2010-07-01 06:26

RACINE, Wis. – Sensitive to election-year resentment over big government, US President Barack Obama declared Wednesday he intends to get "our debt and our deficits under control." With fears alive of a double-dip recession, Obama warned that he won't slash spending at the expense of the economic rebound.

President Barack Obama speaks at a town-hall style event on the economy, Wednesday, June 30, 2010, at Racine Memorial Hall in Racine, Wis.. [Agencies]

"We got it moving again," Obama said of the economy to his town hall audience in this Midwestern city, where unemployment tops 14 percent. "We now have to, in a gradual way, reduce spending ... but do so in a way that doesn't hurt people. And that is a challenge."

Politically, Obama's challenge is even broader. He is trying to make the case to the nation that the $862 billion stimulus plan prevented disaster and is fueling job growth even while millions are still out of work. And he is doing it at a time when Republicans are pounding him for running up a long-term bill for taxpayers, the same frustration that helped give rise to the Tea Party movement and that has made the budget deficit a bigger worry for voters across the spectrum.

The dilemma is also playing out globally, as world leaders try to balance pressures to cut their debt without eroding any jolt that came from new spending.

Seizing on a political opportunity, Obama used his latest getaway from Washington to lash out at Republicans as out of touch with the daily problems of Americans. His agenda was to sharpen the contrast with the opposition party as midterm elections loom and economic anxiety still runs high.

The president jumped all over for two recent comments by Republican lawmakers that Democrats are trying to turn into a political liability for the GOP: Rep. Joe Barton's apology to BP for the $20 billion compensation fund the White House pressured the company to set up after the Gulf oil spill, and House Minority Leader John Boehner's recent comment that the financial regulation bill Obama supports amounts to "killing an ant with a nuclear weapon."

"He can't be that out of touch with the struggles of American families," Obama said of Boehner. "If he is, then he has to come here to Racine and ask people what they think."

Boehner shot back in a statement: "The president should be focused on solving the problems of the American people — stopping the leaking oil and cleaning up the Gulf, scrapping his job-killing agenda, repealing and replacing ObamaCare — instead of my choice of metaphors."

Obama's comments about debt came amid a national sense of bailout fatigue, with his own economic leadership in question.

"How do we get government spending under control? That's a legitimate question," Obama said. "And whether you're a Democrat, an independent, or a Republican, all of us should be worried about the fact that we have been running the credit card ... Somebody's going to have to pay that back."

He promised that the matter would be a priority for him over the next couple of years, with help from a commission studying how to reduce costly safety-net programs. Still, the president defended as essential both the unprecedented stimulus spending and the massive aid given to big banks and auto companies.

Speaking to a friendly audience in a state he won in 2008, Obama made the case for a government that plays a role in the lives of its people. And in a sharp critique of his opponents, he said it was a hands-off vision favored by many Republicans that led the country into an economic mess in the first place.

"Their prescription for every challenge is pretty much the same — and I don't think I'm exaggerating here: basically cut taxes for the wealthy, cut rules for corporations and cut working folks loose to fend for themselves," he said.

Obama's critique of the GOP underscored a reality four months out from the midterm elections: While the economy is no longer teetering on the edge of a recession, there are still concerns that the fragile recovery could spiral downward.

A string of disappointing economic numbers, capped off by a dismal report on consumer confidence this week, have contributed to a slide in the markets. The unemployment rate is expected to hover around 10 percent through the end of the year, and many economists expect Friday's employment report to show that employers cut jobs in June, reversing five straight months of growth.

Obama chided Republicans for blocking the extension of unemployment benefits and opposing a Wall Street reform bill making its way through Congress, policies he said would bring more certainty to the lives of Americans and to the markets.

From his audience, fielded questions about help for struggling homeowners, support for the military, college education costs and more.

The president seemed to enjoy the moment. And earlier, on his way into town, Obama found a different slice of happiness. At a pastry shop.

He made a surprise detour to O&H Danish Bakery, purveyor of a delicacy called a kringle — a large round flat pastry with a hole in the middle.

Obama walked in with his jacket off and sleeves rolled up and shook hands with the dozen patrons in the store. He sampled a pecan kringle, proclaimed it outstanding and added: "It makes you happy."