Obama talks economy in Nashua
President Barack Obama spoke about the importance of stimulating small business growth at Nashua High School North on Tuesday.
By Paulina Karpis, The Dartmouth Staff
Published on Wednesday, February 3, 2010
NASHUA, N.H. -- President Barack Obama announced a new government lending plan to stimulate small businesses and create jobs at a speech in Nashua, N.H., on Tuesday. The town hall-style meeting — Obama’s fifth question-and-answer session with a live or Internet audience in the last 12 days — came as the president works to reinvigorate his term after the surprise victory of Sen. Scott Brown, R-Mass., in January’s special election.
“I won’t rest until businesses are hiring again, and wages are rising again, and the middle class is thriving again, and we’ve finally got an economy that works for all Americans,” Obama said to an audience of 1,600 attendees at Nashua High School North. “I won’t rest until we do what we know has to be done to secure our leadership in the 21st century.”
As part of his mission to stimulate the economy, Obama unveiled plans for a Small Business Lending Fund, which would provide $30 billion in capital to community banks that lend to small businesses, he said.
“These banks are the pipeline to small business lending,” senior administration officials said in a conference call with reporters before the announcement. “When they have more capital, the increase in small business lending happens quite naturally.”
The funds dedicated to the program would come from Troubled Asset Relief Program money that Wall Street banks have repaid the government, officials said.
Obama said in the speech that jobs are his number one priority in 2010, citing the fact that one out of every 10 Americans is currently unemployed.
“The worst of the storm has passed,” he said. “But I don’t need to tell you, the devastation remains.”
Before the town hall meeting, Obama toured ARC Energy, a start-up business that is pioneering a new manufacturing process for LED lightbulbs, he said.
In addition to the Small Business Lending Fund, the Obama administration will continue to increase guarantees and waive payments for Small Business Administration-backed loans in its bid to spur small business growth, Obama said.
It is critical for Obama to revitalize small businesses, Dartmouth economics professor Annamaria Lusardi said.
“The objective is to create jobs. The best way to stimulate jobs is to stimulate that part of the economy that creates jobs,” Lusardi said, explaining that small businesses are responsible for a significant amount of job growth in the United States.
Some economists worry, however, that the Small Business Lending Fund will not be effective, arguing that banks have been prevented from investing in small businesses not by a lack of funds but by the dearth of reliable small businesses suitable for investment, according to the Huffington Post.
Senior Obama administration officials maintained that after consulting with banks, they are confidant the proposed fund will receive a positive reception and experience widespread participation.
Echoing many themes from his Jan. 27 State of the Union address, Obama called for other sweeping reforms. Addressing education, the president pushed for changes that would make American students competitive with their peers worldwide, and said that affordable loans should be available for qualified students wishing to attend college.
Obama also said he intends to push health care reform through Congress with the help of Democrats and Republicans, bringing a standing ovation from the audience.
“I didn’t run for president to play it safe. I didn’t run just to keep my poll numbers as high as possible for the next election,” he said. “I ran to solve problems for the next generation. I ran to get the hard things done.”
The president also addressed the need to tap into America’s capacity for innovation to find alternative energy sources, touching on proposals to reduce the soaring government deficit by cutting government programs and limiting public spending.
Obama called for political unity in Washington, charging that Republicans have shirked their responsibility to preserve the nation’s interests and instead have pursued their own short-term political interests.
“You want us to start worrying less about our jobs and more about your jobs,” the president said, addressing the audience. “You want us to worry less about our election and more about solving your problems. And for once, you’d like a government that reflects a sense of responsibility, decency and generosity, because that’s how you try to live your lives.”
Several members of the Dartmouth College Democrats attended the town hall meeting.
“President Obama is always impressive,” David Imamura ’10, president of the New Hampshire College Democrats, said. “Obama today, during the town hall, proved that despair and cynicism is not the message coming from the White House.”
2 questions: is the Huffington Post really a sound source for a synopsis of economists’ views? Has anyone ever heard of crowding out?
The idea that there aren’t credit-worthy small businesses is preposterous. The credit market is dominated by the US government’s insatiable appetite for credit. US government borrowing is effectively crowding out other borrowers. It works like this: The Fed Funds Rate is 0%. Only banks have access to this Federal Reserve interest rate. They “borrow” money essentially for free and lend it back to the US government at 2-3% interest (i.e. the big banks make big profits in nominal terms just for showing up and turning on the lights every morning). This circular-US Dollar-destroying-nonsense occurs for a lot of reasons, not least of which is the political power the big banks hold. But more important to this topic, how can the small time lenders have access to the cash they need to lend and thus how can small business/individual borrowers get the cash in this environment? The answer is they can’t. They have been crowded out of the credit market by a more dominant player.
As a band-aid, the administration is proposing to designate a fund for small business lending that must be comprised of money the US government has itself borrowed either from one of the banks mentioned or from a foreign entity. The money must, in fact, be borrowed (or printed) because the revenue the government receives from taxation of the productivity of American citizens cannot keep pace with its liabilities. (i.e. government incarnation of a cash flow problem)
Anthony Paravati DMS ‘10, T '12
By Anthony J. Paravati on Feb 3 | 7:35 pm