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President Barack Obama held an economic town-hall meeting Monday, part of his administration's continuing effort to demonstrate its laser-like focus on the economy which is meant to counter the wide-spread impression that it lacked same.
Carried live on CNBC from the Newseum in downtown Washington, DC, the town hall meeting gave Obama a chance to answer a pre-recorded question from Rick Santelli, the CNBC personality whose famous on-air rant against government bail-outs and Obama helped inspire the Tea Party movement.
Santelli appeared to have calmed down considerably since The Rant, perhaps in keeping with his new role as a founding father of a movement.
Curiously, Santelli didn't ask about taxpayer subsidies of distressed homeowners, the subject of The Rant.
Instead, he asked Obama a question based on a dubious premise. If the federal government were a business, wouldn't an investor be rightly skeptical about investing given its debt levels?
Obama accepted the premise of the question even though he could've pointed out the fallacy. The U.S. isn't a business. It's goal isn't to maximize profits for shareholders.
It's aim is to maximize the liberty of citizens, to perpetuate the nation and to address issues that are too big for individuals or even states to resolve by themselves.
But Obama didn't go there. Instead, he took Santelli's question at face value and answered it. Here's their exchange:
SANTELLI: Mr. President. If I were to ask an investor would he invest in a company that for every dollar it spent it had to borrow 42 cents, I think that investor would think long and hard. Now if you look at the amount of money the government takes in and the amount of spending, those are pretty much the numbers for our government right now.
Does it bother you that 42 percent of our spending is borrowed even understanding that we have to deficit spend under tough times. How long can the U.S. continue to spend in that fashion without potentially hurting our long time financial health.
OBAMA: Well, it bothers me a lot. It bothered me when I was running for office and it bothered me when I arrived and I had a $1.3 trillion deficit wrapped in a bow and waiting for me in the Oval Office.
So, the answer to Rick's question is we've got to so something about it. And we have to do something about it fairly rapidly. The first thing you do is not dig it deeper. That's why this tax debate is important. We can't give $700 billion away to some of America's wealthiest people. We've got to make sure we're responsible for our budget, that's point #1....
The one thing I have to say to the public is that about 60 percent of our budget is entitlements, Social Security, Medicare and Medicaid. And a lot of the discretion I have is somewhat limited on these programs.
Now part of the reason health-care reform was so important is because the biggest driver of our long term budget deficits is Medicare. If our economy is growing at 2 or 3 or 4 percent, but health care costs are going up 6, or 7 or 8 percent, than the budget will blow up no matter how many cuts I make in other programs...
Are your eyes glazing over yet? That's the problem, all this economics stuff can be fairly dull unless you're really interested in the details which many people don't seem to be.
It really would have made for better TV if Santelli had ranted at the president about home-owners with underwater mortgages or who were otherwise unable to pay their mortgages getting taxpayer financed bailouts.
Lacking that, it was left to CNBC anchor John Harwood to ask Obama about bailouts for homeowners.
HARWOOD: Hasn't experience proven though that those interventions haven't worked and basically the housing market has got to find its bottom and get back...
OBAMA: This is the argument Rick Santelli made. This is when he went on that rant about the tea party. (Audience laughs.)
It is a fair economic argument that some people make that say 'just leave it alone. And if people are losing their homes, they've got to lose their homes. If the housing market has to go down another 10 percent, just let it go down another 10 percent. Eventually it will find bottom, that's an argument that's being made out there.
I guess my job as president is to think about those families that are losing their homes, not in some abstract numbers. I mean, these are real people who worked really hard for that house. And, you know, we think it's very important that specualtors, people who are just trying to flip condos, that they're not getting help.
We think it's very important that some people just bought too much house, they couldn't afford it. And it's not fair for the rest of us to have to subsidize them because of the bad judgments and mistakes that they made.
On the other hand, we also think it's important to recognize that if you've got communities where you've got every other house is foreclosed, that that's bad for the economy as a whole...
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