President Barack Obama launched a sweeping defence of his economic and budget proposals on Thursday, saying government had to step in at a time of crisis to push the economy toward growth. Obama, who has spent his first weeks in office trying to stabilise the financial system and tackle the US recession, said he believed private enterprise should take responsibility for economic growth once government intervention succeeded.
"Government has to intervene in a crisis, but the goal should always be to right the ship and let private enterprise do its magic," he told a group of more than 60 business leaders from top US companies.
The US president defended his administrations efforts to revamp the US healthcare, education and energy systems simultaneously with efforts to fix the economy - a strategy some critics have said lacks focus. He said his administration and its 10-year budget forecasts focused on the long-term. "My focus has to be on the long-term and my long-term projections are highly optimistic," Obama said. "The one thing I dont want to do is to replicate the false confidence that was premised on bubbles."
Obama and his economic team have faced criticism for rolling out proposals that have at times lacked clarity and come against a backdrop of worsening economic data. His administration got a lift on Thursday with the release of unexpectedly better US February retail sales, which boosted US stocks and extended a two-day rally.
Obama has been viewed by some in the business community with scepticism since his election last November and the opposition Republicans have blasted his administration for what they see as a soft march toward socialism. But executives who attended the Business Roundtable event on Thursday gave the president a warm reception.
"Theres a misperception, I think, in some peoples minds that the relationship between business and the Obama administration is like, well, oil and vinegar," said Harold McGraw, the groups chairman. "From our standpoint, that couldnt be farther from the truth."
Obama repeated his call for regulatory reform but said it should be implemented without stifling entrepreneurship. In one potential concession, the Democratic president also indicated some flexibility over plans to sell all carbon dioxide permits to industry in a future cap-and-trade system aimed at reducing greenhouse gas emissions. "If youre giving away carbon permits for free, then basically youre not really pricing the thing and it doesnt work, or people can game the system in so many ways that its not creating the incentive structures were looking for," Obama said, referring to his main proposal to fight climate change.
He added that he would be willing to consider lowering the corporate tax rate if the business community helped him to close tax loopholes. Obama said that strengthening the banking system through an honest accounting of balance sheets was key to solving the financial crisis, though he added that information was still missing from some of the struggling banks. "The weakened condition of some of our largest banks has implications for the entire system," he said.
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