The Economic Logic in the President’s Speech to Congress
President Obama superb address Tuesday night had an underlying, unifying logic which some may have missed, but which hopefully readers of this will recognize. First, on the financial and economic crisis, he embraced the three basic steps we have urged since last September: On top of a stimulus aimed at long-term investments and helping the states — that’s now done — there will be new requirements that banks getting help from taxpayers use it to expand their lending, and new steps to keep people in their homes and bring down foreclosure rates. It’s just economic common sense — but that’s precisely what most of official Washington casually casts aside in favor of scoring short-term, political points. (Take a look at Governor Bobby Jindal’s empty and sneering response to the President’s speech. His repeated citing of Katrina as a model for government action, by itself, should be a career-ending act.)
The President also laid out a domestic agenda for the rest of his first term, and it looks like the most sweeping since FDR and LBJ. I suppose that personal blogs, by definition, are no place for humility, so here it is straight. The three cornerstone Obama initiatives — slow down our fast-rising health care costs, expand energy conservation and our use of alternative fuels, and give everybody new chances to upgrade their working skills — are the exact prescription laid out in my recent book, Futurecast: How Superpowers, Populations and Globalization Will Change the Way You Live and Work, more than a year ago. It’s also been a regular theme of this blog and a series of papers written for NDN, the progressive think tank which also advised the Obama campaign and transition.
Here, too, it’s just economic common sense, for a world being transformed by globalization. The underlying logic of the President’s program springs from the fierce new challenges Americans face under globalization to their jobs and incomes. Globalization has made competition much stronger, and that competition leaves American businesses and their workers in a bind. Their costs have been rising very fast, especially for health care and energy, but intense global competition makes it harder for companies to raise their prices to cover these rising costs. The result is that the wages of most American stopped rising since about 2002, even as they became more productive. And most can’t find higher wages by getting new jobs, because before the current crisis began, the same forces had made this period the weakest for job creation since World War II.
The President understands that coming out of the current crisis isn’t enough, if we just return to another period of growth without wage gains or healthy job creation. He also understands another theme of Futurecast and this blog, namely that about half of Americans also need new skills if they aspire to jobs with a real future. That’s the basis for the third plank of the domestic agenda he laid out last night — genuine, new access for young people to go to college or receive other, post-secondary training, and new opportunities for everyone else to upgrade their skills.
President Obama’s first speech to Congress already ranks as the most serious and thoughtful presidential address on the economy in decades. Perhaps it took an historic crisis to break through the political cant and mental laziness that has gripped our economic agenda for so long. But the president is using this moment to put forward not only meaningful answers for the crisis, but serious, long-term remedies for much deeper economic problems which other politicians routinely ignore. That’s presidential leadership of the sort we haven’t seen since, well, FDR.