Obama stresses dire economy as he begins

Analysis

updated 3:56 p.m. ET Jan. 13, 2009

WASHINGTON - In hard times, the man in the Oval Office usually is the cheerleader-in-chief, looking ahead optimistically. Not Barack Obama, who is taking office full of gloom and doom about the nation's economy, warning that things are dire and bound to get worse.

That helps him sell his economic program and sets a low bar for measuring his success.

The president-elect warns darkly of "a crisis unlike any we have seen in our lifetime" as he tries to forge an early political consensus for Congress to act quickly.

Recession "could linger for years and the unemployment rate reach double digits" if nothing is done, and the nation should brace for trillion-dollar budget deficits "for years to come," he cautions.

Few politicians or economists would dispute that the economy is in the worst shape in at least a generation, perhaps even since the Great Depression.

But Obama also runs the risk of "talking down" the economy so much that it will make consumers and investors even more jittery, perhaps making things worse. As bad as it is, the economy is still a long way from Great Depression levels, when 25 to 30 percent of the nation was unemployed compared with the present 7.2 percent.

Obama's grim warnings are "a way of lowering the bar and preparing for his own economic success," said Wayne Fields, director of American culture studies at Washington University in St. Louis and an expert on presidential rhetoric. "It's a declaration of his own intent to improve things."

Obama advisers say they are mindful of the risks of being too pessimistic. They say the president-elect seeks to strike a balance by also emphasizing the nation's ability to overcome adversity, much as President Franklin D. Roosevelt did in the 1930s.

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Roosevelt, whose first 100 days Obama is studying, said in his first inaugural address in March 1933 that "only a foolish optimist can deny the dark realities of the moment."

But FDR also asserted famously that "the only thing we have to fear is fear itself" and told the nation: "Our greatest task is to put people to work. This is no unsolvable problem if we face it wisely and courageously."

Some recent presidents have also sounded downbeat notes upon taking office:

• President George W. Bush vowed at his 2001 inauguration to "recover the momentum of our economy."
• President Bill Clinton said in January 1993 that the economy had been "weakened by business failures, stagnant wages, increasing inequality, and deep divisions among our people."
• President Ronald Reagan declared at his 1981 inaugural that "these United States are confronted with an economic affliction of great proportions."

All three insisted their economic policies could help lift the economy. Later data and analyses revealed that the economy was not technically in recession when Reagan, Clinton or Bush took office.

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Obama faces far more series economic challenges, more like those Roosevelt faced.

And, unlike his immediate predecessors, Obama has been warning of the consequences of the downturn almost daily ahead of next Tuesday's swearing-in ceremonies — in speeches, news conferences, interviews, meetings with lawmakers and even on YouTube.

Obama, who pressed his case with Senate Democrats at lunch in the Capitol Tuesday, has been laying the groundwork for a $800 billion stimulus package he says will create or save up to 4 million jobs.

He may also be trying to get some of the underbrush out of the way so he can focus in next Tuesday's inaugural address on broader themes, suggested economist Rob Shapiro, a top Commerce Department official in the Clinton administration who is on Obama's team of transition advisers.

"He's going to ask for very large steps, he's going to take some very large steps," said Shapiro. Obama's grim pronouncements are laying "the predicate for those steps, that conditions really are worse than anyone has experienced probably in their lifetimes."

Shapiro dismisses suggestions that Obama's dire warnings could make matters worse by rattling consumers. "I don't think that anything the president-elect says is going to frighten people more than the reality of this downturn," Shapiro said.

Even so, Obama's downer talk does pose certain risks of worsening a recession now entering its second year, suggested David Wyss, chief economist at Standard and Poor's in New York. "Because confidence is key. If you do enough talking about how bad things are, people believe it and stop spending, they stop putting money into the stock market."

"On the other hand, from a political standpoint, if you're going to have a recession you really want to have it at the beginning of your term. Then you have a shot of getting over it before the next election," said Wyss.

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