July 29, 2009 / 4:30 PM / 10 years ago

UPDATE 2-Obama vigorously defends economic policies

* Obama says stimulus policies averted depression

* Obama expects carmakers will pay back government loans (Adds quotes, color)

By David Alexander

RALEIGH, N.C., July 29 (Reuters) - President Barack Obama launched a spirited defense of his economic policies on Wednesday, declaring that they had helped save the country from plunging into a depression.

With a spate of polls showing Americans have growing doubts about his policies, Obama said bank and auto bailouts and stimulus spending were necessary to stop the economic bleeding.

“We may be seeing the beginning of the end of the recession,” he said,

Speaking at a campaign-style town hall meeting at a North Carolina school gymnasium, Obama took on Republican critics who say his $787 billion economic stimulus plan has failed to prevent the jobless rate from rising to 9.5 percent.

“I can’t help but remember those same critics contributed to a $1.3 trillion deficit that I inherited when I took office,” Obama told the crowd of about 2,200 people at Broughton High School.

“I do think we should have a collective memory in terms of spending habits,” he added. “You hand me a $1.3 trillion bill, and then you’re complaining six months later that we haven’t paid it all back.”

The president’s trip aimed to promote his plans to overhaul the U.S. healthcare system. He was met by protesters outside the venue waving signs saying “Hands off my healthcare” and “The road to hell: No Obama Care.”

But his opening remarks were mostly about the economy. Obama said he was startled to see a Newsweek magazine cover that declared, “The Recession is Over.”

“Here’s what’s true. We have stopped the freefall. The market is up and the financial system is no longer on the verge of collapse. That’s true. We’re losing jobs at half the rate we were when I took office six months ago,” he said.

“We just saw home prices rise for the first time in three years. So there’s no doubt that things have gotten better ... But that’s little comfort if you’re one of the folks who have lost their job, and haven’t found another.”


Republicans have complained that the stimulus plan has not jump-started the economy. They criticized Vice President Joe Biden for writing in The New York Times on Sunday that the stimulus was not intended to provide a short-term “jolt” but rather steady support over an extended period.

Obama said two-thirds of stimulus funds went for tax cuts and to help people who had lost jobs, while the billions spent to bail out banks were vital.

“By unlocking frozen credit markets and opening up loans for families and businesses, we helped stop a recession from becoming a depression. And taxpayers are already being paid back — with interest,” he said.

Bailing out Chrysler and General Motors helped saved thousands of jobs and prevented further economic upheaval and the government expects “to get our money back,” he said.

Obama said he was concerned about the deficit, which is projected to grow to $1.8 trillion this year, but reining in spending now would be a mistake.

“We are going to have to tighten our belt, but we can’t do it as the economy is coming out of recession,” he said.

Obama’s job approval rating has slid recently, as Americans expressed doubts about his policies. A new National Public Radio poll put him at 53 percent approval.

Forty five percent of those surveyed thought his economic policies helped avert an even worse crisis while 48 percent believed they had run up a record federal deficit while failing to end the recession or slow the job losses. (Additional reporting by Ross Colvin, writing by David Alexander and Steve Holland, editing by Alan Elsner)

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