WASHINGTON (Washington Post) -- Amid signs that the economy is stabilizing, President Obama and his aides are moving to take credit for the gains.

In appearances on weekend talk shows, Obama's advisers gave a first look at how the administration seeks to navigate a tricky period for communicating about the economy. They wish to advertise the signs of economic improvement while not appearing out of touch with the millions of Americans who remain jobless.
The administration will keep using government policy to boost the economy in the short run, the advisers indicated, but will contain the deficit in the longer run, even if it means higher taxes. Treasury Secretary Timothy F. Geithner refused to rule out that possibility, saying the administration will “do what it takes” to bring the deficit down.
To reconcile the apparent tensions, they simultaneously tried to remind Americans of how bad conditions were at the beginning of the year, claim that the economic stimulus package they championed is part of the reason things are looking better now and acknowledge that the job market is likely to get worse before it gets better.
“Six months ago, the economy was in a nose dive, people were talking about the possibility of another depression, the statistics all suggested a vertical decline,” said Lawrence H. Summers, the top White House economic adviser, on “Meet the Press.” “None of that is the situation right now,” he said.
As Congress goes on recess and the debate over a health-care overhaul stalls, attention is shifting back to the state of the economy and the prognosis for a sustained recovery -- along with how to deal with the budget deficits the nation could be left with in the years ahead.
Both Summers and Geithner argued that the Obama administration will contain those deficits. Geithner, under repeated questioning from “This Week” host George Stephanopoulos, refused to rule out tax increases to close the long-term budget gap.
“We're going to have to do what it takes” to contain the deficit, Geithner said.
Friday's better-than-expected report on gross domestic product offered strong evidence that the economic contraction that began at the end of 2007 could now be ending. Companies have cut back so aggressively that they will need to increase production levels just to keep up with demand for their goods and services.
That, forecasters say, will lead to an increase in GDP, the broadest measure of economic output, over the coming months. Sectors of the economy that have been in deep decline, including housing and autos, now appear to be leveling off.
Sunday, for example, Ford officials told reporters that they sold more vehicles in July than they did a year earlier -- the first monthly increase for the company in two years. Ford attributed the gain in part to the government's “Cash for Clunkers” program to encourage people to buy new cars.
Even as the nation starts producing more goods and services, though, joblessness is expected to continue rising -- both because the expansion is expected to be weak initially and because businesses are behaving with extreme caution, making them reluctant to hire even if they do see rising demand for their products.
The unemployment rate was 9.5 percent in June, and the July number is scheduled to be released Friday. Economists expect it to have risen to about 9.6 percent last month, and to rise above 10 percent later in the year. Acknowledging that was a second prong of the Obama officials' message yesterday.
“I want to emphasize the basic realities,” said Geithner, appearing on “This Week.” “Unemployment is still very high in this country.” He added that the administration and Congress are “going to look very carefully” at extending unemployment insurance benefits further.
Economists view it as unsurprising that unemployment would continue rising even after the downturn ends; the last recession ended in November 2001, but the jobless rate didn't begin a steady downward trend until mid-2003.
But what seems normal to economists creates big political difficulties for the Obama administration and Congressional Democrats. Republicans are seizing on the continued weakness in the labor market to attack Obama's economic strategy, particularly the $787 billion stimulus package that passed in February.
“We hope the economy will start to create jobs for families and small businesses,” said Rep. John A. Boehner (R-Ohio). But the stimulus package “clearly isn't working by the standards Washington Democrats set for themselves.”
Independent economists generally say that it is too early to draw firm conclusions on the effectiveness of the stimulus legislation, of which a relatively small portion has been deployed so far. The Obama officials expressed greater confidence. “We absolutely do feel it is working,” said Christina Romer, chairman of the Council of Economic Advisors, on CNN's “State of the Union.”
But Obama administration officials have been on the defensive because under their forecasts for the impact of the stimulus, the unemployment rate would peak at 8 percent. “There was a surprise in the unemployment statistics,” Summers said on “Meet the Press,” “but that didn't have to do with the impact of the stimulus. That had to do with the baseline that we were dealing with.”
One more immediate issue for Congress is whether to add more money to the “Cash for Clunkers” program, which proved so popular in its initial weeks that its $1 billion reserve is already about to run out. The House passed a bill Friday to pump another $2 billion into the program, and the Senate will consider the legislation this week, before going on its August recess this Friday.
Appearing on C-SPAN's “Newsmakers” show Sunday, Transportation Secretary Ray LaHood said that the program, which provides up to $4,500 to people who trade in an older car for a more fuel-efficient model, will have to be suspended unless the Senate acts.