Just when Sin City was beginning to forget what AIG Effect means, President Obama has restarted the whole debate by saying that people trying to save shouldn’t be spending money in Vegas.

President Obama & Fabulous Las Vegas Sign

On Feb 2, 2010, President Obama delivered a speech at a townhall in Nashua, New Hampshire. In the speech, he says that “When times are tough, you tighten your belts. You don’t go buying a boat when you can barely pay your mortgage. You don’t blow a bunch of cash in Vegas when you’re trying to save for college. You prioritize. You make tough choices.”

Here’s the full transcript of the speech. This is the second time that President Obama has piled on Vegas. Exactly one year ago, on Feb 9, 2009, at a townhall meeting in Elkhart, Indiana, President Obama said “You can’t get corporate jets, you can’t go take a trip to Las Vegas or go down to the Super Bowl on the taxpayer’s dime.”

That statement last year was made due to concern over public anger at federal bail outs for companies who were spending hundreds of thousands of dollars on meetings and events. It was widely seen as a move to deflect public anger over the bailouts from the government and focus it on the corporates.

This time around, President Obama is trying to tamp down worries about federal deficits. He made the statement about ‘blowing a bunch of cash in Vegas’ in the context of wasteful government spending, which he says needs to be prioritized. This could be translated by federal agencies as a sign that they shouldn’t be considering Vegas for meetings and conferences.

There has already been a big kerfuffle over a federal blacklist for Vegas and other resort cities, and Senate Majority Leader Harry Reid (D-NV) has even introduced the Protecting Resort Cities from Discrimination Act (S. 1530 & H.R. 3732) to make it go away.

The President’s new remarks open up the entire debate all over again.

Reaction from Vegas officials and Nevada lawmakers:-

Senator Harry Reid (D-NV) – Issued statement titled “Reid to Obama – Lay off Las Vegas.” Also called White House and told them that “the president needs to lay off Las Vegas and stop making it the poster child for where people shouldn’t be spending their money.”

Las Vegas Mayor Oscar Goodman – Called Press Conference and said “I’ll do everything I can to give him the boot.”

Congresswoman Shelley Berkley (D-NV) – Issued statement saying “Enough is enough! President Obama needs to stop picking on Las Vegas and he needs to let Americans decide for themselves how and where to spend their hard-earned vacation dollars.”

In response to the criticism, President Obama sent a conciliatory note to Sen. Harry Reid. In the letter, he says that “I hope you know that during my Town Hall today, I wasn’t saying anything negative about Las Vegas. I was making the simple point that families use vacation dollars, not college tuition money, to have fun.  There is no place better to have fun than Vegas, one of our country’s great destinations.  I have always enjoyed my visits, look forward to visiting in a few weeks, and hope folks will visit in record numbers this year.”