In a speech to a journalism awards dinner, Obama urged journalists to ask tougher questions of the candidates vying to be president.
He voiced dismay over the vulgar rhetoric, violence at rallies and unrealistic campaign pledges that have continually grabbed headlines, in a thinly veiled reference to Republican front-runner Donald Trump.
"The number one question I'm getting as I travel around the world or talk to world leaders right now is, 'What is happening in America?' about our politics," Obama said, describing international alarm over whether the United States will continue to function effectively.
"It's not because around the world people have not seen crazy politics. It is that they understand America is the place where you can't afford completely crazy politics," he said.
"When our elected officials and our political campaigns become entirely untethered to reason and facts and analysis, when it doesn't matter what's true and what's not, that makes it all but impossible for us to make good decisions on behalf of future generations," Obama said.
He said the media landscape has changed since his first presidential campaign in 2008, when "there was a price if you said one thing and then did something completely different.
"The question is, in the current media environment, is that still true? Does that still hold?" he said.
He said news organizations have a responsibility to dig deeper despite the faster pace of "this smartphone age" and steep financial pressures in the news business.
Voters "would be better served if billions of dollars in free media came with serious accountability, especially when politicians issue unworkable plans or make promises they can't keep," Obama said.
The New York Times earlier this month reported that Trump has so far earned almost $1.9 billion worth of media coverage, compared with $313 million for the next closest Republican challenger, US Senator Ted Cruz of Texas, and $746 million for Democratic front-runner Hillary Clinton.
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