The market is tanking. The unemployment rate is still north of 9% and much higher when you count those who have stopped looking. It is almost a given that we are on the verge of a second recession. Corporations are sitting on mountains of cash, waiting for demand to re-emerge. And governments here and in Europe are fixated on lowering deficits and debt in what has turned into an undisguised contest between creditors who insist on being paid and debtors who can't do it.
We are in big trouble.
And, better late than never, the president has to come out swinging.
Here is what he should say:
"Fellow Americans --
On a crisp fall day in November almost three years ago, you and I made history. We proved the naysayers wrong and the optimists right. Instead of just talking about American exceptionalism, we demonstrated it.
We relegated our two centuries plus compromise on Jefferson's promise that "all men are created equal" to the proverbial dustbin of history, elected the son of a Kenyan immigrant and Kansas student to our highest office, and reignited the American dream for many across the globe who wondered if it still truly existed.
Today, it is time to call on that exceptionalism once again.
Our nation and our world is hurting.
Close to one fifth of our fellow citizens are unemployed or underemployed. Economic growth across much of the world is now anemic as demand in developed countries -- our own included -- has stagnated. Home values have plummeted. And so have the retirement nest eggs in our 401k's. The vast majority of you think the nation is on the wrong track. And you are right.
The reasons for this downward spiral are not all that mysterious.
From 2001 to 2008, we turned a federal surplus into our largest federal deficit. We gave the rich and super rich tax breaks they didn't need and that many of them did not even want. We fought two wars but paid for neither of them. And we continued our now thirty year love affair with deregulation, allowing Wall Street to create worthless mortgage backed securities that it peddled the world over, armed with nothing more than Standard & Poor's phony assurances that these securities would never go under.
Well, and not for the first time, Wall Street was wrong.
And so was S & P.
The result was the financial crisis of September 2008, two months before I was elected and four months before I took the oath of office.
That crisis drove America and the world to the brink of Depression. Huge financial houses collapsed or had to be substantially reorganized. Their names are familiar to all of us -- Lehman Brothers, AIG, Bank of America, Merrill Lynch. Much to the chagrin of many of you, the government was forced to bail out the banks, those same irresponsible parties who had brought the world to the brink in the first place. But if we had not done that, all most assuredly would have been lost. And we would have suffered the first Depression in almost eighty years.
There are not many of us alive who remember the 1930s. And none of them seem to be in Congress. But those who refuse to study history are condemned to repeat it. So it behooves us to take a look back at that grim decade -- an America of 25-30% unemployment, whole families living in shanty towns in our public parks, children going to bed hungry at night, poverty on the rise, especially among the aged, and business at a standstill. And it also behooves us to understand how we were able to end that Depression.
Because the answer may surprise many of us living in today's America. And it will certainly surprise my opponents in Congress and on the Presidential campaign trail. The answer is simple --
The Government did it.
We called it the New Deal then, crafted and guided by a President -- Franklin Roosevelt -- who lifted himself from a wheelchair to lift this nation from its knees. Roosevelt's New Deal put people to work, stimulated demand, regulated finance capital to end the abuses that had caused the Depression, and ended poverty among the aged with Social Security.
And today we need to do much of that again.
So tonight I am proposing, and tomorrow I will send to Congress, a New Deal for the 21st Century. Call it New Deal, 2.1.
Instead of ignoring the weapons at our disposal in the current fight against unemployment and recession, it will enlist them. Instead of pretending the private sector will magically renew itself, it will create the demand business needs to spend the money it is now sitting on and generate the growth and jobs we so desperately need. Instead of trusting Wall Street and the multi-nationals to behave themselves and pay their taxes, it will use the long arm of the regulatory state and the law to make them do it. And instead of assuming Government is the problem, it will use Government to solve the problem.
The centerpiece of today's New Deal will be a stimulus sufficient to the size of the problem at hand. It is time to stop playing politics with our economy. Without consumer spending, there can be no recovery. And at this point, the only way to get consumers to spend is to lower their debt burdens and get them the jobs that will give them the money necessary to do so. To do so, I will ask Congress to fund an additional $200 billion stimulus for this fiscal year and the next. The only strings attached will be requirements that the money increase consumer demand. It will not be used to shore up banks or enrich those who were so heavily favored over the past ten years. It will be used to permit states to fund the projects now suspended due to their own budget crises, and to put money in the pockets of America's working class.
Wall Street, of course, did not just nearly cripple the American economy in the last quarter of 2008. It also left us with a very painful hangover in the form of a housing market where values are going down, foreclosures are going up, and even willing buyers and sellers face difficult and often insurmountable barriers to completing their deals. The central reason for this problem in the housing market is the glut of foreclosed properties. In the past, I have proposed programs that were designed to incentivize private lenders to renegotiate existing loans in an effort to alleviate and ultimately resolve the foreclosure problem. Those efforts have not been sufficient. So tonight I am proposing the creation of a new Federal Housing Authority. This FHA will have the power to write new mortgages with lengthened terms and lower interest rates so that properties in foreclosure can be re-financed and the housing market can recover.
And here too it is helpful to remember some history. The 30-year mortgage Michelle and I used to buy our home in Chicago was not some vehicle given to us by the ancients. In fact, at the start of the Depression in the 1930s, it did not even exist. Most of the properties foreclosed upon then were under mortgages containing much stricter terms -- typically five years of interest only payments with principal due in the form of a balloon payment at the end. It was no wonder that those without jobs lost their homes and farms as the Depression continued.
President Roosevelt more or less invented the 30-year mortgage to fix that problem in the '30s. And today we should imitate his creativity and fashion a mortgage instrument sufficient to the challenges of today's housing market
I know my opponents will oppose this New Deal for the 21st Century. They will say we cannot afford it. They will claim it is Government run amok and that I am a Socialist or worse. They will embrace the rhetoric of our founders while they demonize the very Government those founders gave us. In truth, as with the sorry recent spectacle in which necessary debt ceiling legislation was held hostage to the extreme views of the irresponsible and the uninformed, they will try to create a new crisis rather than solve any existing problems.
They, however, are not new to America or unique to this era. They are merely the heirs to the plutocrats who denounced President Roosevelt in the 1930s. They have spent much of the last three years worrying more about my birth certificate than your jobs. And they have spent all of the last Congress avoiding the problems that you and I hired them to work on and solve. Almost all their ideas -- from continued tax cuts for the rich to deregulation of the financial sector -- have been tried and have failed. So, unable or unwilling to confront the reality of their own failures, they have simply taken to repeatedly, and often viciously, denouncing me.
This too, however, is an old song sung by deniers throughout our history. Indeed, in the 1930s, those same sorts denounced President Roosevelt. He knew it and so did everyone else. As he put it then: "Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me. And I welcome their hatred."
Tonight, I join my predecessor, FDR.
I welcome their hatred as well.
It's time to put America to work again. There is not a family among us that faces a problem by denying itself the tools necessary to solve that problem. And neither will we. A friend of mine once counseled that we should pray as if everything depends upon God but act as it everything depends upon us. And so we will --
Beseeching the Almighty to give us the strength and wisdom necessary to reject outworn shibboleths.
Thanking our God for the plenty with which we still are blessed.
But in the end echoing President Kennedy's understanding that, on this earth, God's work must truly be our own. "