Reading through the latest report from the Florida Center for Fiscal and Economic Policy I felt the words of Jeffrey Lebowski (”The Dude”) come to mind: “That’s a bummer, man.”

I have never seen Florida’s economy and shortcomings so well explained and so depressing and dire. Here are the report’s conclusion:

Key indicators of the health of Florida’s economy point to a state in trouble.

Of particular concern for the future will be the need to direct spending to the most important priorities of the state, such as investments in education that will strengthen the capacity of Florida residents to prosper in a different kind of economy, with the goal of producing higher-paid jobs. The traditional drivers of economic growth in Florida have weakened and in some cases there is no prospect for change in the near future. Population growth is not expected to match the historic post-World War II rate, providing less demand for new homes and other construction – demand that spurs economic activity. The huge supply of existing houses for sale will further depress construction and economic activity which, in turn, will dampen tax revenue collected by the state. As the recession wanes, tourism spending will begin to recover, and so will jobs in that sector of the economy. But most of those are of the low-wage service variety — not the kind of higher-wage occupations around which to build a vibrant economy.

Creating an economy with better jobs in the future will be made more difficult against the backdrop of state funding in many areas that has long been inadequate and now is being further cut as a national recession drives down the tax revenues needed to pay for government services.

Still not at panic attack stage yet? Try these bullet points:

Much of Florida’s economic well-being over the past few decades was tied to growth in population. The state’s population is now stagnant, however, and the proportion of children and youth – Florida’s future work force – is declining.

Florida’s rate of growth in income per person has fallen to 45th in the country.

The percentage of residents of Florida living in poverty has increased. About 180,000 more Floridians were living in poverty in 2007 than 2006. More than one out of every 10 people living in Florida receives food stamps.

The gap between the wealthiest and the poorest in Florida is widening and the gap between the richest fifth of Floridians and the middle fifth is even more dramatic.

The rate of growth in Florida’s gross state product – the value of goods and services we produce – has slowed over the past three years to where it ranks 47th in the nation.

Florida’s unemployment rate is one of the highest in the country and exceeds 10%.

Foreclosures in Florida quadrupled over the last three years.

Almost half of the state’s jobs are compensated at less than 150% of the federal poverty level, indicating the difficulty workers face in supporting themselves and their families.

Per capita state government spending in Florida is less than the national average and ranks 44th in the country.

Florida spends a smaller share of its budget on elementary and secondary education and higher education than most states, and spends a greater share on corrections than all but two.

The results of state spending are substandard, according to various measures:

1. Florida’s high school graduation rate is 45th in the country.

2. Florida’s health system is ranked 45th nationally.

3. Tens of thousands of Florida’s elderly and disabled are on waitlists for services and generally wait years to gain access to programs they need.

4. Waitlists for people with mental health and substance abuse needs are also prevalent and lengthy; 190,000 adults needing mental health services are not receiving them and 265,000 children with emotional and developmental needs are not receiving services they need.

Here is the entire report, in .pdf format. 022_final-well-being-report

By Mitch Perry
PoHo contributor and anchor of the WMNF Evening News on 88.5 FM community radio

Health care reform in Washington is in peril.

In the words of Maryland Democratic Sen. Barbara Mikulski late last week, “Obviously this is not going to go as fast as we thought.”

The promise of reforming health care has been a singular focus of President Barack Obama — well, along with dealing with the banking crises, the foreclosure crises, and getting the economy recharged.

But now that crunch time is approaching, the various voices that comprise the debate in Washington are speaking up, and some groups previously considered as potential allies, (such as the U.S. Chamber of Commerce) are now speaking critically of the legislation being discussed right now.

And it can’t bode well that President Clinton’s former pollster, Stan Greenberg, has written a new article that’s subtitled “Why health care reform could fail again.”

Greenberg writes in the New Republic that he’s compared surveys he did back in 1993 and now, and has discovered that on some basic fundamentals, the American public remains stagnant when it comes to making serious changes in our system.

His dismal conclusion?

“If anything, I found on most of these questions that the desire for change and support for reform was slightly stronger 16 years ago, underscoring the importance of learning some lessons from that history.”

If that isn’t portending inertia, the president’s supporters were then hit with a trifecta of major polls last week, all showing that for the first time since health care was last seriously debated in Washington, concerns about the federal deficit have become the most salient issue amongst the American public.

No doubt the $787 billion stimulus, followed by the less enthusiastic response for bailouts for AIG and even General Motors, has reinforced in much of the public’s mind that we are somehow running out of money and that making major changes to health care may be a tad too ambitious at the present time.

But according to The New York Times business columnist David Leonhardt, Obama is not the man to blame for the fact that we have a current deficit that is expected to go to $1.2 trillion dollars from 2009 to 20012.

In an interview on WMNF radio earlier this month, Leonhardt said that of our current financial deficit, Obama’s spending so far is responsible for very little of it.

In fact, he says, “Most of what he wants to spend is for continuing for Bush plans. Most Republicans want to keep the tax cuts going. So, yes, the stimulus bill is quite expensive, but it makes up about $150 billion of the $200 billion or so that his policies are responsible for(the deficit) right now. But the rest of what he’s proposing is not so much.”

Leonhardt explains that’s because health care reform simply will not happen until it’s “deficit neutral” (i.e. can be paid for, either though higher taxes or cuts in spending elsewhere). And he says the president and the Democratic Congress’ controversial cap-and-trade proposal on energy actually raises money for the government, tied to the price of carbon emissions. “The government is going to get a lot of money from that through these licenses,” Leonhardt said. “They can figure out how they’re going to spend that money, but it’s NOT going to make the deficit bigger.”

But even citizens who urgently want to see health care reform are feeling uneasy these days.

At a discussion on health care reform at the Seminole Library in Pinellas County on Saturday, I encountered several people who are not feeling as optimistic as they did after the election changes happening in health care.

Linda Gervitz, a clinical psychologist from Clearwater, said, “I’m really concerned that in these attempts to make everybody happy, the doctors, the insurance companies, to some extent consumers, that nothing is going to be done. What came out of the last attempt is by the Clintons actually made things worse — because then we got HMO’s. So I’m really worried that without a clear mission and a clear path we’re gong to end up with things getting worse, like Medicare Part D…. So I guess I’m pessimistic.

And a Seminole woman who would only identify herself as Jean added, “It seems like we had a lot of hope for this, and it does seem like people are now pulling back from it, and I think if we don’t get it this year, it’s going to be a lot less likely that we’ll get it next year.”

The next month or so should decide whether the U.S. can find a way to provide coverage to as many of the 47 million people are without right now, as well as lowering costs to consumers and businesses alike.

Do me and The Atlantic a favor and read the entire column and pass it along via e-mail to your goofy friends/relatives who bombard you with BS email about how we are becoming socialists.

Here is the top of the news release from Treasury:

Treasury Department Statement
on GM Dealer Consolidation Announcement

WASHINGTON – Today, General Motors initiated the dealer consolidation plan it laid out in its interim plan on April 27, 2009.

Under that terminology, we’ve got one helluva jobs consolidation situation going on right now.

The real story, from CNN/Money:

General Motors notified 1,100 of its 6,000 dealerships Friday that it is terminating their contracts with the struggling automaker, the first step in cutting up to 40% of its retail network.

GM spokeswoman Susan Garontakos said that the dealers receiving notice Friday are being told that their contracts will not be renewed in October 2010. Many of them are expected to close shop this year.

The shockwaves from the government-labor takeover at Chrysler is reverberating in the Tampa Bay area, as seven dealerships are set to be closed as part of nearly 800 dealer closings across the nation.

The local dealerships are:

Venice Nissan Dodge

Bob Boast Dodge, Bradenton

Tarpon Springs Dodge

Winter Park Dodge

Regal Pontiac Jeep, Lakeland

Sarasota Chrysler

St. Pete Jeep Chrysler Plymouth

(UPDATE: A seventh Chrysler-related Bay area dealership, Fitzgerald Countryside Jeep, is also on the closing list.)

Here’s the political angle: Republican Congressman Vern Buchanan has one of his dealerships on the block, and he’s not happy about it. Michael Hinman of The Business Journal reports:

Hours after Chrysler LLC asked a bankruptcy judge to let it part ways with nearly 800 dealerships nationally; one of the owners of the affected dealerships is utilizing his soapbox to protest it.

U.S. Rep. Vern Buchanan, R-Longboat Key, called the dealership closings “arbitrary” and would do nothing to make car manufacturers more viable financially.

“Last year, I opposed the auto bailout bill before Congress because the automakers failed to develop a restructuring plan,” Buchanan said in a statement. “Now instead of a responsible plan to address the industry’s core economic problems, the automakers are arbitrarily closing hundreds, and possibly thousands of dealerships across the country.”

His point? That even though a few banks still need billions to shore up their balance sheets, they are making money and likely can raise those extra funds in the market – not from taxpayers.

Bloomberg reports that the market indeed likes the results of the financial stress tests:

Stocks rallied after the news, sending the Standard & Poor’s 500 Financials Index to its highest level in four months. The results are the culmination of weeks of investigations, led by the Federal Reserve, into the banks’ lending practices, funding strategies and securities and loan portfolios.

“The markets are telling us we’re in a recovery and the banks are beginning to heal,” William Isaac, former chairman of the Federal Deposit Insurance Corp., said in an interview today. The end of the stress tests after “three months of water torture” is providing investors some relief, he said.

The regulators put an emphasis in their reviews on tangible common equity, and will give firms needing bigger reserves six months to meet their requirements. Citigroup’s assessment reflects the New York-based bank’s previously announced plan to convert some of its preferred shares into common stock.

Now, the choice we face is not between saving our environment and saving our economy. The choice we face is between prosperity and decline…. The nation that leads the world in creating new energy sources will be the nation that leads the 21st-century global economy.

It is refreshing to finally have a president who recognizes that “environmentally friendly” doesn’t mean “bad for the economy.” A video (after the jump) demonstrates how a green economy can actually create jobs. The new initiative will lease federal waters to harness wind and ocean currents as a renewable source of energy. These facilities must be designed, materials need to be bought, their construction needs to be contracted, staff needs to maintain it – all are positions waiting to be filled.

Here’s the video:

The President recognized that this won’t be a simple agenda, but it will be worth it in the end:

So it won’t be easy. There will be bumps along the road. There will be costs to our nation and for each of us as individuals…Our parents, our grandparents, our great-grandparents adapted to much more difficult circumstances to deliver the prosperity that we enjoy today. And I’m confident that we can be and will be the benefactors of a brighter future for our children and grandchildren.

A greener economy is just a better solution all around. Imagine an economy and an American entrepreneurial spirit that is cognizant of the health and environmental ramifications of our traditional energy use and restructures itself to meet the new demands of health and environmental standards. Isn’t this the kind of economy we want to work in, not to mention the kind of world we want to live in?

Below is a short list of websites that will link you to green jobs right here in Florida. If you are aware of other websites for green jobs then leave a comment below with the website’s address so that we can start ‘greening’ our economy.

http://jobs.care2.com/a/all-jobs/list/l-florida/mi-exact

http://www.sustainablebusiness.com/index.cfm/go/greendreamjobs.main

http://www.idealist.org/if/as/Org/ig

http://www.greencollarblog.org/green-job-boards.html

Even the Starbucks there is looking at shutting its doors. As part of a nationwide closure of the ubiquitous coffee shops, the coffee monster wants to shutter the Centro store, but the neighborhood association is not taking this lying down, according to TBO.com:

It isn’t a full-fledged protest yet, but an Ybor City neighborhood association has launched a modest campaign to persuade Starbucks to stay at Centro Ybor.

The Historic Ybor Neighborhood Civic Association is encouraging Starbucks fans to call the Seattle-based corporation and urge it to stay put at the Ybor City entertainment center. Starbucks revealed earlier this month it plans to leave Centro Ybor, but hasn’t given a time or date.

But in the upcoming budget, Mayor Pam Iorio says she will be forced to cut funding to both categories by the same formula as two years ago, 10 percent cuts to the Tampa Bay Performing Arts Center, Lowry Park Zoo, Florida Aquarium, Tampa Theatre, Tampa Museum of Art, and H. B. Plant Museum, and 20 percent cuts to a dozen or so other nonprofits.

The city’s full statement after the jump:

Tampa Commits to Funding Non-Profits at Reduced Amount

Tampa, Fla. (April 14, 2009) – In preparation for the fiscal year 2010 budget, Mayor Pam Iorio met with non-profits funded by the city to discuss their city subsidies.  The mayor is recommending that their funding for 2010 be reduced by 10 percent for city-owned non-profits and 20 percent for non-profits that are not city owned or sponsored.

Over the past two budget cycles the City of Tampa has been careful to maintain adequate funding for the non-profits.  In 2007, their funding was reduced by 10 percent for city-owned non-profits and 20 percent for non-profits that are not city owned or sponsored.  Last year their funding was not reduced.  While many cultural institutions are suffering from severe cutbacks from both state and local governments, the City has been careful to recommend cuts incrementally in order for these cultural organizations to still grow and be successful.  The arts are a large part of our local economy and our subsidies to many of the organizations are important to their success.

City-Owned Non-Profits:
Tampa Bay Performing Arts Center
Lowry Park Zoo
Florida Aquarium
Tampa Theatre
Tampa Museum of Art
H. B. Plant Museum

Total FY 2009 operating subsidy for city-owned non-profits: $2,750,500
10 percent reduction: $275,050
Total FY 2010 operating subsidy for city-owned non-profits: $2,475,450

Non City-Owned Non-Profits:
Florida Orchestra
Boys & Girls Club
Humane Society
Glazer Children’s Museum
Master Chorale
Mendez Foundation
Museum of Science & Industry
Sister Cities
Spanish Lyric Theatre
Tampa Bay Black History Festival
Tampa Bay History Center
Tampa Photographic Museum
Ybor Chamber of Commerce
Ybor State Museum
Youth Opportunity Movement

Total FY 2009 operating subsidy for non city-owned non-profits: $1,020,000
10 percent reduction: $204,000
Total FY 2010 operating subsidy for non city-owned non-profits: $816,000

“It is simply not sustainable to have a 21st century financial system that is governed by 20th century rules and regulations that allowed the recklessness of a few to threaten the entire economy,” the president said. “It is not sustainable to have an economy where in one year, 40 percent of our corporate profits came from a financial sector that was based too much on inflated home prices, maxed out credit cards, overleveraged banks and overvalued assets; or an economy where the incomes of the top 1 percent have skyrocketed while the typical working household has seen their income decline by nearly $2,000.”

Obama then turned to the Bible for an analogy.

“There is a parable at the end of the Sermon on the Mount that tells the story of two men,” he said. “The first built his house on a pile of sand, and it was destroyed as soon as the storm hit. But the second is known as the wise man, for when “…the rain descended, and the floods came, and the winds blew, and beat upon that house…it fell not: for it was founded upon a rock.

“We cannot rebuild this economy on the same pile of sand. We must build our house upon a rock. We must lay a new foundation for growth and prosperity – a foundation that will move us from an era of borrow and spend to one where we save and invest; where we consume less at home and send more exports abroad.”

He called for more scientists and engineers and fewer financial pencil-pushers and manipulators, as well as a transition to a clean-energy carbon emissions cap. And Obama said people who focus on cutting “a few earmarks” or slashing the National Endowment for the Arts misses the bigger picture, that the deficit is driven by entitlement programs such as Social Security and Medicaid/Medicare. Changing the health care system, then, is crucial to a long-term solution.

And he rightly puts some blame on the culture in Washington and the media’s shortening attention span. “For too long, too many in Washington put off hard decisions for some other time on some other day,” he said. “There’s been a tendency to score political points instead of rolling up sleeves to solve real problems. There is also an impatience that characterizes this town – an attention span that has only grown shorter with the twenty-four hour news cycle, and insists on instant gratification in the form of immediate results or higher poll numbers … instead of confronting the major challenges that will shape our future in a sustained and focused way.”

The full text after the jump.

THE WHITE HOUSE

Office of the Press Secretary

_________________________________________________________________

For Immediate Release April 14, 2009

Remarks of President Barack Obama

A New Foundation

Tuesday, April 14th, 2009

Washington, DC

As Prepared for Delivery

It has now been twelve weeks since my administration began. And I think even our critics would agree that at the very least, we’ve been busy. In just under three months, we have responded to an extraordinary set of economic challenges with extraordinary action – action that has been unprecedented in both its scale and its speed.

I know that some have accused us of taking on too much at once. Others believe we haven’t done enough. And many Americans are simply wondering how all of our different programs and policies fit together in a single, overarching strategy that will move this economy from recession to recovery and ultimately to prosperity.

So today, I want to step back for a moment and explain our strategy as clearly as I can. I want to talk about what we’ve done, why we’ve done it, and what we have left to do. I want to update you on the progress we’ve made, and be honest about the pitfalls that may lie ahead.

And most of all, I want every American to know that each action we take and each policy we pursue is driven by a larger vision of America’s future – a future where sustained economic growth creates good jobs and rising incomes; a future where prosperity is fueled not by excessive debt, reckless speculation, and fleeing profit, but is instead built by skilled, productive workers; by sound investments that will spread opportunity at home and allow this nation to lead the world in the technologies, innovations, and discoveries that will shape the 21st century. That is the America I see. That is the future I know we can have.

To understand how we get there, we first need to understand how we got here.

Recessions are not uncommon. Markets and economies naturally ebb and flow, as we have seen many times in our history. But this recession is different. This recession was not caused by a normal downturn in the business cycle. It was caused by a perfect storm of irresponsibility and poor decision-making that stretched from Wall Street to Washington to Main Street.

As has been widely reported, it started in the housing market. During the course of the decade, the formula for buying a house changed: instead of saving their pennies to buy their dream house, many Americans found they could take out loans that by traditional standards their incomes just could not support. Others were tricked into signing these subprime loans by lenders who were trying to make a quick profit. And the reason these loans were so readily available was that Wall Street saw big profits to be made. Investment banks would buy and package together these questionable mortgages into securities, arguing that by pooling the mortgages, the risks had been reduced. And credit agencies that are supposed to help investors determine the soundness of various investments stamped the securities with their safest rating when they should have been labeled “Buyer Beware.”

No one really knew what the actual value of these securities were, but since the housing market was booming and prices were rising, banks and investors kept buying and selling them, always passing off the risk to someone else for a greater profit without having to take any of the responsibility. Banks took on more debt than they could handle. The government-chartered companies Fannie Mae and Freddie Mac, whose traditional mandate was to help support traditional mortgages, decided to get in on the action by buying and holding billions of dollars of these securities. AIG, the biggest insurer in the world, decided to make profits by selling billions of dollars of complicated financial instruments that supposedly insured these securities. Everybody was making record profits – except the wealth created was real only on paper. And as the bubble grew, there was almost no accountability or oversight from anyone in Washington.

Then the housing bubble burst. Home prices fell. People began defaulting on their subprime mortgages. The value of all those loans and securities plummeted. Banks and investors couldn’t find anyone to buy them. Greed gave way to fear. Investors pulled their money out of the market. Large financial institutions that didn’t have enough money on hand to pay off all their obligations collapsed. Other banks held on tight to the money they did have and simply stopped lending.

This is when the crisis spread from Wall Street to Main Street. After all, the ability to get a loan is how you finance the purchase of everything from a home to a car to a college education. It’s how stores stock their shelves, farms buy equipment, and businesses make payroll. So when banks stopped lending money, businesses started laying off workers. When laid off workers had less money to spend, businesses were forced to lay off even more workers. When people couldn’t get car loans, a bad situation at the auto companies became even worse. When people couldn’t get home loans, the crisis in the housing market only deepened. Because the infected securities were being traded worldwide and other nations also had weak regulations, this recession soon became global. And when other nations can’t afford to buy our goods, it slows our economy even further.

This is the situation we confronted on the day we took office. And so our most urgent task has been to clear away the wreckage, repair the immediate damage to the economy, and do everything we can to prevent a larger collapse. And since the problems we face are all working off each other to feed a vicious economic downturn, we’ve had no choice but to attack all fronts of our economic crisis at once.

The first step was to fight a severe shortage of demand in the economy. The Federal Reserve did this by dramatically lowering interest rates last year in order to boost investment. And my administration and Congress boosted demand by passing the largest recovery plan in our nation’s history. It’s a plan that is already in the process of saving or creating 3.5 million jobs over the next two years. It is putting money directly in people’s pockets with a tax cut for 95% of working families that is now showing up in paychecks across America. And to cushion the blow of this recession, we also provided extended unemployment benefits and continued health care coverage to Americans who have lost their jobs through no fault of their own.

Now, some have argued that this recovery plan is a case of irresponsible government spending; that it is somehow to blame for our long-term deficit projections, and that the federal government should be cutting instead of increasing spending right now. So let me tackle this argument head on.

To begin with, economists on both the left and right agree that the last thing a government should do in the middle of a recession is to cut back on spending. You see, when this recession began, many families sat around their kitchen table and tried to figure out where they could cut back. So do many businesses. That is a completely responsible and understandable reaction. But if every family in America cuts back, then no one is spending any money, which means there are more layoffs, and the economy gets even worse. That’s why the government has to step in and temporarily boost spending in order to stimulate demand. And that’s exactly what we’re doing right now.

Second of all, I absolutely agree that our long-term deficit is a major problem that we have to fix. But the fact is that this recovery plan represents only a tiny fraction of that long-term deficit. As I will discuss in a moment, the key to dealing with our deficit and debt is to get a handle on out-of-control health care costs – not to stand idly by as the economy goes into free fall.

So the recovery plan has been the first step in confronting this economic crisis. The second step has been to heal our financial system so that credit is once again flowing to the businesses and families who rely on it.

The heart of this financial crisis is that too many banks and other financial institutions simply stopped lending money. In a climate of fear, banks were unable to replace their losses by raising new capital on their own, and they were unwilling to lend the money they did have because they were afraid that no one would pay it back. It is for this reason that the last administration used the Troubled Asset Relief Program, or TARP, to provide these banks with temporary financial assistance in order to get them lending again.

Now, I don’t agree with some of the ways the TARP program was managed, but I do agree with the broader rationale that we must provide banks with the capital and the confidence necessary to start lending again. That is the purpose of the stress tests that will soon tell us how much additional capital will be needed to support lending at our largest banks. Ideally, these needs will be met by private investors. But where this is not possible, and banks require substantial additional resources from the government, we will hold accountable those responsible, force the necessary adjustments, provide the support to clean up their balance sheets, and assure the continuity of a strong, viable institution that can serve our people and our economy.

Of course, there are some who argue that the government should stand back and simply let these banks fail – especially since in many cases it was their bad decisions that helped create the crisis in the first place. But whether we like it or not, history has repeatedly shown that when nations do not take early and aggressive action to get credit flowing again, they have crises that last years and years instead of months and months – years of low growth, low job creation, and low investment that cost those nations far more than a course of bold, upfront action. And although there are a lot of Americans who understandably think that government money would be better spent going directly to families and businesses instead of banks – “where’s our bailout?,” they ask – the truth is that a dollar of capital in a bank can actually result in eight or ten dollars of loans to families and businesses, a multiplier effect that can ultimately lead to a faster pace of economic growth.

On the other hand, there have been some who don’t dispute that we need to shore up the banking system, but suggest that we have been too timid in how we go about it. They say that the federal government should have already preemptively stepped in and taken over major financial institutions the way that the FDIC currently intervenes in smaller banks, and that our failure to do so is yet another example of Washington coddling Wall Street. So let me be clear – the reason we have not taken this step has nothing to do with any ideological or political judgment we’ve made about government involvement in banks, and it’s certainly not because of any concern we have for the management and shareholders whose actions have helped cause this mess.

Rather, it is because we believe that preemptive government takeovers are likely to end up costing taxpayers even more in the end, and because it is more likely to undermine than to create confidence. Governments should practice the same principle as doctors: first do no harm. So rest assured – we will do whatever is necessary to get credit flowing again, but we will do so in ways that minimize risks to taxpayers and to the broader economy. To that end, in addition to the program to provide capital to the banks, we have launched a plan that will pair government resources with private investment in order to clear away the old loans and securities – the so-called toxic assets – that are also preventing our banks from lending money.

Now, what we’ve also learned during this crisis is that our banks aren’t the only institutions affected by these toxic assets that are clogging the financial system. A.I.G., for example, is not a bank. And yet because it chose to insure trillions of dollars worth of risky assets, its failure could threaten the entire financial system and freeze lending even further. This is why, as frustrating as it is – and I promise you, nobody is more frustrated than me – we’ve had to provide support for A.I.G. It’s also why we need new legal authority so that we have the power to intervene in such financial institutions, just like a bankruptcy court does with businesses that hit hard times, so that we can restructure these businesses in an orderly way that does not induce panic – and can restructure inappropriate bonus contracts without creating a perception that government can just change compensation rules on a whim.

This is also why we’re moving aggressively to unfreeze markets and jumpstart lending outside the banking system, where more than half of all lending in America actually takes place. To do this, we’ve started a program that will increase guarantees for small business loans and unlock the market for auto loans and student loans. And to stabilize the housing market, we’ve launched a plan that will save up to four million responsible homeowners from foreclosure and help many millions more re-finance.

In a few weeks, we will also reassess the state of Chrysler and General Motors, two companies with an important place in our history and a large footprint in our economy – but two companies that have also fallen on hard times.

Late last year, the companies were given transitional loans by the previous administration to tide them over as they worked to develop viable business plans. But the plans they developed fell short, and so we have given them some additional time to work these complex issues through. We owed that, not to the executives whose bad bets contributed to the weakening of their companies, but to the hundreds of thousands of workers whose livelihoods hang in the balance.

It is our fervent hope that in the coming weeks, Chrysler will find a viable business partner and that GM will develop a business plan that will put it on a path to profitability without endless support from the American taxpayer. In the meantime, we are taking steps to spur demand for American cars and provide relief to autoworkers and their communities. And we will continue to reaffirm this nation’s commitment to a 21st century American auto industry that creates new jobs and builds the fuel-efficient cars and trucks that will carry us toward a clean energy future.

Finally, to coordinate a global response to this global recession, I went to the meeting of the G20 nations in London the other week. Each nation has undertaken significant stimulus to spur demand. All agreed to pursue tougher regulatory reforms. We also agreed to triple the lending capacity of the International Monetary Fund, an international financial institution supported by all the major economies, and provide direct assistance to developing nations and vulnerable populations – because America’s success depends on whether other nations have the ability to buy what we sell. We pledged to avoid the trade barriers and protectionism that hurts us all in the end. And we decided to meet again in the fall to gauge our progress and take additional steps if necessary.

So all of these actions – the Recovery Act, the bank capitalization program, the housing plan, the strengthening of the non-bank credit market, the auto plan, and our work at the G20 – have been necessary pieces of the recovery puzzle. They have been designed to increase aggregate demand, get credit flowing again to families and businesses, and help them ride out the storm. And taken together, these actions are starting to generate signs of economic progress. Because of our recovery plan, schools and police departments have cancelled planned layoffs. Clean energy companies and construction companies are re-hiring workers to build everything from energy efficient windows to new roads and highways. Our housing plan has helped lead to a spike in the number of homeowners who are taking advantage of historically-low mortgage rates by refinancing, which is like putting a $2,000 tax cut in your in pocket. Our program to support the market for auto loans and student loans has started to unfreeze this market and securitize more of this lending in the last few weeks. And small businesses are seeing a jump in loan activity for the first time in months.

This is all welcome and encouraging news, but it does not mean that hard times are over. 2009 will continue to be a difficult year for America’s economy. The severity of this recession will cause more job loss, more foreclosures, and more pain before it ends. The market will continue to rise and fall. Credit is still not flowing nearly as easily as it should. The process for restructuring AIG and the auto companies will involve difficult and sometimes unpopular choices. All of this means that there is much more work to be done. And all of this means that you can continue to expect an unrelenting, unyielding, day-by-day effort from this administration to fight for economic recovery on all fronts.

But even as we continue to clear away the wreckage and address the immediate crisis, it is my firm belief that our next task is to make sure such a crisis never happens again. Even as we clean up balance sheets and get credit flowing; even as people start spending and business start hiring – we have to realize that we cannot go back to the bubble and bust economy that led us to this point.

It is simply not sustainable to have a 21st century financial system that is governed by 20th century rules and regulations that allowed the recklessness of a few to threaten the entire economy. It is not sustainable to have an economy where in one year, 40% of our corporate profits came from a financial sector that was based too much on inflated home prices, maxed out credit cards, overleveraged banks and overvalued assets; or an economy where the incomes of the top 1% have skyrocketed while the typical working household has seen their income decline by nearly $2,000.

For even as too many were chasing ever-bigger bonuses and short-term profits over the last decade, we continued to neglect the long-term threats to our prosperity: the crushing burden that the rising cost of health care is placing on families and businesses; the failure of our education system to prepare our workers for a new age; the progress that other nations are making on clean energy industries and technologies while we remain addicted to foreign oil; the growing debt that we’re passing on to our children. And even after we emerge from the current recession, these challenges will still represent major obstacles that stand in the way of our success in the 21st century.

There is a parable at the end of the Sermon on the Mount that tells the story of two men. The first built his house on a pile of sand, and it was destroyed as soon as the storm hit. But the second is known as the wise man, for when “…the rain descended, and the floods came, and the winds blew, and beat upon that house…it fell not: for it was founded upon a rock.”

We cannot rebuild this economy on the same pile of sand. We must build our house upon a rock. We must lay a new foundation for growth and prosperity – a foundation that will move us from an era of borrow and spend to one where we save and invest; where we consume less at home and send more exports abroad.

It’s a foundation built upon five pillars that will grow our economy and make this new century another American century: new rules for Wall Street that will reward drive and innovation; new investments in education that will make our workforce more skilled and competitive; new investments in renewable energy and technology that will create new jobs and industries; new investments in health care that will cut costs for families and businesses; and new savings in our federal budget that will bring down the debt for future generations. That is the new foundation we must build. That must be our future – and my Administration’s policies are designed to achieve that future.

The first step we will take to build this foundation is to reform the outdated rules and regulations that allowed this crisis to happen in the first place. It is time to lay down tough new rules of the road for Wall Street to ensure that we never find ourselves here again. Rules that punish short-cuts and abuse. Rules that tie someone’s pay to their actual job performance. Rules that protect typical American families when they buy a home, get a credit card or invest in a 401k. We have already begun to work with Congress to shape this new regulatory framework – and I expect a bill to arrive on my desk for signature before the year is out.

The second pillar of this new foundation is an education system that finally prepares our workers for a 21st century economy. In the 20th century, the GI Bill sent a generation to college, and for decades, we led the world in education and economic growth. But in this new economy, we trail the world’s leaders in graduation rates and achievement. That is why we have set a goal that will greatly enhance our ability to compete for the high-wage, high-tech jobs of the 21st century: by 2020, America will once more have the highest proportion of college graduates in the world.

To meet that goal, we have already dramatically expanded early childhood education. We are investing in innovative programs that have proven to help schools meet high standards and close achievement gaps. We are creating new rewards tied to teacher performance and new pathways for advancement. I have asked every American to commit to at least one year or more of higher education or career training, and we have provided tax credits to make a college education more affordable for every American.

The third pillar of this new foundation is to harness the renewable energy that can create millions of new jobs and new industries. We all know that the country that harnesses this energy will lead the 21st century. Yet we have allowed other countries to outpace us on this race to the future.

Well, I do not accept a future where the jobs and industries of tomorrow take root beyond our borders. It is time for America to lead again.

The investments we made in the Recovery Act will double this nation’s supply of renewable energy in the next three years. And we are putting Americans to work making our homes and buildings more efficient so that we can save billions on our energy bills and grow our economy at the same time.

But the only way to truly spark this transformation is through a gradual, market-based cap on carbon pollution, so that clean energy is the profitable kind of energy. Some have argued that we shouldn’t attempt such a transition until the economy recovers, and they are right that we have to take the costs of transition into account. But we can no longer delay putting a framework for a clean energy economy in place. If businesses and entrepreneurs know today that we are closing this carbon pollution loophole, they will start investing in clean energy now. And pretty soon, we’ll see more companies constructing solar panels, and workers building wind turbines, and car companies manufacturing fuel-efficient cars. Investors will put some money into a new energy technology, and a small business will open to start selling it. That’s how we can grow this economy, enhance our security, and protect our planet at the same time.

The fourth pillar of the new foundation is a 21st century health care system where families, businesses, and government budgets aren’t dragged down by skyrocketing insurance premiums.

One and a half million Americans could lose their homes this year just because of a medical crisis. Major American corporations are struggling to compete with their foreign counterparts, and small businesses are closing their doors. We cannot allow the cost of health care to strangle our economy any longer.

That’s why our Recovery Act will invest in electronic health records with strict privacy standards that will save money and lives. We’ve also made the largest investment ever in preventive care, because that is one of the best ways to keep costs under control. And included in the budgets that just passed Congress is an historic commitment to reform that will finally make quality health care affordable for every American. So I look forward to working with both parties in Congress to make this reform a reality in the coming months.

Fixing our health care system will certainly require resources, but in my budget, we’ve made a commitment to fully pay for reform without increasing the deficit, and we’ve identified specific savings that will make the health care system more efficient and reduce costs for us all.

In fact, we have undertaken an unprecedented effort to find this kind of savings in every corner of the budget, because the final pillar in building our new foundation is restoring fiscal discipline once this economy recovers. Already, we have identified two trillion dollars in deficit-reductions over the next decade. We have announced procurement reform that will greatly reduce no-bid contracts and save the government $40 billion. Secretary Gates recently announced a courageous set of reforms that go right at the hundreds of billions of dollars in waste and cost overruns that have bloated our defense budget without making America safer. We will end education programs that don’t work, and root out waste, fraud, and abuse in our Medicare program.

Altogether, this budget will reduce discretionary spending for domestic programs as share of the economy by more than 10% over the next decade to the lowest level since we began keeping records nearly half a century ago. And as we continue to go through the federal budget line by line, we will be announcing additional savings, secured by eliminating and consolidating programs we don’t need so that we can make room for the things we do need.

Now, I realize that for some, this isn’t enough. I know there is a criticism out there that my administration has somehow been spending with reckless abandon, pushing a liberal social agenda while mortgaging our children’s future.

Well let me make three points.

First, as I said earlier, the worst thing that we could do in a recession this severe is to try to cut government spending at the same time as families and businesses around the world are cutting back on their spending. So as serious as our deficit and debt problems are – and they are very serious – major efforts to deal with them have to focus on the medium and long-term budget picture.

Second, in tackling the deficit issue, we simply cannot sacrifice the long-term investments that we so desperately need to generate long-term prosperity. Just as a cash-strapped family may cut back on luxuries but will insist on spending money to get their children through college, so we as a country have to make current choices with an eye on the future. If we don’t invest now in renewable energy or a skilled workforce or a more affordable health care system, this economy simply won’t grow at the pace it needs to in two or five or ten years down the road. If we don’t lay this new foundation, it won’t be long before we are right back where we are today. And I can assure you that chronically slow growth will not help our long-term budget situation.

Third, the problem with our deficit and debt is not new. It has been building dramatically over the past eight years, largely because big tax cuts combined with increased spending on two wars and the increased costs of government health care programs. This structural gap in our budget, between the amount of money coming in and the amount going out, will only get worse as Baby Boomers age, and will in fact lead us down an unsustainable path. But let’s not kid ourselves and suggest that we can do it by trimming a few earmarks or cutting the budget for the National Endowment for the Arts. Along with defense and interest on the national debt, the biggest costs in our budget are entitlement programs like Medicare, Medicaid, and Social Security that get more and more expensive every year. So if we want to get serious about fiscal discipline – and I do – then we are going to not only have to trim waste out of our discretionary budget, a process we have already begun – but we will also have to get serious about entitlement reform.

Nothing will be more important to this goal than passing health care reform that brings down costs across the system, including in Medicare and Medicaid. Make no mistake: health care reform is entitlement reform. That’s not just my opinion – that was the conclusion of a wide range of participants at the Fiscal Responsibility Summit we held at the White House in February, and that’s one of the reasons why I firmly believe we need to get health care reform done this year.

Once we tackle rising health care costs, we must also work to put Social Security on firmer footing. It is time for both parties to come together and find a way to keep the promise of a sound retirement for future generations. And we should restore a sense of fairness and balance to our tax code by shutting down corporate loopholes and ensuring that everyone pays what they owe.

All of these efforts will require tough choices and compromises. But the difficulties can’t serve as an excuse for inaction. Not anymore.

This brings up one final point I’d like to make today. I’ve talked a lot about the fundamental weakness in our economy that led us to this day of reckoning. But we also arrived here because of a fundamental weakness in our political system.

For too long, too many in Washington put off hard decisions for some other time on some other day. There’s been a tendency to score political points instead of rolling up sleeves to solve real problems. There is also an impatience that characterizes this town – an attention span that has only grown shorter with the twenty-four hour news cycle, and insists on instant gratification in the form of immediate results or higher poll numbers. When a crisis hits, there’s all too often a lurch from shock to trance, with everyone responding to the tempest of the moment until the furor has died away and the media coverage has moved on, instead of confronting the major challenges that will shape our future in a sustained and focused way.

This can’t be one of those times. The challenges are too great. The stakes are too high. I know how difficult it is for Members of Congress in both parties to grapple with some of the big decisions we face right now. It’s more than most congresses and most presidents have to deal with in a lifetime.

But we have been called to govern in extraordinary times. And that requires an extraordinary sense of responsibility – to ourselves, to the men and women who sent us here, and to the many generations whose lives will be affected for good or for ill because of what we do here.

There is no doubt that times are still tough. By no means are we out of the woods just yet. But from where we stand, for the very first time, we are beginning to see glimmers of hope. And beyond that, way off in the distance, we can see a vision of an America’s future that is far different than our troubled economic past. It’s an America teeming with new industry and commerce; humming with new energy and discoveries that light the world once more. A place where anyone from anywhere with a good idea or the will to work can live the dream they’ve heard so much about.

It is that house upon the rock. Proud, sturdy, and unwavering in the face of the greatest storm. We will not finish it in one year or even many, but if we use this moment to lay that new foundation; if we come together and begin the hard work of rebuilding; if we persist and persevere against the disappointments and setbacks that will surely lie ahead, then I have no doubt that this house will stand and the dream of our founders will live on in our time. Thank you, God Bless you, and may God Bless the United States of America.