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President-elect Barack Obama offered what The New York Times is calling an “unusually direct and high-profile appeal” on the economy today.
The speech, given at George Mason University in northern Virginia, outlined in broad terms his plans for a
sweeping economic stimulus measures, including a tax cut and an infusion of as much as $800 billion, or face the likelihood that “this recession could linger for years.”
Obama’s speech came against a backdrop of further bad news on the economy, as the federal Labor Department reported that
The number of laid-off workers who are continuing to draw unemployment checks has jumped to the highest in more than a quarter-century and is likely to keep climbing this year — fresh evidence that people are finding it increasingly difficult to get a new job amid a deepening recession.
The Labor Department’s report Thursday also said first-time applications for jobless benefits dropped to 467,000 last week. But economists largely described that decline as a distortion, reflecting the government’s difficulty in making seasonal adjustments over the holiday period. Even with the dip, the figure still signaled trouble in the labor market. A year ago, initial claims stood at 330,000.
Persistent economic woes — housing, credit and financial crises — along with a flurry of layoffs announcements in the opening days of 2009 all point to another terrible year for jobseekers, economists said.
The report — as much of the news on the economic front over the last six months — should instill a sense of urgency in policymakers, prodding them to move quickly.
Obama described the collapsing economy and then made it clear that he believed change was possible, but only if policymakers move quickly.
I don’t believe it’s too late to change course, but it will be if we don’t take dramatic action as soon as possible. If nothing is done, this recession could linger for years. The unemployment rate could reach double digits. Our economy could fall $1 trillion short of its full capacity, which translates into more than $12,000 in lost income for a family of four. We could lose a generation of potential and promise, as more young Americans are forced to forgo dreams of college or the chance to train for the jobs of the future. And our nation could lose the competitive edge that has served as a foundation for our strength and our standing in the world.
In short, a bad situation could become dramatically worse.
The Times offered this summary of his proposal:
He said he aimed to double the production of alternative energy within three years, a seemingly ambitious target; computerize all medical records in the country within five years, a move he said could save lives, money and jobs; modernize 75 percent of federal buildings and improve energy efficiency in 2 million homes; upgrade classrooms, libraries and laboratories in thousands of schools, and expand broadband access to rural areas.
Other elements, include road and bridge repair that focuses on “well-planned, worthy and needed infrastructure projects” and aid to the “states, workers and families who are bearing the brunt of this recession.”
To get people spending again, 95 percent of working families will receive a thousand-dollar tax cut, the first stage of a middle-class tax cut that I promised during the campaign and will include in our next budget. To help Americans who have lost their jobs and can’t find new ones, we’ll continue the bipartisan extension of unemployment insurance and health-care coverage to help them through this crisis. Government at every level will have to tighten its belt, but we’ll help struggling states avoid harmful budget cuts, as long as they take responsibility and use the money to maintain essential services like police, fire, education and health care.
He also endorsed the notion of regulation — a heartening change from the anti-government rhetoric of the last two decades.
We must also work with the same sense of urgency to stabilize and repair the financial system we all depend on. That means using our full arsenal of tools to get credit flowing again to families and business, while restoring confidence in our markets. It means launching a sweeping effort to address the foreclosure crisis so that we can keep responsible families in their homes. It means preventing the catastrophic failure of financial institutions whose collapse could endanger the entire economy, but only with maximum protections for taxpayers and a clear understanding that government support for any company is an extraordinary action that must come with significant restrictions on the firms that receive support. And it means reforming a weak and outdated regulatory system so that we can better withstand financial shocks and better protect consumers, investors and businesses from the reckless greed and risk- taking that must never endanger our prosperity again.
No longer can we allow Wall Street wrongdoers to slip through regulatory cracks. No longer can we allow special interests to put their thumbs on the economic scales. No longer can we allow the unscrupulous lending and borrowing that leads only to destructive cycles of bubble and bust.
Strong words, which is why Matt Rothschild, editor of The Progressive, gave the Obama speech good reviews. Rothschild, while critical of Obama’s tendency to “shoot too low,” makes it clear that what Obama has put on the table is unlike anything we’ve seen in recent years on the economy. “(A)t least,” he says, “Obama recognizes a crisis when he sees one.”
At least he is fluent enough in economics to understand the essential role that the federal government must play in such a crisis.
And at least he has put on the table several good ideas for ameliorating that crisis.
David Sirota, editor of In These Times and a regular blogger for Open Left, also viewed today’s speech in a positive light, praising “rhetoric (that) will translate into proposals to spend billions on public infrastructure and re-regulate the financial industry.”
In that sense, he is embracing the lessons of Franklin Roosevelt, and rejecting conservatives’ increasingly loud claims that the New Deal “prolonged the Great Depression” – claims that are demonstrably false. As Census data shows, the pre-WWII New Deal spending and regulatory agenda resulted both in robust GDP growth rates and the single biggest decline in the unemployment rate in American history. Unbelievably, conservative think tanks have resorted to quite literally lying about government data, claiming, as the Heritage Foundation has, that the “New Deal never drove unemployment below 20 percent.” As you can see from the Census Bureau’s verifiable data from 1936 and 1937, that claim is a patent lie – and it’s great that Obama and his economic team seems to understand that.
At the same time, Sirota raises something that might otherwise be lost in the coverage of today’s address: Obama’s comments earlier this week on Social Security and Medicare, which were just vague enough to cast doubt on his commitment to the two programs.
As the New York Times points out, that’s coded politicalspeak for an effort to “reform” Social Security and Medicare, which history has shown is often itself politicalspeak for cuts to those programs.
There is debate on this — a fact that should cause concern by itself. A progressive Democrat would not be talking about entitlements, especially at this moment in history. And while I doubt the likelihood of cuts to the two programs, I can’t help but remember that it was Bill Clinton, the last Democratic president, who “ended welfare as we know it,” pushed through Nafta and altered the entitlement debate in the first place.
Hank Kalet 