President Obama took a break from his vacation on Martha's Vineyard to announce he would nominate Ben Bernanke for a second term as chairman of the Federal Reserve and credited him with guiding the economy through the worst recession since the 1930s.
"As an expert on the causes of the Great Depression, I'm sure Ben never imagined that he would be part of a team responsible for preventing another," the president said. "But because of his background, his temperament, his courage, and his creativity, that's exactly what he has helped to achieve."
Bernanke's four-year term is not up for another five months, but a White House official told ABC News they made the announcement today, because there has been a lot of speculation about Bernanke's future and the president wanted to put it to rest.
Obama praised Bernanke for the job he has done in guiding monetary policy through the economic crisis.
"Ben approached a financial system on the verge of collapse with calm and wisdom, with bold action and outside-the-box thinking that has helped put the brakes on our economic free fall," he said.
"We will continue to maintain a strong and independent Federal Reserve," the president added. Bernanke echoed that sentiment and credited Obama for "his unwavering support for a strong and independent Federal Reserve."
The Fed, Bernanke said, has been "challenged by the unprecedented events of the past few years."
"We have been bold or deliberate as circumstances demanded," the Fed chair said, "but our objective remains constant: to restore a more stable economic and financial environment in which opportunity can again flourish, and in which Americans' hard work and creativity can receive their proper rewards."
"We will also keep working towards the reform of a health insurance system whose costs and discriminatory practices are bankrupting our families, our businesses, and our government," Obama said.
Much like the decisions we've made so far, the steps we take to build this new foundation will not be easy. Change never is," Obama said. "As Ben and I both know, it comes with debate and disagreement and resistance from those who prefer the status quo. And that's OK, because that's how democracy is supposed to work."
Bernanke Likely to Get Congressional Support
Bernanke's re-appointment will still need Congressional approval, and while the Fed Chairman has had his share of controversy, it is expected to go through because he has earned the support of both Republicans and Democrats.
Senate Banking Committee Chairman Chris Dodd, D-Conn., said reappointing the Fed Chairman to a second term is the right choice.
"While I have had serious differences with the Federal Reserve over the past few years, I think reappointing Chairman Bernanke is probably the right choice," Dodd said in a statement. "Chairman Bernanke was too slow to act during the early stages of the foreclosure crisis, but he ultimately demonstrated effective leadership and his reappointment sends the right signal to the markets."
Economists are also praising Bernanke's reappointment, as a sign that the administration supports continued independence in the country's central bank.
"This will no doubt come as welcome news to financial markets, which would prefer continuity over change during such a critical time," said Diane Swonk, chief economist at Mesirow Financial. "Few (if any) are better qualified than Ben to undo what has been done to avert another Great Depression."
But don't expect a massive market rally on the news; Wall Street had been pushing for a second Bernanke term for some time.
"We do not expect this news to trigger any extended market movement," said David Kotok, economist at Cumberland Advisors. "About 70 percent of those market professionals polled were assuming Bernanke's reappointment."
While Bernanke obviously has passed a test -- a Republican appointee being given a nod by a Democratic President -- the hard, non-political work is ahead.
The announcement comes as the White House releases its revised 10-year cumulative budget deficit projection, which is $2 trillion more than its February projection.
Budget Deficit Numbers Higher than Predicted
The administration said today the deficit through 2019 is projected to be $9.051 trillion, which brings their estimates closer in line with the Congressional Budget Office's June projection.
Officials called these figures "higher than desirable" and said the forecast is based on new data that reflect "how severe the economic downturn was" at the end of last year and the first half of this year.
Getting these deficits under control is a "top priority of the administration," said Peter Orszag, director of the Office of Management and Budget. "We are in the midst of the policy process surrounding the FY 2011 budget, and that process will include proposals to put the nation on a fiscally sustainable path." Orszag would not comment on what those proposals would be or any details of the 2011 budget process.
Romer also said the administration predicts the unemployment numbers will peak in Q4 2009 and Q1 2010 and will hit 10 percent "for some months or some quarters" in that time period. She said the annual average of the unemployment rate for 2009 will be 9.3 percent and 9.8 percent in 2010.
Romer said these unemployment figures reflect two things: the deterioration of the GDP forecast ("the recession was simply worse" than they thought) and the fact that this is an "unusual recession for labor market."
One semi-positive projection the White House will announce tomorrow -- the size of this year's deficit has fallen by almost $262 billion (about 1.7 percent of GDP) and is projected to be $1.58 trillion (11.2 percent of GDP), since less money than once anticipated has been needed to stabilize the financial system.
The Obama administration points the finger at the Bush White House for not following PAYGO rules, and says the projected 10-year deficit would be $5 trillion smaller if they had.
"In other words, more than half of the projected deficits over the next 10 years are directly attributable to the previous Administration's failure to follow the pay-as-you-go principle," according to a release from the Office of Management and Budget.
ABC News' Dan Arnall and Matt Jaffe contributed to this report.