responsible homeowners from foreclosure and help many millions more re-finance.
In a few weeks, we will also reassess the state of Chrysler and General Motors, two companies with an important place in our history and a large footprint in our economy – but two companies that have also fallen on hard times.
Late last year, the companies were given transitional loans by the previous administration to tide them over as they worked to develop viable business plans. But the plans they developed fell short, and so we have given them some additional time to work these complex issues through. We owed that, not to the executives whose bad bets contributed to the weakening of their companies, but to the hundreds of thousands of workers whose livelihoods hang in the balance.
It is our fervent hope that in the coming weeks, Chrysler will find a viable business partner and that GM will develop a business plan that will put it on a path to profitability without endless support from the American taxpayer. In the meantime, we are taking steps to spur demand for American cars and provide relief to autoworkers and their communities. And we will continue to reaffirm this nation's commitment to a 21st century American auto industry that creates new jobs and builds the fuel-efficient cars and trucks that will carry us toward a clean energy future.
Finally, to coordinate a global response to this global recession, I went to the meeting of the G20 nations in London the other week. Each nation has undertaken significant stimulus to spur demand. All agreed to pursue tougher regulatory reforms. We also agreed to triple the lending capacity of the International Monetary Fund, an international financial institution supported by all the major economies, and provide direct assistance to developing nations and vulnerable populations – because America's success depends on whether other nations have the ability to buy what we sell. We pledged to avoid the trade barriers and protectionism that hurts us all in the end. And we decided to meet again in the fall to gauge our progress and take additional steps if necessary.
So all of these actions – the Recovery Act, the bank capitalization program, the housing plan, the strengthening of the non-bank credit market, the auto plan, and our work at the G20 – have been necessary pieces of the recovery puzzle. They have been designed to increase aggregate demand, get credit flowing again to families and businesses, and help them ride out the storm. And taken together, these actions are starting to generate signs of economic progress. Because of our recovery plan, schools and police departments have cancelled planned layoffs. Clean energy companies and construction companies are re-hiring workers to build everything from energy efficient windows to new roads and highways. Our housing plan has helped lead to a spike in the number of homeowners who are taking advantage of historically-low mortgage rates by refinancing, which is like putting a $2,000 tax cut in your in pocket. Our program to support the market for auto loans and student loans has started to unfreeze this market and securitize more of this lending in the last few weeks. And small businesses are seeing a jump in loan activity for the first time in months.
This is all welcome and encouraging news, but it does not mean that hard times are over. 2009 will continue to be a difficult year for America's economy. The severity of this recession will cause more job loss, more foreclosures, and more pain before it ends. The market will continue to rise and fall. Credit is still not flowing nearly as easily as it should. The process for restructuring AIG and the auto companies will involve difficult and sometimes unpopular choices. All of this means that there is much more work to be done. And all of this means that you can continue to expect an unrelenting, unyielding, day-by-day effort from this administration to fight for economic recovery on all fronts.
But even as we continue to clear away the wreckage and address the immediate crisis, it is my firm belief that our next task is to make sure such a crisis never happens again. Even as we clean up balance sheets and get credit flowing; even as people start spending and business start hiring – we have to realize that we cannot go back to the bubble and bust economy that led us to this point.
It is simply not sustainable to have a 21st century financial system that is governed by 20th century rules and regulations that allowed the recklessness of a few to threaten the entire economy. It is not sustainable to have an economy where in one year, 40% of our corporate profits came from a financial sector that was based too much on inflated home prices, maxed out credit cards, overleveraged banks and overvalued assets; or an economy where the incomes of the top 1% have skyrocketed while the typical working household has seen their income decline by nearly $2,000.
For even as too many were chasing ever-bigger bonuses and short-term profits over the last decade, we continued to neglect the long-term threats to our prosperity: the crushing burden that the rising cost of health care is placing on families and businesses; the failure of our education system to prepare our workers for a new age; the progress that other nations are making on clean energy industries and technologies while we remain addicted to foreign oil; the growing debt that we're passing on to our children. And even after we emerge from the current recession, these challenges will still represent major obstacles that stand in the way of our success in the 21st century.
There is a parable at the end of the Sermon on the Mount that tells the story of two men. The first built his house on a pile of sand, and it was destroyed as soon as the storm hit. But the second is known as the wise man, for when "…the rain descended, and the floods came, and the winds blew, and beat upon that house…it fell not: for it was founded upon a rock."
We cannot rebuild this economy on the same pile of sand. We must build our house upon a rock. We must lay a new foundation for growth and prosperity – a foundation that will move us from an era of borrow and spend to one where we save and invest; where we consume less at home and send more exports abroad.
It's a foundation built upon five pillars that will grow our economy and make this new century another American century: new rules for Wall Street that will reward drive and innovation; new investments in education that will make our workforce more skilled and competitive; new investments in renewable energy and technology that will create new jobs and industries; new investments in health care that will cut costs for families and businesses; and new savings in our federal budget that will bring down the debt for future generations. That is the new foundation we must build. That must be our future – and my Administration's policies are designed to achieve that future.
The first step we will take to build this foundation is to reform the outdated rules and regulations that allowed this crisis to happen in the first place. It is time to lay down tough new rules of the road for Wall Street to ensure that we never find ourselves here again. Rules that punish short-cuts and abuse. Rules that tie someone's pay to their actual job performance. Rules that protect typical American families when they buy a home, get a credit card or invest in a 401k. We have already begun to work with Congress to shape this new regulatory framework – and I expect a bill to arrive on my desk for signature before the year is out.
The second pillar of this new foundation is an education system that finally prepares our workers for a 21st century economy. In the 20th century, the GI Bill sent a generation to college, and for decades, we led the world in education and economic growth. But in this new economy, we trail the world's leaders in graduation rates and achievement. That is why we have set a goal that will greatly enhance our ability to compete for the high-wage, high-tech jobs of the 21st century: by 2020, America will once more have the highest proportion of college graduates in the world.
To meet that goal, we have already dramatically expanded early childhood education. We are investing in innovative programs that have proven to help schools meet high standards and close achievement gaps. We are creating new rewards tied to teacher performance and new pathways for advancement. I have asked every American to commit to at least one year or more of higher education or career training, and we have provided tax credits to make a college education more affordable for every American.
The third pillar of this new foundation is to harness the renewable energy that can create millions of new jobs and new industries. We all know that the country that harnesses this energy will lead the 21st century. Yet we have allowed other countries to outpace us on this race to the future.
Well, I do not accept a future where the jobs and industries of tomorrow take root beyond our borders. It is time for America to lead again.
The investments we made in the Recovery Act will double this nation's supply of renewable energy in the next three years. And we are putting Americans to work making our homes and buildings more efficient so that we can save billions on our energy bills and grow our economy at the same time.
But the only way to truly spark this transformation is through a gradual, market-based cap on carbon pollution, so that clean energy is the profitable kind of energy. Some have argued that we shouldn't attempt such a transition until the economy recovers, and they are right that we have to take the costs of transition into account. But we can no longer delay putting a framework for a clean energy economy in place. If businesses and entrepreneurs know today that we are closing this carbon pollution loophole, they will start investing in clean energy now. And pretty soon, we'll see more companies constructing solar panels, and workers building wind turbines, and car companies manufacturing fuel-efficient cars. Investors will put some money into a new energy technology, and a small business will open to start selling it. That's how we can grow this economy, enhance our security, and protect our planet at the same time.
The fourth pillar of the new foundation is a 21st century health care system where families, businesses, and government budgets aren't dragged down by skyrocketing insurance premiums.
One and a half million Americans could lose their homes this year just because of a medical crisis. Major American corporations are struggling to compete with their foreign counterparts, and small businesses are closing their doors. We cannot allow the cost of health care to strangle our economy any longer.
That's why our Recovery Act will invest in electronic health records with strict privacy standards that will save money and lives. We've also made the largest investment ever in preventive care, because that is one of the best ways to keep costs under control. And included in the budgets that just passed Congress is an historic commitment to reform that will finally make quality health care affordable for every American. So I look forward to working with both parties in Congress to make this reform a reality in the coming months.
Fixing our health care system will certainly require resources, but in my budget, we've made a commitment to fully pay for reform without increasing the deficit, and we've identified specific savings that will make the health care system more efficient and reduce costs for us all.
In fact, we have undertaken an unprecedented effort to find this kind of savings in every corner of the budget, because the final pillar in building our new foundation is restoring fiscal discipline once this economy recovers. Already, we have identified two trillion dollars in deficit-reductions over the next decade. We have announced procurement reform that will greatly reduce no-bid contracts and save the government $40 billion. Secretary Gates recently announced a courageous set of reforms that go right at the hundreds of billions of dollars in waste and cost overruns that have bloated our defense budget without making America safer. We will end education programs that don't work, and root out waste, fraud, and abuse in our Medicare program.
Altogether, this budget will reduce discretionary spending for domestic programs as share of the economy by more than 10% over the next decade to the lowest level since we began keeping records nearly half a century ago. And as we continue to go through the federal budget line by line, we will be announcing additional savings, secured by eliminating and consolidating programs we don't need so that we can make room for the things we do need.
Now, I realize that for some, this isn't enough. I know there is a criticism out there that my administration has somehow been spending with reckless abandon, pushing a liberal social agenda while mortgaging our children's future.
Well let me make three points.
First, as I said earlier, the worst thing that we could do in a recession this severe is to try to cut government spending at the same time as families and businesses around the world are cutting back on their spending. So as serious as our deficit and debt problems are – and they are very serious – major efforts to deal with them have to focus on the medium and long-term budget picture.
Second, in tackling the deficit issue, we simply cannot sacrifice the long-term investments that we so desperately need to generate long-term prosperity. Just as a cash-strapped family may cut back on luxuries but will insist on spending money to get their children through college, so we as a country have to make current choices with an eye on the future. If we don't invest now in renewable energy or a skilled workforce or a more affordable health care system, this economy simply won't grow at the pace it needs to in two or five or ten years down the road. If we don't lay this new foundation, it won't be long before we are right back where we are today. And I can assure you that chronically slow growth will not help our long-term budget situation.
Third, the problem with our deficit and debt is not new. It has been building dramatically over the past eight years, largely because big tax cuts combined with increased spending on two wars and the increased costs of government health care programs. This structural gap in our budget, between the amount of money coming in and the amount going out, will only get worse as Baby Boomers age, and will in fact lead us down an unsustainable path. But let's not kid ourselves and suggest that we can do it by trimming a few earmarks or cutting the budget for the National Endowment for the Arts. Along with defense and interest on the national debt, the biggest costs in our budget are entitlement programs like Medicare, Medicaid, and Social Security that get more and more expensive every year. So if we want to get serious about fiscal discipline – and I do – then we are going to not only have to trim waste out of our discretionary budget, a process we have already begun – but we will also have to get serious about entitlement reform.
Nothing will be more important to this goal than passing health care reform that brings down costs across the system, including in Medicare and Medicaid. Make no mistake: health care reform is entitlement reform. That's not just my opinion – that was the conclusion of a wide range of participants at the Fiscal Responsibility Summit we held at the White House in February, and that's one of the reasons why I firmly believe we need to get health care reform done this year.
Once we tackle rising health care costs, we must also work to put Social Security on firmer footing. It is time for both parties to come together and find a way to keep the promise of a sound retirement for future generations. And we should restore a sense of fairness and balance to our tax code by shutting down corporate loopholes and ensuring that everyone pays what they owe.
All of these efforts will require tough choices and compromises. But the difficulties can't serve as an excuse for inaction. Not anymore.
This brings up one final point I'd like to make today. I've talked a lot about the fundamental weakness in our economy that led us to this day of reckoning. But we also arrived here because of a fundamental weakness in our political system.
For too long, too many in Washington put off hard decisions for some other time on some other day. There's been a tendency to score political points instead of rolling up sleeves to solve real problems. There is also an impatience that characterizes this town – an attention span that has only grown shorter with the twenty-four hour news cycle, and insists on instant gratification in the form of immediate results or higher poll numbers. When a crisis hits, there's all too often a lurch from shock to trance, with everyone responding to the tempest of the moment until the furor has died away and the media coverage has moved on, instead of confronting the major challenges that will shape our future in a sustained and focused way.
This can't be one of those times. The challenges are too great. The stakes are too high. I know how difficult it is for Members of Congress in both parties to grapple with some of the big decisions we face right now. It's more than most congresses and most presidents have to deal with in a lifetime.
But we have been called to govern in extraordinary times. And that requires an extraordinary sense of responsibility – to ourselves, to the men and women who sent us here, and to the many generations whose lives will be affected for good or for ill because of what we do here.
There is no doubt that times are still tough. By no means are we out of the woods just yet. But from where we stand, for the very first time, we are beginning to see glimmers of hope. And beyond that, way off in the distance, we can see a vision of an America's future that is far different than our troubled economic past. It's an America teeming with new industry and commerce; humming with new energy and discoveries that light the world once more. A place where anyone from anywhere with a good idea or the will to work can live the dream they've heard so much about.
It is that house upon the rock. Proud, sturdy, and unwavering in the face of the greatest storm. We will not finish it in one year or even many, but if we use this moment to lay that new foundation; if we come together and begin the hard work of rebuilding; if we persist and persevere against the disappointments and setbacks that will surely lie ahead, then I have no doubt that this house will stand and the dream of our founders will live on in our time. Thank you, God Bless you, and may God Bless the United States of America.
B O explains so you can understand!
Obama Sees More Pain Now but Hope Later on Economy
By DAVID STOUT
WASHINGTON — President Obama said on Tuesday that the battered economy was showing signs of recovery, but he warned Americans that more pain lies ahead and urged them to help build a foundation for a new, 21st century prosperity.
Speaking just after a disappointing report on March retail sales made it clear that a sustained recovery is not yet at hand, the president delivered a speech that was part pep talk and part rebuke, not only for the once high-rolling members of the financial world but for politicians whom he said had deferred tough decisions for too long.
“I want every American to know that each action we take and each policy we pursue is driven by a larger vision of America’s future,” Mr. Obama said in remarks at Georgetown University.
The president envisioned “a future where sustained economic growth creates good jobs and rising incomes; a future where prosperity is fueled not by excessive debt, reckless speculation and fleeing profit, but is instead built by skilled, productive workers; by sound investments that will spread opportunity at home and allow this nation to lead the world in the technologies, innovations and discoveries that will shape the 21st century.”
“That is the future I see. That is the future I know we can have.”
But the near future will bring “more job loss, more foreclosures and more pain before it ends,” Mr. Obama said. Underscoring his point was a Commerce Department report showing that consumer spending on a wide array of goods declined in March, reflecting a general spirit of uncertainty as well as continuing job losses.
The president said, as he has repeatedly, that the recently enacted stimulus plan, the efforts to strengthen the banking system and attempts to rescue the flagging American auto industry have all borne fruit, demonstrated in part by an increase in home-mortgage refinancings and more lending by small businesses.
“This is all welcome and encouraging news, but it does not mean that hard times are over,” Mr. Obama said, warning that 2009 will be a difficult year, and that no one should expect a return to full prosperity soon.
As the president spoke, the Federal Reserve Chairman Ben S. Bernanke told an audience at Morehouse College in Atlanta that there were “tentative signs” that the decline in the economy was slowing.
President Obama called on Americans to take the long view. “There is no doubt that times are still tough,” he said. “By no means are we out of the woods just yet. But from where we stand, for the very first time, we are beginning to see glimmers of hope. And beyond that, way off in the distance, we can see a vision of an America’s future that is far different than our troubled economic past.”
Realizing that vision will require a new regulatory structure, one based on 21st century needs rather than an outdated financial buccaneer ethic, the president said. It will also require work on deep, complicated issues like health care and energy, he said.
Mr. Obama said he saw a new America whose foundations are not built on sand but on rock, “proud, sturdy and unwavering in the face of the greatest storm.”
“We will not finish it in one year or even many,” he said, “but if we use this moment to lay that new foundation, if we come together and begin the hard work of rebuilding, if we persist and persevere against the disappointments and setbacks that will surely lie ahead, then I have no doubt that this house will stand and the dream of our founders will live on in our time.”
By DAVID STOUT
WASHINGTON — President Obama said on Tuesday that the battered economy was showing signs of recovery, but he warned Americans that more pain lies ahead and urged them to help build a foundation for a new, 21st century prosperity.
Speaking just after a disappointing report on March retail sales made it clear that a sustained recovery is not yet at hand, the president delivered a speech that was part pep talk and part rebuke, not only for the once high-rolling members of the financial world but for politicians whom he said had deferred tough decisions for too long.
“I want every American to know that each action we take and each policy we pursue is driven by a larger vision of America’s future,” Mr. Obama said in remarks at Georgetown University.
The president envisioned “a future where sustained economic growth creates good jobs and rising incomes; a future where prosperity is fueled not by excessive debt, reckless speculation and fleeing profit, but is instead built by skilled, productive workers; by sound investments that will spread opportunity at home and allow this nation to lead the world in the technologies, innovations and discoveries that will shape the 21st century.”
“That is the future I see. That is the future I know we can have.”
But the near future will bring “more job loss, more foreclosures and more pain before it ends,” Mr. Obama said. Underscoring his point was a Commerce Department report showing that consumer spending on a wide array of goods declined in March, reflecting a general spirit of uncertainty as well as continuing job losses.
The president said, as he has repeatedly, that the recently enacted stimulus plan, the efforts to strengthen the banking system and attempts to rescue the flagging American auto industry have all borne fruit, demonstrated in part by an increase in home-mortgage refinancings and more lending by small businesses.
“This is all welcome and encouraging news, but it does not mean that hard times are over,” Mr. Obama said, warning that 2009 will be a difficult year, and that no one should expect a return to full prosperity soon.
As the president spoke, the Federal Reserve Chairman Ben S. Bernanke told an audience at Morehouse College in Atlanta that there were “tentative signs” that the decline in the economy was slowing.
President Obama called on Americans to take the long view. “There is no doubt that times are still tough,” he said. “By no means are we out of the woods just yet. But from where we stand, for the very first time, we are beginning to see glimmers of hope. And beyond that, way off in the distance, we can see a vision of an America’s future that is far different than our troubled economic past.”
Realizing that vision will require a new regulatory structure, one based on 21st century needs rather than an outdated financial buccaneer ethic, the president said. It will also require work on deep, complicated issues like health care and energy, he said.
Mr. Obama said he saw a new America whose foundations are not built on sand but on rock, “proud, sturdy and unwavering in the face of the greatest storm.”
“We will not finish it in one year or even many,” he said, “but if we use this moment to lay that new foundation, if we come together and begin the hard work of rebuilding, if we persist and persevere against the disappointments and setbacks that will surely lie ahead, then I have no doubt that this house will stand and the dream of our founders will live on in our time.”
AN over MEDICATED nation!
Stomach Bug Crystallizes an Antibiotic Threat
By TARA PARKER-POPE
Earlier this year, Harold and Freda Mitchell of Como, Miss., both came down with a serious stomach bug. At first, doctors did not know what was wrong, but the gastrointestinal symptoms became so severe that Mrs. Mitchell, 66, was hospitalized for two weeks. Her husband, a manufacturing supervisor, missed 20 days of work.
A local doctor who had worked in a Veterans Affairs hospital recognized the signs of Clostridium difficile, a contagious and potentially deadly bacterium. Although the illness is difficult to track, health officials estimate that in the United States the bacteria cause 350,000 infections each year in hospitals alone, with tens of thousands more occurring in nursing homes. While the majority of cases are found in health care settings, 20 percent or more may occur in the community. The illness kills an estimated 15,000 to 20,000 people annually.
“It’s been the worst thing I’ve ever tried to get through in my life,” said Mrs. Mitchell, who remains weakened by the ordeal. “I really did think I was going to die.”
What is so frightening about C. difficile is that it is often spurred by antibiotics. The drugs wipe out the targeted illness, like a urinary tract or upper respiratory infection, but they also kill off large portions of the healthy bacteria that normally live in the digestive tract. If a person comes into contact with C. difficile, or already has it, the disruption to the beneficial bacteria creates an opportunity for the harmful bacteria to flourish.
The public health community has been sounding the alarm for years about the overuse of antibiotics and the emergence of “superbugs” — bacteria that have developed immunity to a wide number of antibiotics. But the C. difficile problem shows that the threat is not generalized or hypothetical, but immediate and personal.
“One of the things that we counsel consumers about is to make sure that an antibiotic is really necessary,” said Dr. Dale N. Gerding, an infectious disease specialist at the Stritch School of Medicine at Loyola University in Chicago. “There are many good reasons for taking an antibiotic, but an illness like sinusitis or bronchitis winds up being treated with antibiotics even though it will go away by itself anyway.”
Even appropriate use of antibiotics can put a person at risk. Dr. Gerding said his own adult son came down with a C. difficile infection after taking antibiotics for tonsillitis.
The typical treatment for C. difficile is another course of antibiotics, typically the drug vancomycin. But the situation can quickly turn tragic. The Centers for Disease Control and Prevention has reported on several cases of pregnant and postpartum women who developed life-threatening C. difficile infections after being treated for minor infections. In some instances, a C. difficile infection can be treated only by emergency surgery to remove the patient’s colon. Doctors say many patients report that they continue to suffer from regular bouts of diarrhea even after the infection is gone. About 20 percent of patients with the infection suffer a relapse, and C. difficile support groups have emerged on the Internet.
In the case of the Mitchell family, Mr. Mitchell had been taking antibiotics for another health problem, and the treatment apparently led to his C. difficile infection. Mrs. Mitchell probably contracted the illness from her husband. The spores from C. difficile are hardy, and contaminated surfaces must be scrubbed down with bleach to eradicate the germ. Doctors say Mrs. Mitchell’s illness is unusual because most people are protected by their own bacterial flora and wouldn’t be vulnerable to C. difficile if they had not been taking antibiotics, even after close exposure. The risk of contracting C. difficile outside the health care setting remains low, at about 7 cases per 100,000 people, studies show.
C. difficile is not a new illness, but it appears to be spreading at an alarming rate. The rate of C. difficile infection among hospital patients doubled from 2001 to 2005, according to an April 2008 report from the C.D.C. The rise in C. difficile cases around the world is linked with the growing use of all antibiotics, particularly a class of drugs called fluoroquinolones, which came into widespread use around 2001. The use of acid-suppressing drugs, including proton pump inhibitors like Prilosec, also may be a risk factor, although studies have been contradictory.
In addition to becoming more common, C. difficile is also becoming more deadly. Several years ago, the mortality rate from a C. difficile infection was around 1 to 2 percent. But today, various studies estimate that the death rate is 6 percent. The reason is that a hypervirulent strain has emerged that emits higher levels of toxins than earlier strains.
Many patients are far more familiar with another superbug, methicillin-resistant Staphylococcus aureus, or MRSA, which can cause a severe and potentially deadly skin infection. MRSA started off primarily as a hospital-based infection but has become increasingly common in the community.
Hospitals may become more motivated to control C. difficile if the Centers for Medicare and Medicaid Services decides to withhold reimbursement for cases of hospital-acquired C. difficile infections. The system already withholds reimbursement for certain other preventable hospital infections.
In addition to careful use of antibiotics, patients and hospital visitors should always be vigilant about hand washing, and visitors should not sit on a patient’s hospital bed or use a patient’s restroom if it can be avoided. Patients should always report severe diarrhea symptoms to a doctor, particularly if they have taken antibiotics recently.
“Up until about 2002, this was a very mild disorder and very few people ever died from it,” said Dr. Perry Hookman, a gastroenterologist and associate professor of medicine at the Miller School of Medicine at the University of Miami. “But in the past few years the bugs have become hypervirulent, more severe and now it’s a global threat.”
By TARA PARKER-POPE
Earlier this year, Harold and Freda Mitchell of Como, Miss., both came down with a serious stomach bug. At first, doctors did not know what was wrong, but the gastrointestinal symptoms became so severe that Mrs. Mitchell, 66, was hospitalized for two weeks. Her husband, a manufacturing supervisor, missed 20 days of work.
A local doctor who had worked in a Veterans Affairs hospital recognized the signs of Clostridium difficile, a contagious and potentially deadly bacterium. Although the illness is difficult to track, health officials estimate that in the United States the bacteria cause 350,000 infections each year in hospitals alone, with tens of thousands more occurring in nursing homes. While the majority of cases are found in health care settings, 20 percent or more may occur in the community. The illness kills an estimated 15,000 to 20,000 people annually.
“It’s been the worst thing I’ve ever tried to get through in my life,” said Mrs. Mitchell, who remains weakened by the ordeal. “I really did think I was going to die.”
What is so frightening about C. difficile is that it is often spurred by antibiotics. The drugs wipe out the targeted illness, like a urinary tract or upper respiratory infection, but they also kill off large portions of the healthy bacteria that normally live in the digestive tract. If a person comes into contact with C. difficile, or already has it, the disruption to the beneficial bacteria creates an opportunity for the harmful bacteria to flourish.
The public health community has been sounding the alarm for years about the overuse of antibiotics and the emergence of “superbugs” — bacteria that have developed immunity to a wide number of antibiotics. But the C. difficile problem shows that the threat is not generalized or hypothetical, but immediate and personal.
“One of the things that we counsel consumers about is to make sure that an antibiotic is really necessary,” said Dr. Dale N. Gerding, an infectious disease specialist at the Stritch School of Medicine at Loyola University in Chicago. “There are many good reasons for taking an antibiotic, but an illness like sinusitis or bronchitis winds up being treated with antibiotics even though it will go away by itself anyway.”
Even appropriate use of antibiotics can put a person at risk. Dr. Gerding said his own adult son came down with a C. difficile infection after taking antibiotics for tonsillitis.
The typical treatment for C. difficile is another course of antibiotics, typically the drug vancomycin. But the situation can quickly turn tragic. The Centers for Disease Control and Prevention has reported on several cases of pregnant and postpartum women who developed life-threatening C. difficile infections after being treated for minor infections. In some instances, a C. difficile infection can be treated only by emergency surgery to remove the patient’s colon. Doctors say many patients report that they continue to suffer from regular bouts of diarrhea even after the infection is gone. About 20 percent of patients with the infection suffer a relapse, and C. difficile support groups have emerged on the Internet.
In the case of the Mitchell family, Mr. Mitchell had been taking antibiotics for another health problem, and the treatment apparently led to his C. difficile infection. Mrs. Mitchell probably contracted the illness from her husband. The spores from C. difficile are hardy, and contaminated surfaces must be scrubbed down with bleach to eradicate the germ. Doctors say Mrs. Mitchell’s illness is unusual because most people are protected by their own bacterial flora and wouldn’t be vulnerable to C. difficile if they had not been taking antibiotics, even after close exposure. The risk of contracting C. difficile outside the health care setting remains low, at about 7 cases per 100,000 people, studies show.
C. difficile is not a new illness, but it appears to be spreading at an alarming rate. The rate of C. difficile infection among hospital patients doubled from 2001 to 2005, according to an April 2008 report from the C.D.C. The rise in C. difficile cases around the world is linked with the growing use of all antibiotics, particularly a class of drugs called fluoroquinolones, which came into widespread use around 2001. The use of acid-suppressing drugs, including proton pump inhibitors like Prilosec, also may be a risk factor, although studies have been contradictory.
In addition to becoming more common, C. difficile is also becoming more deadly. Several years ago, the mortality rate from a C. difficile infection was around 1 to 2 percent. But today, various studies estimate that the death rate is 6 percent. The reason is that a hypervirulent strain has emerged that emits higher levels of toxins than earlier strains.
Many patients are far more familiar with another superbug, methicillin-resistant Staphylococcus aureus, or MRSA, which can cause a severe and potentially deadly skin infection. MRSA started off primarily as a hospital-based infection but has become increasingly common in the community.
Hospitals may become more motivated to control C. difficile if the Centers for Medicare and Medicaid Services decides to withhold reimbursement for cases of hospital-acquired C. difficile infections. The system already withholds reimbursement for certain other preventable hospital infections.
In addition to careful use of antibiotics, patients and hospital visitors should always be vigilant about hand washing, and visitors should not sit on a patient’s hospital bed or use a patient’s restroom if it can be avoided. Patients should always report severe diarrhea symptoms to a doctor, particularly if they have taken antibiotics recently.
“Up until about 2002, this was a very mild disorder and very few people ever died from it,” said Dr. Perry Hookman, a gastroenterologist and associate professor of medicine at the Miller School of Medicine at the University of Miami. “But in the past few years the bugs have become hypervirulent, more severe and now it’s a global threat.”
Monday, April 13, 2009
IMMIGRATION REFORM editorial NYTIMES
Immigration Reform and Hard Times
The Obama administration said last week that it would begin a major push for immigration reform this year. The country’s two big labor federations just announced that they are joining forces to support that effort, which includes a path to citizenship for undocumented workers. That’s double good news.
The administration is saying that it will keep its promise to fix the broken system, even if it means pushing the hottest of hot buttons: legalization, the dreaded “amnesty” that sets the Republican right wing ablaze and makes many Democrats quiver.
We are also heartened that American labor is speaking with a united voice in hard times, rejecting the false claim that fixing the immigration system will somehow hurt American workers. Even in a bad economy — especially in a bad economy — getting undocumented immigrants on the right side of the law only makes sense.
Administration officials said President Obama planned to speak publicly about the issue next month and would convene working groups this summer, Ã la health care, to begin discussing future legislation. Immigrant advocates were ecstatic, though it is important to note that this was not a promise to move a bill, only to start the debate. Even that is not going to be easy. Reform was thwarted in the last two Congresses by obstructionist Republicans committed to the delusion that expelling 12 million people amounts to a realistic policy.
The country has suffered mightily in the meantime. American workers and businesses continue to be undercut by the underground economy. The economic potential of some of the country’s most industrious workers is thwarted. Working off the books — and living in constant fear of apprehension — they earn less, spend less, pay less in taxes and have little ability to report abuses or to improve their skills or job prospects.
The ingredients of reform are clear: legalization for the 12 million, to yield bumper crops of new citizens, to make it easier to weed out criminals and to end the fear and hopelessness of life in the shadows; sensible enforcement at the border that focuses resources on fighting crime, drugs and violence; a strengthened employment system that punishes businesses that exploit illegal labor; and a future flow of workers that is attuned to the economy’s needs and fully protects workers’ rights.
The last point has been a sticky one with some unions. The agreement between the A.F.L.-C.I.O. and Change to Win — a rival federation that includes service employees, the Teamsters and carpenters — will center on a new approach to future immigration, a compromise in which an independent national commission calibrates the size of temporary-worker programs each year, based on conditions in labor markets. It may not be a perfect plan, but after years of vitriol, it’s encouraging to hear calmer voices outlining smart reform.
We expect to hear more from Mr. Obama soon. It will take courage to defend the wisdom and necessity of fixing the immigration system. It will take even more courage to engage in the serious fight to do so. It is what the country needs and what American voters elected Mr. Obama to do.
The Obama administration said last week that it would begin a major push for immigration reform this year. The country’s two big labor federations just announced that they are joining forces to support that effort, which includes a path to citizenship for undocumented workers. That’s double good news.
The administration is saying that it will keep its promise to fix the broken system, even if it means pushing the hottest of hot buttons: legalization, the dreaded “amnesty” that sets the Republican right wing ablaze and makes many Democrats quiver.
We are also heartened that American labor is speaking with a united voice in hard times, rejecting the false claim that fixing the immigration system will somehow hurt American workers. Even in a bad economy — especially in a bad economy — getting undocumented immigrants on the right side of the law only makes sense.
Administration officials said President Obama planned to speak publicly about the issue next month and would convene working groups this summer, Ã la health care, to begin discussing future legislation. Immigrant advocates were ecstatic, though it is important to note that this was not a promise to move a bill, only to start the debate. Even that is not going to be easy. Reform was thwarted in the last two Congresses by obstructionist Republicans committed to the delusion that expelling 12 million people amounts to a realistic policy.
The country has suffered mightily in the meantime. American workers and businesses continue to be undercut by the underground economy. The economic potential of some of the country’s most industrious workers is thwarted. Working off the books — and living in constant fear of apprehension — they earn less, spend less, pay less in taxes and have little ability to report abuses or to improve their skills or job prospects.
The ingredients of reform are clear: legalization for the 12 million, to yield bumper crops of new citizens, to make it easier to weed out criminals and to end the fear and hopelessness of life in the shadows; sensible enforcement at the border that focuses resources on fighting crime, drugs and violence; a strengthened employment system that punishes businesses that exploit illegal labor; and a future flow of workers that is attuned to the economy’s needs and fully protects workers’ rights.
The last point has been a sticky one with some unions. The agreement between the A.F.L.-C.I.O. and Change to Win — a rival federation that includes service employees, the Teamsters and carpenters — will center on a new approach to future immigration, a compromise in which an independent national commission calibrates the size of temporary-worker programs each year, based on conditions in labor markets. It may not be a perfect plan, but after years of vitriol, it’s encouraging to hear calmer voices outlining smart reform.
We expect to hear more from Mr. Obama soon. It will take courage to defend the wisdom and necessity of fixing the immigration system. It will take even more courage to engage in the serious fight to do so. It is what the country needs and what American voters elected Mr. Obama to do.
Tea Parties Forever
Tea Parties Forever
PAUL KRUGMAN
This is a column about Republicans — and I’m not sure I should even be writing it.
Today’s G.O.P. is, after all, very much a minority party. It retains some limited ability to obstruct the Democrats, but has no ability to make or even significantly shape policy.
Beyond that, Republicans have become embarrassing to watch. And it doesn’t feel right to make fun of crazy people. Better, perhaps, to focus on the real policy debates, which are all among Democrats.
But here’s the thing: the G.O.P. looked as crazy 10 or 15 years ago as it does now. That didn’t stop Republicans from taking control of both Congress and the White House. And they could return to power if the Democrats stumble. So it behooves us to look closely at the state of what is, after all, one of our nation’s two great political parties.
One way to get a good sense of the current state of the G.O.P., and also to see how little has really changed, is to look at the “tea parties” that have been held in a number of places already, and will be held across the country on Wednesday. These parties — antitaxation demonstrations that are supposed to evoke the memory of the Boston Tea Party and the American Revolution — have been the subject of considerable mockery, and rightly so.
But everything that critics mock about these parties has long been standard practice within the Republican Party.
Thus, President Obama is being called a “socialist” who seeks to destroy capitalism. Why? Because he wants to raise the tax rate on the highest-income Americans back to, um, about 10 percentage points less than it was for most of the Reagan administration. Bizarre.
But the charge of socialism is being thrown around only because “liberal” doesn’t seem to carry the punch it used to. And if you go back just a few years, you find top Republican figures making equally bizarre claims about what liberals were up to. Remember when Karl Rove declared that liberals wanted to offer “therapy and understanding” to the 9/11 terrorists?
Then there are the claims made at some recent tea-party events that Mr. Obama wasn’t born in America, which follow on earlier claims that he is a secret Muslim. Crazy stuff — but nowhere near as crazy as the claims, during the last Democratic administration, that the Clintons were murderers, claims that were supported by a campaign of innuendo on the part of big-league conservative media outlets and figures, especially Rush Limbaugh.
Speaking of Mr. Limbaugh: the most impressive thing about his role right now is the fealty he is able to demand from the rest of the right. The abject apologies he has extracted from Republican politicians who briefly dared to criticize him have been right out of Stalinist show trials. But while it’s new to have a talk-radio host in that role, ferocious party discipline has been the norm since the 1990s, when Tom DeLay, the House majority leader, became known as “The Hammer” in part because of the way he took political retribution on opponents.
Going back to those tea parties, Mr. DeLay, a fierce opponent of the theory of evolution — he famously suggested that the teaching of evolution led to the Columbine school massacre — also foreshadowed the denunciations of evolution that have emerged at some of the parties.
Last but not least: it turns out that the tea parties don’t represent a spontaneous outpouring of public sentiment. They’re AstroTurf (fake grass roots) events, manufactured by the usual suspects. In particular, a key role is being played by FreedomWorks, an organization run by Richard Armey, the former House majority leader, and supported by the usual group of right-wing billionaires. And the parties are, of course, being promoted heavily by Fox News.
But that’s nothing new, and AstroTurf has worked well for Republicans in the past. The most notable example was the “spontaneous” riot back in 2000 — actually orchestrated by G.O.P. strategists — that shut down the presidential vote recount in Florida’s Miami-Dade County.
So what’s the implication of the fact that Republicans are refusing to grow up, the fact that they are still behaving the same way they did when history seemed to be on their side? I’d say that it’s good for Democrats, at least in the short run — but it’s bad for the country.
For now, the Obama administration gains a substantial advantage from the fact that it has no credible opposition, especially on economic policy, where the Republicans seem particularly clueless.
But as I said, the G.O.P. remains one of America’s great parties, and events could still put that party back in power. We can only hope that Republicans have moved on by the time that happens.
PAUL KRUGMAN
This is a column about Republicans — and I’m not sure I should even be writing it.
Today’s G.O.P. is, after all, very much a minority party. It retains some limited ability to obstruct the Democrats, but has no ability to make or even significantly shape policy.
Beyond that, Republicans have become embarrassing to watch. And it doesn’t feel right to make fun of crazy people. Better, perhaps, to focus on the real policy debates, which are all among Democrats.
But here’s the thing: the G.O.P. looked as crazy 10 or 15 years ago as it does now. That didn’t stop Republicans from taking control of both Congress and the White House. And they could return to power if the Democrats stumble. So it behooves us to look closely at the state of what is, after all, one of our nation’s two great political parties.
One way to get a good sense of the current state of the G.O.P., and also to see how little has really changed, is to look at the “tea parties” that have been held in a number of places already, and will be held across the country on Wednesday. These parties — antitaxation demonstrations that are supposed to evoke the memory of the Boston Tea Party and the American Revolution — have been the subject of considerable mockery, and rightly so.
But everything that critics mock about these parties has long been standard practice within the Republican Party.
Thus, President Obama is being called a “socialist” who seeks to destroy capitalism. Why? Because he wants to raise the tax rate on the highest-income Americans back to, um, about 10 percentage points less than it was for most of the Reagan administration. Bizarre.
But the charge of socialism is being thrown around only because “liberal” doesn’t seem to carry the punch it used to. And if you go back just a few years, you find top Republican figures making equally bizarre claims about what liberals were up to. Remember when Karl Rove declared that liberals wanted to offer “therapy and understanding” to the 9/11 terrorists?
Then there are the claims made at some recent tea-party events that Mr. Obama wasn’t born in America, which follow on earlier claims that he is a secret Muslim. Crazy stuff — but nowhere near as crazy as the claims, during the last Democratic administration, that the Clintons were murderers, claims that were supported by a campaign of innuendo on the part of big-league conservative media outlets and figures, especially Rush Limbaugh.
Speaking of Mr. Limbaugh: the most impressive thing about his role right now is the fealty he is able to demand from the rest of the right. The abject apologies he has extracted from Republican politicians who briefly dared to criticize him have been right out of Stalinist show trials. But while it’s new to have a talk-radio host in that role, ferocious party discipline has been the norm since the 1990s, when Tom DeLay, the House majority leader, became known as “The Hammer” in part because of the way he took political retribution on opponents.
Going back to those tea parties, Mr. DeLay, a fierce opponent of the theory of evolution — he famously suggested that the teaching of evolution led to the Columbine school massacre — also foreshadowed the denunciations of evolution that have emerged at some of the parties.
Last but not least: it turns out that the tea parties don’t represent a spontaneous outpouring of public sentiment. They’re AstroTurf (fake grass roots) events, manufactured by the usual suspects. In particular, a key role is being played by FreedomWorks, an organization run by Richard Armey, the former House majority leader, and supported by the usual group of right-wing billionaires. And the parties are, of course, being promoted heavily by Fox News.
But that’s nothing new, and AstroTurf has worked well for Republicans in the past. The most notable example was the “spontaneous” riot back in 2000 — actually orchestrated by G.O.P. strategists — that shut down the presidential vote recount in Florida’s Miami-Dade County.
So what’s the implication of the fact that Republicans are refusing to grow up, the fact that they are still behaving the same way they did when history seemed to be on their side? I’d say that it’s good for Democrats, at least in the short run — but it’s bad for the country.
For now, the Obama administration gains a substantial advantage from the fact that it has no credible opposition, especially on economic policy, where the Republicans seem particularly clueless.
But as I said, the G.O.P. remains one of America’s great parties, and events could still put that party back in power. We can only hope that Republicans have moved on by the time that happens.
BANKS CREDIT CARDS 'Blood Suckers!'
Credit Card, Bank Fee Hikes Spark Outrage
Banks Hike Fees Despite Bailout Billions; Consumers and Congressional Panel Ask Why
By ALICE GOMSTYN ABC NEWS April 13, 2009
The billions of dollars that banks have received in taxpayer funds since last year have been a growing source of outrage for American consumers. And in recent months, some banks have added serious insult to injury, leaving Americans like Tony Cesnik fuming about hikes they're seeing to their credit card rates and other bank-related fees.
"The banks have been given billions of dollars of tax money and only lend it out if customers are willing to pay extortion rights," said Cesnik, a Concord, Calif., resident, in a message to ABCNews.com. "The banks need a legal spanking. They are acting like spoiled brats!!"
Myriad banks have steadily been increasing credit card interest rates for some card holders in recent months. Bank customers are also seeing spikes in other fees: charges for bounced checks and ATM surcharges are climbing, according to Bankrate.com, a Web site that surveys financial institutions.
Scores of Americans sent angry messages to ABCNews.com about bank rate hikes. But everyday consumers aren't the only ones who believe something is awry -- the congressional panel that oversees the government's bank rescue plan, the Troubled Asset Relief Program, is taking an interest in the issue.
The Wall Street Journal reported today that complaints about bank fee spikes have prompted the Congressional Oversight Panel to launch a probe into the issue.
A panel official told ABC News, however, that there is no investigation under way but rather the issue may be covered in a future report.
"The people who subsidizing the activities of the banks through their tax dollars are the same people who are furnishing the high profits through consumer lending," Elizabeth Warren, the chairwoman of the panel, told the The Wall Street Journal. "In a sense, we're asking taxpayers to pay twice."
Banks Profits Reported This Week
Outrage over the higher fees has grown even as banks, which are due to release first-quarter earnings reports in coming days, have said they've seen a profitable start to 2009.
Last week, Wells Fargo said it expected record first-quarter earnings of $3 billion. Earlier this year, executives at Bank of America, Citigroup and JPMorgan Chase also said they are seeing profitable quarters.
But despite those positive results, the banks have also raised fees and credit card interest rates. Most recently, Bank of America -- which has received $45 billion TARP funding -- announced that it was raising interest rates on credit card customers who carry a balance.
One reason for such increases, some say, is that banks are trying to compensate for rising credit card defaults. But that reasoning just isn't enough for consumers like Gary Gates, of Marcellus, N.Y.
"You might be able to justify a small increase," Gates said in a message to ABCNews.com, but the banks "go overboard."
Why Rate Hikes? Banks Cite Tough Economy, High Borrowing Costs
A Bank of America spokeswoman told ABCNews.com that credit card customers who saw increases had their rates rise from below 10 percent to "the low- to mid-teens."
Betty Reiss said that the increase in loan defaults by Bank of America customers and other factors, including relatively high borrowing costs between banks, contributed to the bank's decision to raise rates.
"This is about properly pricing our portfolio either based on risk or realigning a portion of the portfolio that is priced below what is prudent in the current market," Reiss said.
Citigroup, which has received $50 billion TARP funds -- the most of any bank -- declined a request for comment.
The American Banking Association defended the banking industry today.
"I think the key thing to recognize is that what banks are doing is reacting to broader economic forces, the fact that we are in a recession," said ABA spokesman Peter Garuccio. "Whether we like it or not we're all less credit worthy today than we were just a few months ago."
Garuccio said that it's become harder for banks to fund credit card lines because it's more difficult to package credit card loans and sell them as securities.
"Roughly 50 percent of all credit card loans are funded through securitization," he said. "Because of the freeze up that has occurred in the capital markets that source of funding is relatively dry now."
Help for Credit Card Customers?
There is some relief on the way for credit card holders. Late last year, the Federal Reserve created new rules to protect cardholders from some interest rate hikes.
The rules include a restriction that will allow credit card companies to raise rates on existing credit card balances only when card holders are more than 30 days late, when they are receiving a promotional interest rate with a defined expiration date, or if the interest rate is tied to a specific market index, such as the London Interbank Offered Rate. Under the restriction, card companies would still be able to raise interest rates on new charges.
Bank Customers Close Accounts
The rules, however, don't go into effect until next year. For now, Congress is considering legislation that would impose similar rules sooner.
Some aren't waiting for government help to address their credit card troubles: They're closing their accounts.
"I believe the banks are not considering that the consumer can change banks, and I can assure you that I will," wrote Mary Wiles of Topeka, Kan. "It is like a slap in the face and I take it very personally."
For more on what you can do about high credit card interest rates, check out the latest column from ABC News consumer correspondent Elisabeth Leamy.
With reports from ABC News' Charles Herman and Justin Rood.
Banks Hike Fees Despite Bailout Billions; Consumers and Congressional Panel Ask Why
By ALICE GOMSTYN ABC NEWS April 13, 2009
The billions of dollars that banks have received in taxpayer funds since last year have been a growing source of outrage for American consumers. And in recent months, some banks have added serious insult to injury, leaving Americans like Tony Cesnik fuming about hikes they're seeing to their credit card rates and other bank-related fees.
"The banks have been given billions of dollars of tax money and only lend it out if customers are willing to pay extortion rights," said Cesnik, a Concord, Calif., resident, in a message to ABCNews.com. "The banks need a legal spanking. They are acting like spoiled brats!!"
Myriad banks have steadily been increasing credit card interest rates for some card holders in recent months. Bank customers are also seeing spikes in other fees: charges for bounced checks and ATM surcharges are climbing, according to Bankrate.com, a Web site that surveys financial institutions.
Scores of Americans sent angry messages to ABCNews.com about bank rate hikes. But everyday consumers aren't the only ones who believe something is awry -- the congressional panel that oversees the government's bank rescue plan, the Troubled Asset Relief Program, is taking an interest in the issue.
The Wall Street Journal reported today that complaints about bank fee spikes have prompted the Congressional Oversight Panel to launch a probe into the issue.
A panel official told ABC News, however, that there is no investigation under way but rather the issue may be covered in a future report.
"The people who subsidizing the activities of the banks through their tax dollars are the same people who are furnishing the high profits through consumer lending," Elizabeth Warren, the chairwoman of the panel, told the The Wall Street Journal. "In a sense, we're asking taxpayers to pay twice."
Banks Profits Reported This Week
Outrage over the higher fees has grown even as banks, which are due to release first-quarter earnings reports in coming days, have said they've seen a profitable start to 2009.
Last week, Wells Fargo said it expected record first-quarter earnings of $3 billion. Earlier this year, executives at Bank of America, Citigroup and JPMorgan Chase also said they are seeing profitable quarters.
But despite those positive results, the banks have also raised fees and credit card interest rates. Most recently, Bank of America -- which has received $45 billion TARP funding -- announced that it was raising interest rates on credit card customers who carry a balance.
One reason for such increases, some say, is that banks are trying to compensate for rising credit card defaults. But that reasoning just isn't enough for consumers like Gary Gates, of Marcellus, N.Y.
"You might be able to justify a small increase," Gates said in a message to ABCNews.com, but the banks "go overboard."
Why Rate Hikes? Banks Cite Tough Economy, High Borrowing Costs
A Bank of America spokeswoman told ABCNews.com that credit card customers who saw increases had their rates rise from below 10 percent to "the low- to mid-teens."
Betty Reiss said that the increase in loan defaults by Bank of America customers and other factors, including relatively high borrowing costs between banks, contributed to the bank's decision to raise rates.
"This is about properly pricing our portfolio either based on risk or realigning a portion of the portfolio that is priced below what is prudent in the current market," Reiss said.
Citigroup, which has received $50 billion TARP funds -- the most of any bank -- declined a request for comment.
The American Banking Association defended the banking industry today.
"I think the key thing to recognize is that what banks are doing is reacting to broader economic forces, the fact that we are in a recession," said ABA spokesman Peter Garuccio. "Whether we like it or not we're all less credit worthy today than we were just a few months ago."
Garuccio said that it's become harder for banks to fund credit card lines because it's more difficult to package credit card loans and sell them as securities.
"Roughly 50 percent of all credit card loans are funded through securitization," he said. "Because of the freeze up that has occurred in the capital markets that source of funding is relatively dry now."
Help for Credit Card Customers?
There is some relief on the way for credit card holders. Late last year, the Federal Reserve created new rules to protect cardholders from some interest rate hikes.
The rules include a restriction that will allow credit card companies to raise rates on existing credit card balances only when card holders are more than 30 days late, when they are receiving a promotional interest rate with a defined expiration date, or if the interest rate is tied to a specific market index, such as the London Interbank Offered Rate. Under the restriction, card companies would still be able to raise interest rates on new charges.
Bank Customers Close Accounts
The rules, however, don't go into effect until next year. For now, Congress is considering legislation that would impose similar rules sooner.
Some aren't waiting for government help to address their credit card troubles: They're closing their accounts.
"I believe the banks are not considering that the consumer can change banks, and I can assure you that I will," wrote Mary Wiles of Topeka, Kan. "It is like a slap in the face and I take it very personally."
For more on what you can do about high credit card interest rates, check out the latest column from ABC News consumer correspondent Elisabeth Leamy.
With reports from ABC News' Charles Herman and Justin Rood.
CNN IS THE BEST STILL!
CNN IS THE BEST STILL!
This past Sunday morning, 12 April 2009 had another example why
CNN is truly the best News Channel in the world!
When the news broke about CAPTAIN RICHARD PHILLPS
rescue from pirates at sea by our military.
CNN broke the news story while MSNBC had prefab programming
and actually was running a Video Professor commercial when
CNN broke the story.
Meanwhile FOX News Channel was running a pre record talk
by PASTOR RICK WARREN!
So much for covering the news!
I know CNN has its faults but it really does cover real news story best without too
Much of opinionated adjunct introductions.
Hart Kirch
This past Sunday morning, 12 April 2009 had another example why
CNN is truly the best News Channel in the world!
When the news broke about CAPTAIN RICHARD PHILLPS
rescue from pirates at sea by our military.
CNN broke the news story while MSNBC had prefab programming
and actually was running a Video Professor commercial when
CNN broke the story.
Meanwhile FOX News Channel was running a pre record talk
by PASTOR RICK WARREN!
So much for covering the news!
I know CNN has its faults but it really does cover real news story best without too
Much of opinionated adjunct introductions.
Hart Kirch
Sunday, April 12, 2009
Obama beats first national security test
Analysis: By JENNIFER LOVEN
AP White House Correspondent
The U.S. economy is showing only glimmers of life and two costly wars remain in the balance, but President Barack Obama's "no drama" handling of the Indian Ocean hostage crisis proved a big win for his administration in its first critical national security test.
Obama's quiet backstage decision to authorize the Defense Department to take necessary action if Capt. Richard Phillips' life was in imminent danger gave a Navy commander the go-ahead to order snipers to fire on the pirates holding the cargo ship captain at gunpoint.
For Obama, the benefits were instantly clear: an American life saved and a major victory notched against an increasingly worrisome scourge of the seas off the Horn of Africa.
Obama's handling of the crisis showed a president who was comfortable in relying on the U.S. military, much as his predecessor, George W. Bush, did.
But it also showed a new commander in chief who was willing to use all the tools at his disposal, bringing in federal law enforcement officials to handle the judicial elements of the crisis.
The rescue appeared to vindicate Obama's muted but determined handling of the incident. What won't be known for some time is whether Obama will benefit politically.
When Obama campaigns for re-election, he may take Bush's approach of turning any such incident into evidence of his leadership acumen. On the other hand, Obama didn't go before the cameras Sunday to trumpet the success, instead releasing a written statement that saluted the bravery of the military and Phillips but claimed no credit for himself.
Also, this crisis, while topping the news now, may fade into distant memory by the time voters get a chance to take any new measure of Obama and his party.
Still, it goes some way toward dispelling the notion that a liberal Democrat with a known distaste for war — Obama campaigned on his consistent opposition to the Iraq invasion — doesn't have the chops to call on U.S. military power.
The sniper operation Sunday, with pirate guns aimed at Phillips, was a daring, high-stakes gambit, and it could have easily gone awry. If it had, the fallout would have probably landed hardest on Obama.
Indeed, the last Democratic president to unleash American military might against Somalis suffered miserably from the failure of that operation. Portrayed in the book and movie "Black Hawk Down," a U.S. peacekeeping mission ordered by President Bill Clinton ended with a humiliating withdrawal of troops after a deadly clash in the Somali capital of Mogadishu.
The outcome this time was vastly different.
Since the standoff began last Tuesday, Obama made no public, in-person remarks on the topic, even declining to answer when questions were shouted at him during a press availability.
He didn't call in his Cabinet for a high-profile command meeting. He let military and top administration officials do the talking, but even they kept saber-rattling out of the equation.
White House chief of staff Rahm Emanuel said Obama's silence should not be interpreted to mean that he wasn't deeply involved. The president's public posture was calculated to not raise the temperature on the situation or give the hostage-takers anything to exploit.
"Let's not confuse a public role with being on top of the situation," Emanuel said. "If you'd interjected yourself, you would make the discussions that were happening more difficult."
So what Obama did was receive regular briefings, sometimes as often as half a dozen times a day. He weighed in with two critical decisions allowing the military to take action to save Phillips' life. And he laid the groundwork for a federal criminal law enforcement response.
White House officials said the Justice Department is already reviewing evidence to determine whether to file criminal charges against the captured Somali pirate. The U.S. is treating the matter as a criminal case because officials have found no direct ties between East African pirates and terror groups.
Obama doesn't like labels for himself or catch phrases for policy. So it's notable that in an administration that has for all intents and purposes banned the phrase "war on terror," no one called the pirates "terrorists."
AP White House Correspondent
The U.S. economy is showing only glimmers of life and two costly wars remain in the balance, but President Barack Obama's "no drama" handling of the Indian Ocean hostage crisis proved a big win for his administration in its first critical national security test.
Obama's quiet backstage decision to authorize the Defense Department to take necessary action if Capt. Richard Phillips' life was in imminent danger gave a Navy commander the go-ahead to order snipers to fire on the pirates holding the cargo ship captain at gunpoint.
For Obama, the benefits were instantly clear: an American life saved and a major victory notched against an increasingly worrisome scourge of the seas off the Horn of Africa.
Obama's handling of the crisis showed a president who was comfortable in relying on the U.S. military, much as his predecessor, George W. Bush, did.
But it also showed a new commander in chief who was willing to use all the tools at his disposal, bringing in federal law enforcement officials to handle the judicial elements of the crisis.
The rescue appeared to vindicate Obama's muted but determined handling of the incident. What won't be known for some time is whether Obama will benefit politically.
When Obama campaigns for re-election, he may take Bush's approach of turning any such incident into evidence of his leadership acumen. On the other hand, Obama didn't go before the cameras Sunday to trumpet the success, instead releasing a written statement that saluted the bravery of the military and Phillips but claimed no credit for himself.
Also, this crisis, while topping the news now, may fade into distant memory by the time voters get a chance to take any new measure of Obama and his party.
Still, it goes some way toward dispelling the notion that a liberal Democrat with a known distaste for war — Obama campaigned on his consistent opposition to the Iraq invasion — doesn't have the chops to call on U.S. military power.
The sniper operation Sunday, with pirate guns aimed at Phillips, was a daring, high-stakes gambit, and it could have easily gone awry. If it had, the fallout would have probably landed hardest on Obama.
Indeed, the last Democratic president to unleash American military might against Somalis suffered miserably from the failure of that operation. Portrayed in the book and movie "Black Hawk Down," a U.S. peacekeeping mission ordered by President Bill Clinton ended with a humiliating withdrawal of troops after a deadly clash in the Somali capital of Mogadishu.
The outcome this time was vastly different.
Since the standoff began last Tuesday, Obama made no public, in-person remarks on the topic, even declining to answer when questions were shouted at him during a press availability.
He didn't call in his Cabinet for a high-profile command meeting. He let military and top administration officials do the talking, but even they kept saber-rattling out of the equation.
White House chief of staff Rahm Emanuel said Obama's silence should not be interpreted to mean that he wasn't deeply involved. The president's public posture was calculated to not raise the temperature on the situation or give the hostage-takers anything to exploit.
"Let's not confuse a public role with being on top of the situation," Emanuel said. "If you'd interjected yourself, you would make the discussions that were happening more difficult."
So what Obama did was receive regular briefings, sometimes as often as half a dozen times a day. He weighed in with two critical decisions allowing the military to take action to save Phillips' life. And he laid the groundwork for a federal criminal law enforcement response.
White House officials said the Justice Department is already reviewing evidence to determine whether to file criminal charges against the captured Somali pirate. The U.S. is treating the matter as a criminal case because officials have found no direct ties between East African pirates and terror groups.
Obama doesn't like labels for himself or catch phrases for policy. So it's notable that in an administration that has for all intents and purposes banned the phrase "war on terror," no one called the pirates "terrorists."
RESCUE AT SEA 'Obama does it right again!'
In Rescue of Captain, Navy Kills 3 Pirates
By ROBERT D. MCFADDEN and SCOTT SHANE
Navy Seal snipers rescued an American cargo ship captain unharmed and killed three Somali pirates in a daring operation in the Indian Ocean on Sunday, ending a five-day standoff between United States naval forces and a small band of brigands in a covered orange lifeboat off the Horn of Africa.
Acting with President Obama’s authorization and in the belief that the hostage, Capt. Richard Phillips, was in imminent danger of being killed by captors armed with pistols and AK-47s, snipers on the fantail of the destroyer Bainbridge, which was towing the lifeboat on a 100-foot line, opened fire and picked off the three captors.
Two of the captors had poked their heads out of a rear hatch of the lifeboat, exposing themselves to clear shots, and the third could be seen through a window in the bow, pointing an automatic rifle at the captain, who was tied up inside the 18-foot lifeboat, senior Navy officials said.
It took only three remarkable shots — one each by snipers firing from a distance at dusk, using night-vision scopes, the officials said. Within minutes, rescuers slid down ropes from the Bainbridge, climbed aboard the lifeboat and found the three pirates dead. They then untied Captain Phillips, ending the contretemps at sea that had riveted much of the world’s attention. A fourth pirate had surrendered earlier.
Shortly after his rescue, Captain Phillips was taken aboard the Bainbridge, underwent a medical exam and was found to be in relatively good condition for a 53-year-old seafarer who had been held since Wednesday by pirates who had demanded $2 million for his life. He called home and was flown to the Boxer, an amphibious assault ship also off the Somali coast. Arrangements were being made Sunday night for his return home to Vermont.
“I share the country’s admiration for the bravery of Captain Phillips and his selfless concern for his crew,” Mr. Obama said in a statement. “His courage is a model for all Americans.”
Jubilation over the dramatic rescue reached from the White House to Underhill, Vt., Captain Phillips’s hometown, and from personnel aboard the Bainbridge to the cheering, fist-pumping 19-member crew of the captain’s cargo ship, the Maersk Alabama, docked in Mombasa, Kenya.
Captain Phillips, who was said to be resting comfortably, spoke to officials of the Maersk Line, who quoted him as saying: “The real heroes are the Navy, the Seals, those who have brought me home.” He also spoke to his wife, Andrea, and two college-aged children in Underhill, where dozens of yellow ribbons fluttered on the white picket fence of his home and two small American flags jutted up from the lawn.
“This is truly a very happy Easter for the Phillips family,” said Alison McColl, a Maersk representative assigned to speak for the family. “They are all just so happy and relieved,” she said. “I think you can all imagine their joy and what a happy moment it was for them.”
On the family’s behalf, Ms. McColl thanked the nation and the people of Vermont for their prayers and support. . “Obviously, this has been a long journey for the family,” she said. John Reinhart, president and chief executive of Maersk Line Ltd., praised the Navy and federal officials for their performance. “Everyone’s worked around the clock,” he said. “It’s magnificent to see the outcome.”
While the outcome was a triumph for America, officials in many countries plagued by pirates said it was not likely to discourage them. Pirates are holding a dozen ships with more than 200 crew members, according to the Malaysia-based International Maritime Bureau.
In Somalia itself, other pirates reacted angrily to the news that Captain Phillips had been rescued, and some said they would avenge the deaths of their colleagues by killing Americans in sea hijackings to come.
“Every country will be treated the way it treats us,” Abdullahi Lami, one of the pirates holding a Greek ship anchored in the pirate den of Gaan, a central Somali town, was quoted by The Associated Press as saying in a telephone interview. “In the future, America will be the one mourning and crying.”
Aboard the Maersk Alabama, a 17,000-ton cargo ship, Captain Phillips’s crew erupted in cheers, waved American flags and fired off flares. When four pirates attacked the ship on Wednesday, the crew escaped harm after the captain offered himself as a hostage. He told his crewmen to lock themselves in cabins, and allowed himself to be taken at gunpoint into the lifeboat in which the pirates fled.
Over the ensuing days, according to official accounts of the episode, the pirates made repeated threats to kill the captain as their motorized lifeboat moved about 30 miles off the Somali coast. It was closely watched by United States warships and helicopters in an increasingly tense standoff.
Talks to free the captain began Thursday, with the commander of the Bainbridge communicating with the pirates under instructions from F.B.I. hostage negotiators flown to the scene. The pirates threatened to kill Captain Phillips if attacked, and the result was tragicomic: the world’s most powerful navy vs. a lifeboat.
Vice Adm. William E. Gortney, commander of the United States naval forces in the region, said in a briefing in Bahrain that despite ransom demands from the pirates the United States had not discussed any ransom and had talked to the pirates only about the release of Captain Phillips and the pirates’ surrender.
The Defense Department twice sought Mr. Obama’s permission to use force to rescue Captain Phillips, most recently on Friday night, senior defense officials said. On Saturday morning, the president agreed, they said, if it appeared that the captain’s life was in imminent danger.
By Friday, with several warships within easy reach of the lifeboat, the negotiations had gone nowhere. Captain Phillips jumped into the sea, but was quickly recaptured. On Saturday, the pirates fired several shots at a small boat that had approached from the Bainbridge.
By the weekend, however, the pirates had begun to run out of food, water and fuel. That apparently provided the opening officials were hoping for. In briefings, senior officers who spoke anonymously because they had not been authorized to disclose information said that the pirates agreed to accept food and water. A small craft was used to deliver them and it apparently made several trips between the Bainbridge and the lifeboat.
On one trip, one of the four pirates — whose hand had been gashed during the capture of Captain Phillips — asked for medical treatment and, in effect surrendering, was taken in the small boat to the Bainbridge. Justice Department officials were studying options for his case, including criminal charges in the United States or turning him over to Kenya, where dozens of pirates have faced prosecution. Three pirates were left on board with Captain Phillips.
Meanwhile, members of the Navy Seals were flown in by fixed-wing aircraft. They parachuted into the sea with inflatable boats and were picked up by the Bainbridge. On Sunday, the pirates, their fuel gone, were drifting toward the Somali coast. They agreed to accept a tow from the Bainbridge, the senior officials said. At first, the towline was 200 feet long, but as darkness gathered and seas became rough, the towline was shortened to 100 feet, the officials said. It was unclear if this was done with the pirates’ knowledge.
At dusk, a single tracer bullet was seen fired from the lifeboat. The intent was unclear, but it ratcheted up the tension and Seal snipers at the stern rail of the Bainbridge fixed night-vision scopes to their high-powered rifles, getting ready for action.
What they saw was the head and shoulders of two of the pirates emerging from the rear hatch of the lifeboat. Through the window of the front hatch they saw the third pirate, pointing his AK-47 at the back of Captain Phillips, who was seen to be tied up.
That was it: the provocation that fulfilled the president’s order to act only if the captain’s life was in imminent danger, and the opportunity of having clear shots at each captor. The order was given. Senior defense officials, themselves marveling at the skill of the snipers, said each took a target and fired one shot.
“This was an incredible team effort,” Admiral Gortney said when it was over. “And I am extremely proud of the tireless efforts of all the men and women who made this rescue possible.”
By ROBERT D. MCFADDEN and SCOTT SHANE
Navy Seal snipers rescued an American cargo ship captain unharmed and killed three Somali pirates in a daring operation in the Indian Ocean on Sunday, ending a five-day standoff between United States naval forces and a small band of brigands in a covered orange lifeboat off the Horn of Africa.
Acting with President Obama’s authorization and in the belief that the hostage, Capt. Richard Phillips, was in imminent danger of being killed by captors armed with pistols and AK-47s, snipers on the fantail of the destroyer Bainbridge, which was towing the lifeboat on a 100-foot line, opened fire and picked off the three captors.
Two of the captors had poked their heads out of a rear hatch of the lifeboat, exposing themselves to clear shots, and the third could be seen through a window in the bow, pointing an automatic rifle at the captain, who was tied up inside the 18-foot lifeboat, senior Navy officials said.
It took only three remarkable shots — one each by snipers firing from a distance at dusk, using night-vision scopes, the officials said. Within minutes, rescuers slid down ropes from the Bainbridge, climbed aboard the lifeboat and found the three pirates dead. They then untied Captain Phillips, ending the contretemps at sea that had riveted much of the world’s attention. A fourth pirate had surrendered earlier.
Shortly after his rescue, Captain Phillips was taken aboard the Bainbridge, underwent a medical exam and was found to be in relatively good condition for a 53-year-old seafarer who had been held since Wednesday by pirates who had demanded $2 million for his life. He called home and was flown to the Boxer, an amphibious assault ship also off the Somali coast. Arrangements were being made Sunday night for his return home to Vermont.
“I share the country’s admiration for the bravery of Captain Phillips and his selfless concern for his crew,” Mr. Obama said in a statement. “His courage is a model for all Americans.”
Jubilation over the dramatic rescue reached from the White House to Underhill, Vt., Captain Phillips’s hometown, and from personnel aboard the Bainbridge to the cheering, fist-pumping 19-member crew of the captain’s cargo ship, the Maersk Alabama, docked in Mombasa, Kenya.
Captain Phillips, who was said to be resting comfortably, spoke to officials of the Maersk Line, who quoted him as saying: “The real heroes are the Navy, the Seals, those who have brought me home.” He also spoke to his wife, Andrea, and two college-aged children in Underhill, where dozens of yellow ribbons fluttered on the white picket fence of his home and two small American flags jutted up from the lawn.
“This is truly a very happy Easter for the Phillips family,” said Alison McColl, a Maersk representative assigned to speak for the family. “They are all just so happy and relieved,” she said. “I think you can all imagine their joy and what a happy moment it was for them.”
On the family’s behalf, Ms. McColl thanked the nation and the people of Vermont for their prayers and support. . “Obviously, this has been a long journey for the family,” she said. John Reinhart, president and chief executive of Maersk Line Ltd., praised the Navy and federal officials for their performance. “Everyone’s worked around the clock,” he said. “It’s magnificent to see the outcome.”
While the outcome was a triumph for America, officials in many countries plagued by pirates said it was not likely to discourage them. Pirates are holding a dozen ships with more than 200 crew members, according to the Malaysia-based International Maritime Bureau.
In Somalia itself, other pirates reacted angrily to the news that Captain Phillips had been rescued, and some said they would avenge the deaths of their colleagues by killing Americans in sea hijackings to come.
“Every country will be treated the way it treats us,” Abdullahi Lami, one of the pirates holding a Greek ship anchored in the pirate den of Gaan, a central Somali town, was quoted by The Associated Press as saying in a telephone interview. “In the future, America will be the one mourning and crying.”
Aboard the Maersk Alabama, a 17,000-ton cargo ship, Captain Phillips’s crew erupted in cheers, waved American flags and fired off flares. When four pirates attacked the ship on Wednesday, the crew escaped harm after the captain offered himself as a hostage. He told his crewmen to lock themselves in cabins, and allowed himself to be taken at gunpoint into the lifeboat in which the pirates fled.
Over the ensuing days, according to official accounts of the episode, the pirates made repeated threats to kill the captain as their motorized lifeboat moved about 30 miles off the Somali coast. It was closely watched by United States warships and helicopters in an increasingly tense standoff.
Talks to free the captain began Thursday, with the commander of the Bainbridge communicating with the pirates under instructions from F.B.I. hostage negotiators flown to the scene. The pirates threatened to kill Captain Phillips if attacked, and the result was tragicomic: the world’s most powerful navy vs. a lifeboat.
Vice Adm. William E. Gortney, commander of the United States naval forces in the region, said in a briefing in Bahrain that despite ransom demands from the pirates the United States had not discussed any ransom and had talked to the pirates only about the release of Captain Phillips and the pirates’ surrender.
The Defense Department twice sought Mr. Obama’s permission to use force to rescue Captain Phillips, most recently on Friday night, senior defense officials said. On Saturday morning, the president agreed, they said, if it appeared that the captain’s life was in imminent danger.
By Friday, with several warships within easy reach of the lifeboat, the negotiations had gone nowhere. Captain Phillips jumped into the sea, but was quickly recaptured. On Saturday, the pirates fired several shots at a small boat that had approached from the Bainbridge.
By the weekend, however, the pirates had begun to run out of food, water and fuel. That apparently provided the opening officials were hoping for. In briefings, senior officers who spoke anonymously because they had not been authorized to disclose information said that the pirates agreed to accept food and water. A small craft was used to deliver them and it apparently made several trips between the Bainbridge and the lifeboat.
On one trip, one of the four pirates — whose hand had been gashed during the capture of Captain Phillips — asked for medical treatment and, in effect surrendering, was taken in the small boat to the Bainbridge. Justice Department officials were studying options for his case, including criminal charges in the United States or turning him over to Kenya, where dozens of pirates have faced prosecution. Three pirates were left on board with Captain Phillips.
Meanwhile, members of the Navy Seals were flown in by fixed-wing aircraft. They parachuted into the sea with inflatable boats and were picked up by the Bainbridge. On Sunday, the pirates, their fuel gone, were drifting toward the Somali coast. They agreed to accept a tow from the Bainbridge, the senior officials said. At first, the towline was 200 feet long, but as darkness gathered and seas became rough, the towline was shortened to 100 feet, the officials said. It was unclear if this was done with the pirates’ knowledge.
At dusk, a single tracer bullet was seen fired from the lifeboat. The intent was unclear, but it ratcheted up the tension and Seal snipers at the stern rail of the Bainbridge fixed night-vision scopes to their high-powered rifles, getting ready for action.
What they saw was the head and shoulders of two of the pirates emerging from the rear hatch of the lifeboat. Through the window of the front hatch they saw the third pirate, pointing his AK-47 at the back of Captain Phillips, who was seen to be tied up.
That was it: the provocation that fulfilled the president’s order to act only if the captain’s life was in imminent danger, and the opportunity of having clear shots at each captor. The order was given. Senior defense officials, themselves marveling at the skill of the snipers, said each took a target and fired one shot.
“This was an incredible team effort,” Admiral Gortney said when it was over. “And I am extremely proud of the tireless efforts of all the men and women who made this rescue possible.”
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