Obama’s Rx: Buy stocks, buy into recovery plan

Federal Reserve chief Ben Bernanke said the U.S. faces ‘a prolonged episode of economic stagnation’ without bold policy moves.

WASHINGTON (AP) — Trying to pump up the nation’s confidence, President Barack Obama said Tuesday that Wall Street has been hammered so hard that “buying stocks is a potentially good deal,” and he dispatched top aides to Capitol Hill to defend his plans for pulling the economy out of its deep recession.

The stock market slipped ever lower, and Republicans suggested Obama was “cooking the books” in rosy recovery predictions.

After being accused for weeks of being too negative about the economy, Obama recently has shifted to a more positive tone. He and his aides still say recovery won’t come quickly, but they are becoming more aggressive in declaring that the government’s efforts will work.

They better work, Federal Reserve Chairman Ben Bernanke said. The country faces “a prolonged episode of economic stagnation” without bold policy moves, he told the Senate Banking Committee.

Separately, the Fed announced a long-awaited program to spur lending for autos, education, credit cards and other consumer loans by providing up to $200 billion in financing to investors to buy up the debt. If the program succeeds, it should help break economy-crippling credit clogs and make it easier for Americans to finance purchases large and small at lower rates, Bernanke said.

“What the economy requires, what the American people demand is that we move as aggressively as we can to get growth back on track,” Treasury Secretary Timothy Geithner told the tax-writing House Ways and Means Committee. “I’m confident this is the right path for the country.”

Republicans were not so sure, accusing the new administration of raising taxes during a recession — on many ordinary Americans as well as on the wealthy.

Underscoring the economy’s weakness, Detroit’s Big Three automakers reported huge U.S. sales declines for February from a year earlier — 53 percent for General Motors Corp., 48 percent for Ford Motor Co. and 44 percent for Chrysler LLC.

On Wall Street, the Dow Jones industrials lost 37 points, but stocks have been falling so fast — 300 points on Monday alone — that the new decline seemed quite modest.

Obama’s plan envisions a deficit of $1.7 trillion this year followed by several more years of trillion-dollar shortfalls.

“The new administration has inherited an economic crisis unlike any we have seen in our lifetimes,” White House Budget Director Peter Orszag told the House Budget Committee.

The administration acknowledges that its energy proposal would increase costs for consumers but argues that the vast majority of people will get tax breaks elsewhere in Obama’s budget package.