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Obama's message on the economy: Trust me

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This summer Congress will engage in a committee-by-committee battle over some of the defining proposals of the Obama presidency, including healthcare reform and a cap-and-trade system intended to curb the nation's emission of greenhouse gases. The administration will also probably have to request some additional actions that could be deeply unpopular with the public, from a tripling of US contributions to the International Monetary Fund (IMF) to a possible further appropriation for the bailout of financial institutions.

Meanwhile, Obama is enjoying high popularity ratings. But the ratings are for him, personally – not for his administration at large.

A recent Gallup poll found that 71 percent of respondents had at least a fair amount of confidence that Obama would do the right thing for the economy. But the corresponding figure for Treasury Secretary Timothy Geithner was only 47 percent. Federal Reserve Chairman Ben Bernanke got a corresponding rating of 49 percent.

With his speech, Obama perhaps was attempting the feat of hitching all of his agenda, even the potentially unpopular bits, to his own rising star.

"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," said Obama.

The stimulus package was necessary, said the president, to prop up spending flowing through the economy. He said that bailouts for banks and other financial institutions, however unpopular, are needed because history shows that unless credit markets are quickly stabilized, recessions can drag on for years.

"The truth is that a dollar of capital in a bank can actually result in $8 or $10 of loans to families and businesses, a multiplier effect that can ultimately lead to a faster pace of economic growth," said Obama.

The US has not gone even further and nationalized banks, not because of some ideological hesitance, but because officials believe that such a move in the end would cost the taxpayers more money than the current strategy, said the president.

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