March 12, 2009 / 11:16 PM / 11 years ago

Obama defends economic plans to business leaders

WASHINGTON (Reuters) - President Barack Obama launched a sweeping defense 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.

President Barack Obama is pictured at a meeting of business leaders at a hotel in Washington, March 12, 2009. REUTERS/Jason Reed

Obama, who has spent his first weeks in office trying to stabilize the financial system and tackle the U.S. 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 U.S. companies.

The U.S. president defended his administration’s efforts to revamp the U.S. 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 don’t 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 U.S. February retail sales, which boosted U.S. stocks and extended a two-day rally.

Obama has been viewed by some in the business community with skepticism 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.

“There’s 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 group’s chairman. “From our standpoint, that couldn’t 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 you’re giving away carbon permits for free, then basically you’re not really pricing the thing and it doesn’t work, or people can game the system in so many ways that it’s not creating the incentive structures we’re 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.

additional reporting by Andy Sullivan, Tabassum Zakaria, Matt Spetalnick, Caren Bohan, and Ross Colvin; Editing by Paul Simao

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