Obama to use 5th anniversary of Lehman Brothers collapse to cite progress

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WASHINGTON -- President Barack Obama is marking the fifth anniversary of the Lehman Brothers collapse by trying to lay claim to an economic turnaround and warning Republicans against moves that he contends would risk a backslide.

His message to the GOP: Don't oppose raising the nation's debt limit, don't threaten to close down the government in a budget fight, and don't push to delay the health care law or starve it of federal money.

The economic emphasis, after weeks devoted to the Syrian crisis, begins coming into focus in a series of events kicked off by a Rose Garden speech Monday. It's a determined effort to confront public skepticism about his stewardship of the economy and to put down his marker for budget clashes with Congress in the weeks ahead.

The White House argues that a better capitalized and better regulated financial sector is extending more credit, fueling an economy now able to withstand headwinds such as spending cuts and tax increases.

"You can draw this straight line from the health of the financial system to the ways the financial system impacts the economy," said Jason Furman, the chairman of Mr. Obama's Council of Economic Advisers.

Mr. Obama can point to a growing economy, rising housing prices, 35 straight months of hiring, a rebounding stock market and other signs of recovery.

Five years after the federal government stepped in and infused banks with $245 billion in taxpayer money to avert a financial meltdown, the government has been paid back nearly in full.

Today is the fifth anniversary of Lehman's bankruptcy, which was the largest in U.S. history. The firm's demise marked the beginning of the global financial crisis and was a major catalyst of the financial meltdown.

"We've put more people back to work, but we've also cleared away the rubble of crisis and laid the foundation for stronger and more durable economic growth," Mr. Obama said during his recent trip to Russia.

But the public is not convinced that the economy is on the mend. Only one-third say the economic system is more secure now than in 2008, and 52 percent say they disapprove of Mr. Obama's handling of the economy, according to a Pew Research Center poll.

Despite job growth, the unemployment rate remains high at 7.3 percent. The income gap between the very rich and the rest of the population is the biggest since 1928.

What's more, some banks that received government aid because they were deemed "too big to fail" are now bigger than they were in 2008, but they are smaller as a share of the economy than the largest banks in other big economies. Three years after Mr. Obama signed a sweeping overhaul of lending and high-finance rules, execution of the law is behind schedule.

"We should not accept a financial system that allows the biggest banks to emerge from a crisis in record-setting shape while ordinary Americans continue to struggle," said Sen. Elizabeth Warren, a Massachusetts Democrat who watched over the bank bailout as head of a special oversight panel. The question that defines the debate is not so much whether government steps helped, but whether it could have done more to accelerate the recovery.

Now many say the economy needs long-term measures that would reduce spending on entitlement programs such as Medicare and Social Security and that would overhaul and simplify the tax system.

nation


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