U.S. Finances Are ‘Unsustainable,’ Obama Says at Facebook

Obama, at Facebook, Says U.S. Finances Unsustainable
U.S. President Barack Obama, left, speaks while Mark Zuckerberg, co-founder and chief executive officer of Facebook Inc., listens during a town hall event at Facebook headquarters in Palo Alto, California, U.S. Photographer: David Paul Morris/Bloomberg

President Barack Obama, on a cross-country trip to sell his deficit reduction plan, said yesterday that the nation’s finances are “unsustainable.”

At a campaign-style town hall meeting at the headquarters of Facebook Inc., Obama described the House Republicans’ budget plan as “fairly radical,” and said members of both political parties in Washington need to work together to start reducing the federal deficit in a “balanced way.”

“We have an unsustainable situation,” he said. “We face a critical time where we are going to have to make some decisions -- how do we bring down the debt in the short term, and how do we bring down the debt over the long term?”

After his appearance at Facebook, Obama turned his attention to political fundraising.

During remarks to Democratic donors today at a San Francisco hotel, a group of people at one table stood and broke into song, demanding the release of Bradley Manning, the U.S. soldier accused of leaking secret documents to the WikiLeaks.com website. Obama brushed off the interruption: “Now there’s an example of creativity,” he said.

Obama attended a dinner in San Francisco last night hosted by Marc R. Benioff, chairman and chief executive officer of Salesforce.com, a cloud computing company.

Obama’s ‘Startup’

Obama spoke after a performance by singer Stevie Wonder, telling a roomful of early supporters: “Some of you were involved in startups. Well, I was a startup.”

“We started something in 2008,” Obama said of his first presidential campaign. “We haven’t finished it yet,” he said, reeling off needs to overhaul education, improve clean energy programs and reduce debt and deficits. “I’m going to need you to help me finish it.”

Tickets for today’s event, which drew about 200 donors, and yesterday’s dinner, attended by about 60 people, cost as much as $35,800 a person, according to a Democratic official who wasn’t authorized to discuss such details publicly. The president yesterday also attended a “Gen44” Obama fundraising event at the Nob Hill Masonic Center, where ticket prices ranged between $25 and $2,500, according to another Democratic official.

Obama is to fly today to Nevada, a politically important state in the 2012 campaign. The president is scheduled to hold a town hall meeting in Reno at ElectraTherm Inc., a small renewable energy company, giving him a chance to reinforce his push for increased spending on clean-energy technology.

Job Approval

A poll released today showed that 42 percent of Americans surveyed approved of Obama’s job performance, down from 48 percent last month. In the poll by American Research Group Inc., of Manchester, New Hampshire, 53 percent of respondents disapproved of Obama’s performance, up from 47 percent in March. Pollsters questioned 1,100 adults nationwide from April 17-20. The margin of error is plus or minus 2.6 percentage points.

Later today, Obama returns to California for fundraisers in Los Angeles, including events at Sony Pictures where actor-singer Jamie Foxx is scheduled to appear.

The fundraising events in San Francisco and Los Angeles are expected to bring in between $4 million and $5 million, a Democratic official said.

Bill Carrick, a Democratic strategist based in Los Angeles, described the trip as “not a full-fledged campaign trip, but it has some of the dynamics of preparing to run a campaign,” such as efforts to “start focusing on swing states early so you can broaden the electoral map.”

Reach Out

Facebook, with more than 500 million users, is the world’s largest social network website. It was founded in 2004 by Mark Zuckerberg.

Obama has used social media sites such as Google Inc.’s YouTube to reach out to voters. Yesterday’s session is the first time he has appeared on Facebook, which passed Google last year to become the most visited website in the U.S.

Zuckerberg, joined by Chief Operating Officer Sheryl Sandberg, moderated the event. Obama took questions filed online through the White House’s Facebook page and website, along with those from an audience of Facebook employees, small-business leaders and Silicon Valley entrepreneurs.

Obama said using Facebook allows us to “make sure this isn’t just a one-way conversation.”

“This format and this company, I think, is an ideal means for us to be able to carry on this conversation,” the president said. “We’re having a very serious debate right now about the future direction of our country.”

Separate Plans

The White House and House Republicans have offered separate plans to reduce cumulative budget deficits by $4 trillion, over 12 years and 10 years respectively. Obama’s plan would include $1 trillion in tax increases that his advisers say could be raised from families earning at least $250,000, while the Republicans’ measure wouldn’t raise taxes.

“The Republican budget that was put forward I would say is fairly radical. I wouldn’t call it particularly courageous,” he said. “I would call it short-sighted.”

Obama criticized the Republican plan for preserving tax breaks while chopping funds from programs such as clean energy and for seeking to overhaul Medicare and Medicaid health insurance programs for the elderly and the poor.

“Nothing is easier than solving a problem on the backs of people who are poor or people who are powerless,” he said.

Treasury Yields

While the deficit dominates political debate in Washington, bond market yields in the U.S. are lower now than when the government was running a budget surplus a decade ago even as Treasury Department data show that the amount of marketable debt outstanding has risen to more than $9 trillion from about $4.3 trillion in mid-2007. The yield on the benchmark 10-year note is below the average of about 7 percent since 1980 and the average of 5.48 percent in 1998 through 2001, the last time the U.S. had a budget surplus, according to Bloomberg Bond Trader prices.

Ten-year yields fell three basis points, or 0.03 percentage point, to 3.38 percent at 11:48 a.m. in New York, according to Bloomberg Bond Trader prices. The Dow Jones Industrial Average rose 0.3 percent to 12,492.10 at 12:59 p.m., after surging 1.5 percent yesterday to its highest closing level since June 2008.

Housing Market

The president said the economy is still “not growing quite as fast as we would like” even after creating almost 2 million jobs in the past 18 months. He called the housing market “probably the biggest drag” on the economy.

“What I’m really concerned about is making sure that the housing market overall recovers enough that it’s not such a huge drag on the economy because, if it isn’t, then people will have more confidence, they’ll spend more, more people will get hired, and overall the economy will improve,” he said. “It’s still tough out there.”

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