Staring down angry House Republicans, a potential debt crisis, and a recovery that feels like a recession, President Obama made the brave decision to give a yawner of an economic speech.
Long on rhetoric, the hour-plus address at Knox College in Galesburg, IL was short on specifics.
In case voters have forgotten the 2008 campaign, the 2012 campaign, and a bevy of bus tours, Obama is for strengthening the middle class and against income inequality. These are his “highest priority,” but they are also problems that have festered steadily over decades—as manufacturing jobs have disappeared, pension plans vanished, and the costs of higher education and health care have risen to debilitating levels.
The speech heralded Obama’s intentions, without delving deeply into his plans for fixing the problems. Even the congressional Republicans that Obama would need to execute much of his vision remained anonymous.
“The fact is, there are Republicans in Congress right now who privately agree with me on many of the ideas I’ll be proposing, but worry they’ll face swift political retaliation for saying so,” the president said.
IN TRAINING FOR THE SLUGFEST TO COME
The speech was another exercise in drawing political lines. It chummed the waters before the upcoming congressional recess in August—after which the White House will have to slug out a deal with Republicans on raising the $16 trillion-plus debt ceiling. Obama used the speech to portray the most conservative Republicans as close-minded ideologues who care little about the middle class.
“Others will dismiss every idea I put forward either because they’re playing to their most strident supporters,” Obama said, “or because they have a fundamentally different vision for America – one that says inequality is both inevitable and just; one that says an unfettered free market without any restraints inevitably produces the best outcomes, regardless of the pain and uncertainty imposed on ordinary families.”
The president pledged to exercise “whatever executive authority I have to help the middle class,” noting that the average American earns less now than in 1999. But his ability to address income inequality—one that has increased under his watch as CEO pay has increased 40 percent since 2009—has been stymied inside the executive branch. The Securities and Exchange Commission has failed over three years to approve a rule that mandates the disclosure of CEO-to-worker pay ratios by publicly traded companies.
Obama talked of the importance of infrastructure jobs that cannot be outsourced overseas, noting that bridges are old enough to qualify for Medicare and that ports must be enlarged to accommodate the next generation of super tankers. The president spoke about opening “manufacturing innovation institutes” to revive the blue collar, even though rust belt states have operated similar kinds of institutes for decades.
As for the expense of higher education, with student loan debt topping $1 trillion, Obama promised to “lay out an aggressive strategy to shake up the system.” He noted that—in the 21st Century economy—the cost of ignorance is far worse than monthly student loan repayments. Online courses and changes to the college funding formula were the two ideas floated by him to lower the price tag of higher education.
A MORTGAGE FOR EVERY FAMILY
Obama then spoke about the virtues of home ownership—and the need for refinancing pre-housing bust mortgages. He defended his Obamacare initiative as controlling the expense of medical care—even though the guts of the program are still going through a tortured implementation process. The administration recently delayed the employer mandate part of the 2010 law, while pushing ahead on launching health care exchanges this October that a Government Accountability Office report said are unready to open.
The Federal Reserve—which contributed to the recovery from the 2008 recession by holding down interest rates—was not part of Obama’s speech, even though the most critical economic choice he might make in the next few months is choosing a successor for Fed Chairman Ben Bernanke.
Obama did warn that the country cannot afford to repeat the near-default of 2011, when he butted heads with congressional Republicans over a needed increase to the government’s borrowing authority. GOP lawmakers demanded, successfully, that spending be cut in tandem with raising the debt ceiling.
Looking at the natural gas and oil reserves now being tapped, Obama suggested the middle class was poised for a comeback if Washington did not screw things up. During the speech, Obama once again became “the outsider” as he was back in 2005 when he last spoke at Knox College, instead of a two-term president.
“With an endless parade of distractions, political posturing and phony scandals,” Obama said “Washington has taken its eye off the ball.”