So today, I want to step back for a moment and explain our strategy as clearly as I can.  This is going to be prose, and not poetry.  I want to talk about what we’ve done, why we’ve done it, and what we have left to do.  I want to update you on the progress we’ve made, but I also want to be honest about the pitfalls that may still lie ahead.

Most of all, I want every American to know that each action we take and each policy we pursue is driven by a larger vision of America’s future — a future where sustained economic growth creates good jobs and rising incomes; a future where prosperity is fueled not by excessive debt, or reckless speculation, or fleeting profits, but is instead built by skilled, productive workers, by sound investments that will spread opportunity at home and allow this nation to lead the world in the technologies and the innovation and discoveries that will shape the 21st century.  That’s the America I see.  That’s the America that Georgetown is preparing so many of you for.  That is the future that I know that we can have.

He explained that in order to understand where we have to go from here, we also have to understand how we got here:

Now, this is when the crisis spread from Wall Street to Main Street.  After all, the ability to get a loan is how you finance the purchase of everything from a home to a car to, as you all know very well, a college education.  It’s how stores stock their shelves, and farms buy equipment, and businesses make payroll.  So when banks stopped lending money, businesses started laying off workers.  When laid-off workers had less money to spend, businesses were forced to lay off even more workers.  When people couldn’t get a car loan, a bad situation at the auto companies became even worse.  When people couldn’t get home loans, the crisis in the housing market only deepened.  Because the infected securities were being traded worldwide and other nations also had weak regulations, this recession soon became global.  And when other nations can’t afford to buy our goods, it slows our economy even further.

So this is the situation, the downward spiral that we confronted on the day that we took office.  So our most urgent task has been to clear away the wreckage, repair the immediate damage to the economy, and do everything we can to prevent a larger collapse.  And since the problems we face are all working off each other to feed a vicious economic downturn, we’ve had no choice but to attack all fronts of our economic crisis simultaneously.

The President spoke at length addressing a sentiment he said he hears most often in letters from people across the country, namely outrage about the government support for banks teetering on failure. As he did throughout the speech, he took time to address opposing arguments and perspectives. To those who take the intuitively and emotionally understandable position that we should simply let the banks fail – “where’s my bailout?” in short – he argued that in truth a dollar in credit can have an immense multiplier effect that will produce a much greater gain in terms of jobs and the broader economy. And in turn, the failure of those banks would have a vastly disproportionate impact on every American. To those who urge the preemptive takeover of banks, “the nationalization argument” as he called it, he gave assurance that his reticence to engage in that strategy was not born of ideological rigidity or moral obligation to shareholders, but rather a belief that this strategy would cause even bigger losses for taxpayers.

Perhaps the heart of the speech was focused on the core weaknesses of the economy that led to the crisis we see now, and the pillars of the new economy the President envisions to ensure such a crisis will be kept at bay in the future:

It is simply not sustainable to have a 21st-century financial system that is governed by 20th-century rules and regulations that allowed the recklessness of a few to threaten the entire economy.  It is not sustainable to have an economy where in one year, 40 percent of our corporate profits came from a financial sector that was based on inflated home prices, maxed-out credit cards, over-leveraged banks and overvalued assets.  It’s not sustainable to have an economy where the incomes of the top 1 percent has skyrocketed while the typical working household has seen their incomes decline by nearly $2,000.  That’s just not a sustainable model for long-term prosperity.

For even as too many were out there chasing ever-bigger bonuses and short-term profits over the last decade, we continued to neglect the long-term threats to our prosperity:  the crushing burden that the rising cost of health care is placing on families and businesses; the failure of our education system to prepare our workers for a new age; the progress that other nations are making on clean energy industries and technologies while we — we remain addicted to foreign oil; the growing debt that we’re passing on to our children.  Even after we emerge from the current recession, these challenges will still represent major obstacles that stand in the way of our success in the 21st century.  So we’ve got a lot of work to do.

Now, there’s a parable at the end of the Sermon on the Mount that tells the story of two men.  The first built his house on a pile of sand, and it was soon destroyed when a storm hit.  But the second is known as the wise man, for when “the rain descended, and the floods came, and the winds blew, and beat upon that house, it fell not:  for it was founded upon a rock.”

It was founded upon a rock.  We cannot rebuild this economy on the same pile of sand.  We must build our house upon a rock.  We must lay a new foundation for growth and prosperity — a foundation that will move us from an era of borrow and spend to one where we save and invest; where we consume less at home and send more exports abroad.

It’s a foundation built upon five pillars that will grow our economy and make this new century another American century:  Number one, new rules for Wall Street that will reward drive and innovation, not reckless risk-taking — (applause); number two, new investments in education that will make our workforce more skilled and competitive — (applause); number three, new investments in renewable energy and technology that will create new jobs and new industries — (applause); number four, new investments in health care that will cut costs for families and businesses; and number five, new savings in our federal budget that will bring down the debt for future generations.  (Applause.)

That’s the new foundation we must build.  That’s our house built upon a rock.  That must be our future — and my administration’s policies are designed to achieve that future.

Towards the end of his speech, he noted that in addition to the fundamental weaknesses of the economy, there is also a fundamental weakness in the political system that must be confronted. He talked about how the prospects for long-term, bold, necessary solutions often give way to 24-hour news cycles and fluctuating poll numbers.

This can’t be one of those times.  The challenges are too great.  The stakes are too high.  I know how difficult it is for Members of Congress in both parties to grapple with some of the big decisions we face right now.  It’s more than most congresses and most presidents have to deal with in a lifetime.

But we have been called to govern in extraordinary times.  And that requires an extraordinary sense of responsibility – to ourselves, to the men and women who sent us here, and to the many generations whose lives will be affected for good or for ill because of what we do here.

Having been forthright about the challenges ahead, he expressed confidence: America will have that house upon the rock.