President says recovery not certain this year

Washington —- President Barack Obama said Saturday that he could not assure Americans the economy would begin growing again in 2009. But he pledged that he would “get all the pillars in place for recovery this year.”

“I don’t think that people should be fearful about our future,” he said in an interview with The New York Times. “I don’t think that people should suddenly mistrust all of our financial institutions.”

The Washington Post on Saturday said Obama’s budget proposal has been called “a Robin Hood budget” that would give the poor new tax cuts, new college loans and a new health care system by taking nearly $1 trillion from the rich in new taxes.

Obama dismissed charges by conservatives that he was driving the country toward socialism or inciting class warfare. But even some Democrats are balking at a key part of his budget plan —- a proposal to raise money for health care reform by limiting the value of itemized deductions, including on mortgage interest and charitable contributions, for the nation’s top earners.

Obama is unapologetic in his pursuit of a fundamental shift in tax policy that would redistribute wealth from about 3 million elite families to forgotten lower and middle classes.

Of the $1.3 trillion in new taxes Obama proposes to levy over the next decade, about half would be generated by simply letting the Bush tax cuts expire for high earners.

In his interview with the Times, Obama struck a reassuring tone, saying Americans should not be frightened of the future, and he said he had no trouble sleeping at night.

“Look, I wish I had the luxury of just dealing with a modest recession or just dealing with health care or just dealing with energy or just dealing with Iraq or just dealing with Afghanistan,” Obama said. “I don’t have that luxury, and I don’t think the American people do, either.”

He suggested that it could take an additional $750 billion to address the problem of weak and failing financial institutions beyond the $700 billion already approved. Finding support for additional bailouts is likely to be among Obama’s biggest challenges, given the anger that many Americans, including lawmakers, feel toward Wall Street executives who they believe are being unduly rewarded with bailout money.

The budget plan he released last month included a placeholder estimate of $250 billion for additional bank bailouts —- an amount that represents the projected long-term cost to taxpayers of a $750 billion infusion into the financial sector —- and in the interview Obama indicated that those figures were what he was likely to seek from Congress.

Addressing the fear and uncertainty among Americans as job losses mount and stock markets sink, Obama urged Americans to “be prudent” in their personal financial decisions, but not to hunker down so much that it would further slow the recovery.

“What I don’t think people should do is suddenly stuff money in their mattresses and pull back completely from spending,” he said.

Still, he avoided guessing when the situation might begin to turn around. “Our belief and expectation is that we will get all the pillars in place for recovery this year,” he said. “How long it will take before recovery actually translates into stronger job markets and so forth is going to depend on a whole range of factors.”

Obama’s uncertain forecast about when the economy will begin to rebound contrasted with the projections embedded in the budget he recently released.

That plan rested on the assumption that the economy would shrink by 1.2 percent this year, a projection that many economists, including some in his own administration, consider overly optimistic because it implies the economy would bounce back in the second half of this year.