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President Barack Obama today held a press conference and addressed the latest developments in Europe. He urged Greeks to chose to remain in the eurozone and expressed sympathy for the hardship they are enduring as they navigate their way through the crisis.
TRANSCRIPT OF PRESIDENT OBAMA’S REMARKS
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THE PRESIDENT: Good morning. I just want to say a few words about the economy, and then I will take some of your questions.
Today, we’re fighting back from the deepest economic crisis since the Great Depression. After losing jobs for 25 months in a row, our businesses have now created jobs for 27 months in a row — 4.3 million new jobs in all. The fact is job growth in this recovery has been stronger than in the one following the last recession a decade ago. But the hole we have to fill is much deeper and the global aftershocks are much greater. That’s why we’ve got to keep on pressing with actions that further strengthen the economy.
Right now, one concern is Europe, which faces a threat of renewed recession as countries deal with a financial crisis. Obviously this matters to us because Europe is our largest economic trading partner. If there’s less demand for our products in places like Paris or Madrid it could mean less businesses — or less business for manufacturers in places like Pittsburgh or Milwaukee.
The good news is there is a path out of this challenge. These decisions are fundamentally in the hands of Europe’s leaders, and fortunately, they understand the seriousness of the situation and the urgent need to act. I’ve been in frequent contact with them over the past several weeks, and we know that there are specific steps they can take right now to prevent the situation there from getting worse.
In the short term, they’ve got to stabilize their financial system. And part of that is taking clear action as soon as possible to inject capital into weak banks. Just as important, leaders can lay out a framework and a vision for a stronger eurozone, including deeper collaboration on budgets and banking policy. Getting there is going to take some time, but showing the political commitment to share the benefits and responsibilities of a integrated Europe will be a strong step.
With respect to Greece, which has important elections next weekend, we’ve said that it is in everybody’s interest for Greece to remain in the eurozone while respecting its commitments to reform. We recognize the sacrifices that the Greek people have made, and European leaders understand the need to provide support if the Greek people choose to remain in the eurozone. But the Greek people also need to recognize that their hardships will likely be worse if they choose to exit from the eurozone.
Over the longer term, even as European countries with large debt burdens carry out necessary fiscal reforms, they’ve also got to promote economic growth and job creation. As some countries have discovered, it’s a lot harder to rein in deficits and debt if your economy isn’t growing. So it’s a positive thing that the conversation has moved in that direction, and leaders like Angela Merkel and Francois Hollande are working to put in place a growth agenda alongside responsible fiscal plans.
The bottom line is the solutions to these problems are hard, but there are solutions. The decisions required are tough, but Europe has the capacity to make them. And they have America’s support. Their success is good for us. And the sooner that they act, and the more decisive and concrete their actions, the sooner people and markets will regain some confidence and the cheaper the costs of cleanup will be down the road.
In the meantime, given the signs of weakness in the world economy, not just in Europe but also some softening in Asia, it’s critical that we take the actions we can to strengthen the American economy right now. [...]
And with that, I’m going to take a couple of questions. And I’m going to start with Caren Bohan — who is with Reuters, but as we all know, is about to go get a fancy job with National Journal. (Laughter.) And we’re very proud of her. So congratulations to you, Caren. You get the first crack at me.
Q Thank you very much, Mr. President. Could you tell the American people what role the United States is playing in the European debt crisis? And also, do you think European leaders have a handle on what’s needed to stem the crisis? And finally, you talked about a number of ideas that you’ve already put forth to shield the American economy. Do you plan to give a speech or lay out additional ideas now that the crisis is really escalating?
THE PRESIDENT: Well, a couple of things. First of all, the situation in Europe is not simply a debt crisis. You’ve got some countries like Greece that genuinely have spent more than they’re bringing in, and they’ve got problems. There are other countries that actually were running a surplus and had fairly responsible fiscal policies but had weaknesses similar to what happened here with respect to their housing market or the real estate markets, and that has weakened their financial system. So there are a bunch of different issues going on in Europe. It’s not simply a debt crisis.
What is true is, is that the markets getting nervous have started making it much more expensive for them to borrow, and that then gets them on a downward spiral.
We have been in constant contact with Europe over the last — European leaders over the last two years, and we have consulted with them both at the head of government and head of state level. I frequently speak to the leaders not only at formal settings like the G8 but also on the telephone or via videoconference. And our economic teams have gone over there to consult.
As I said in my opening remarks, the challenges they face are solvable. Right now, their focus has to be on strengthening their overall banking system — much in the same way that we did back in 2009 and 2010 — making a series of decisive actions that give people confidence that the banking system is solid, that capital requirements are being met, that various stresses that may be out there can be absorbed by the system. And I think that European leaders are in discussions about that and they’re moving in the right direction.
In addition, they’re going to have to look at how do they achieve growth at the same time as they’re carrying out structural reforms that may take two or three or five years to fully accomplish. So countries like Spain and Italy, for example, have embarked on some smart structural reforms that everybody thinks are necessary — everything from tax collection to labor markets to a whole host of different issues. But they’ve got to have the time and the space for those steps to succeed. And if they are just cutting and cutting and cutting, and their unemployment rate is going up and up and up, and people are pulling back further from spending money because they’re feeling a lot of pressure — ironically, that can actually make it harder for them to carry out some of these reforms over the long term.
So I think there’s discussion now about, in addition to sensible ways to deal with debt and government finances, there’s a parallel discussion that’s taking place among European leaders to figure out how do we also encourage growth and show some flexibility to allow some of these reforms to really take root.
Now, keep in mind that this obviously can have a potential impact on us because Europe is our largest trading partner. The good news is, is that a lot of the work we did back in 2009 and 2010 have put our financial system on a much more solid footing. Our insistence of increasing capital requirements for banks means that they can absorb some of the shocks that might come from across the Atlantic. Folks in the financial sector have been monitoring this carefully and I think are prepared for a range of contingencies.
But even if we weren’t directly hit in the sense that our financial system still stayed solid, if Europe goes into a recession that means we’re selling fewer goods, fewer services, and that is going to have some impact on the pace of our recovery. So we want to do everything we can to make sure that we are supportive of what European leaders are talking about. Ultimately, it is a decision that they’ve got to make in terms of how they move forward towards more integration, how they move forward in terms of accommodating the needs for both reform and growth.
And the most important thing I think we can do is make sure that we continue to have a strong, robust recovery. So the steps that I’ve outlined are the ones that are needed. We’ve got a couple of sectors in our economy that are still weak. Overall, the private sector has been doing a good job creating jobs. We’ve seen record profits in the corporate sector.
The big challenge we have in our economy right now is state and local government hiring has been going in the wrong direction. You’ve seen teacher layoffs, police officers, cops, firefighters being laid off. And the other sector that’s still weak has been the construction industry. Those two areas we’ve directly addressed with our jobs plan. The problem is that it requires Congress to take action, and we’re going to keep pushing them to see if they can move in that direction.
Jackie Calmes. Where did Jackie go? There she is.
Q Thank you, Mr. President. I’d like to ask you a couple — about what a couple of other people have said about Europe. And one is that I’d like to know if you agree with former President Bill Clinton, who said in the past week that the European’s policies that you’ve described here today are much like those of the Republicans in this country — politics of austerity that would take us in the same direction as Europe — if you agree with that. The Republicans, for their part, have said that you’re simply blaming the Europeans for problems that have been caused by your own policies. So I’d like you to respond to both of those. And also, tell us precisely how much time you personally spend on the European situation.
THE PRESIDENT: Any other aspects to the question? (Laughter.)
Q I do have more questions. (Laughter.)
Q Is she going to National Journal? (Laughter.)
THE PRESIDENT: First of all, in terms of the amount of time I spend — look, I think it’s fair to say that over the last two years I’m in consistent discussions with European leadership and consistent discussions with my economic team.
This is one of the things that’s changed in the world economy over the last two or three decades, is that this is a global economy now, and what happens anywhere in the world can have an impact here in the United States. Certainly that’s true after the kind of trauma that we saw in 2008 and 2009.
And if you think about the situation in Europe, they’re going through a lot of the things that we went through back in 2009, 2010, where we took some very decisive action. The challenge they have is they’ve got 17 governments that have to coordinate — 27 if you count the entire European Union, not just the eurozone. So imagine dealing with 17 Congresses instead of just one. That makes things more challenging.
But what we’ve tried to do is to be constructive, to not frame this as us scolding them or telling them what to do, but to give them advice, in part based on our experiences here in having stabilized a financial situation effectively. And ultimately, though, they’re going to have to make a lot of these decisions, and so what we can do is to prod, advise, suggest. But ultimately, they’re going to have to make these decisions.
Now, in terms of characterizing the situation over there, what is absolutely true — this is true in Europe and it’s true here in the United States — is that we’ve got short-term problems and long-term problems. And the short-term problems are: How do we put people back to work? How do we make the economy grow as rapidly as possible? How do we ensure that the recovery gains momentum?
Because if we do those things, not only is it good for the people who find work, not only is it good for families who are able to pay the bills, but it actually is one of the most important things we can do to reduce deficits and debt. It’s a lot easier to deal with deficits and debt if you’re growing, because you’re bringing in more revenue and you’re not spending as much because people don’t need unemployment insurance as much; they don’t need other programs that are providing support to people in need because things are going pretty good.
Now, that’s true here in the United States, and that’s true in Europe. So the problem I think President Clinton identified is that if, when an economy is still weak and a recovery is still fragile, that you resort to a strategy of “let’s cut more” — so that you’re seeing government layoffs, reductions in government spending, severe cutbacks in major investments that help the economy grow over the long term — if you’re doing all those things at the same time as consumers are pulling back because they’re still trying to pay off credit card debt, and there’s generally weak demand in the economy as a whole, then you can get on a downward spiral where everybody is pulling back at the same time. That weakens demand and that further crimps the desire of companies to hire more people. And that’s the pattern that Europe is in danger of getting into.
Some countries in Europe right now have an unemployment rate of 15, 20 percent. If you are engaging in too much austerity too quickly, and that unemployment rate goes up to 20 or 25 percent, then that actually makes it harder to then pay off your debts. And the markets, by the way, respond in — when they see this kind of downward spiral happening, they start making a calculation, well, if you’re not growing at all, if you’re contracting, you may end up having more trouble paying us off, so we’re going to charge you even more. Your interest rates will go up. And it makes it that much tougher.
So I think that — what we want both for ourselves, but what we’ve advised in Europe as well is a strategy that says let’s do everything can to grow now, even as we lock in a long-term plan to stabilize our debt and our deficits, and start bringing them down in a steady, sensible way.
And by the way, that’s what we proposed last year; that’s what’s proposed in my budget. What I’ve said is, let’s make long-term spending cuts; let’s initiate long-term reforms; let’s reduce our health care spending; let’s make sure that we’ve got a pathway, a glide-path to fiscal responsibility, but at the same time, let’s not underinvest in the things that we need to do right now to grow. And that recipe of short-term investments in growth and jobs with a long-term path of fiscal responsibility is the right approach to take for, I think, not only the United States but also for Europe.
Q What about the Republicans saying that you’re blaming the Europeans for the failures of your own policies?
THE PRESIDENT: The truth of the matter is that, as I said, we’ve created 4.3 million jobs over the last 27 months, over 800,000 just this year alone. The private sector is doing fine. Where we’re seeing weaknesses in our economy have to do with state and local government — oftentimes, cuts initiated by governors or mayors who are not getting the kind of help that they have in the past from the federal government and who don’t have the same kind of flexibility as the federal government in dealing with fewer revenues coming in.
And so, if Republicans want to be helpful, if they really want to move forward and put people back to work, what they should be thinking about is, how do we help state and local governments and how do we help the construction industry. Because the recipes that they’re promoting are basically the kinds of policies that would add weakness to the economy, would result in further layoffs, would not provide relief in the housing market, and would result, I think most economists estimate, in lower growth and fewer jobs, not more. [...]