Obama says he fears economy could enter 'new normal' of low job growth
Sunday, November 7, 2010; 10:31 PM
Without additional government action to spur hiring, President Obama said Sunday that he fears the U.S. economy could enter a "new normal" in which corporate profits are high but the number of new jobs is too low to reduce the nation's 9.6 percent unemployment rate to pre-recession levels.
"What is a danger is that we stay stuck in a new normal where unemployment rates stay high," he said in an interview aired Sunday night on CBS's "60 Minutes." "People who have jobs see their incomes go up. Businesses make big profits. But they've learned to do more with less. And so they don't hire. And as a consequence, we keep on seeing growth that is just too slow to bring back the 8 million jobs that were lost."
The sit-down interview, Obama's first since Republicans gave him what he called a "shellacking" in last week's congressional midterm elections, focused heavily on the fragile economy and its starring role in the reversal of Democrats' political fortunes. He lamented his inability to make more headway in creating jobs, conceding that "I do get discouraged."
"I thought the economy would have gotten better by now," he said. "One of the things I think you understand as president is you're held responsible for everything. But you don't always have control of everything."
Since he took office at the height of the worst economic downturn since the Great Depression, Obama has signed an economic stimulus package of historic proportions, overseen the bailout of the nation's financial industry and watched the Federal Reserve cut interest rates effectively to zero and move to purchase hundreds of billions of dollars in Treasury bonds to help stimulate activity. After all that, he said Sunday, there may be limits to what more government can do.
"Some of this is going to be just a matter of the economy healing," he said. "Especially an economy this big, there are limited tools to encourage the kind of job growth that we need.
Still, Obama renewed his call for fresh investments in the nation's crumbling infrastructure to help put the hard-hit construction sector back to work. Although Republicans have ruled out direct government spending on the economy - and have even rejected targeted tax cuts to encourage businesses to hire - Obama noted that, "historically, rebuilding our infrastructure is something that has garnered Democratic and Republican support."
"During election season, I think, the rhetoric flies. And by the way, I've been guilty of that. It's not just them," he said, referring to House Minority Leader John A. Boehner (R-Ohio) and Senate Minority Leader Mitch McConnell (R-Ky.). "Part of my promise to the American people when I was elected was to maintain the kind of tone that says we can disagree without being disagreeable. And I think over the course of two years there have been times where I've slipped on that commitment."
Asked about his deteriorating relationship with the business community, he acknowledged it had become a problem. The word he used was "strained."
"I think that we've got some repair work to do there," Obama said. "These were exceptional circumstances over the last two years. I think we have to make sure that people understand and business understands that my overarching philosophy is not one in which we have constantly increasing government intervention. Although I do think that some of the provisions we put in place to protect consumers, to correct, create a regulatory framework where we don't have a repeat of the kind of crisis we had in the banking sector, those have to be preserved."