President Obama's speech last week in Osawatomie, Kansas was widely recognized as an important and revealing look at his domestic policy framing and agenda as the election year begins in earnest. As I pointed out here, the contrast between YOYO (you're on your own) economics and the trickle-down, starve-the-beast agenda it implies, and the president's we're-in-this-together agenda has the potential to be deeply resonant with the vast majority of Americans for whom YOYO has been a terrible bust.
With that in mind, it makes sense to add some concrete to the structure the president began to build -- to begin to think about which policies grow out of the contrasting views of political economy he compellingly introduced.
But first, I'd like to suggest a few criteria for what constitutes useful ideas in this context.
Move the Needle on Unemployment: Stuff like patent reform, free trade deals, "doubling exports" (with no regard to imports) doesn't cut it. There may be other reasons to undertake such measures, but the heart of the speech were new, real economic opportunities for the middle class. This was not a call for fumbling around the edges or scoring points with interest groups.
Politically Viable in More Normal Times: In terms of helpful economic policy, I'm afraid almost nothing's going anywhere useful for the next year. When high-ranking members of one party publicly promulgate that their goal is to sink the president -- even if that means sinking the economy as well... in such a climate, the concept of "political viability" has little meaning.
That said, our policy process cannot be driven by the current dysfunctionality. We have to plan as if our system has regained its ability to self-correct, while working our butts off to help it actually get back there.
So, onto to the agenda.
The president targeted four areas in last week's speech: higher education, infrastructure, progressive taxation, and financial regulation. That's a good start. For now, I'll just introduce what I think are the key policy issues in each case.
Higher Ed: Improving college access and particularly completion will not create jobs, but it will address both opportunity barriers faced by less advantaged kids and diminished economic mobility. The president has worked hard to significantly increase Pell Grants for college affordability but these increases are very much in the YOYO's crosshairs. Income-based-repayment initiatives are important for highly indebted students. Completion is trickier but helping low-income students with tuition costs may be less important here, especially for those in community college, than helping them with the costs of their lives while they're going to school.
However, we must be mindful that education policy is supply-side. It's critically important, it's a huge part of our everyday lives, and it's an area of true interest to the president. But as people realize much more than politicians these days, it's a lesser part of the solution to our biggest medium term challenge: the quantity of jobs. There are too many educated people out there that are all dressed up with nowhere to go.
Infrastructure: This is one place to invest a lot of energy in setting a jobs agenda. As I've traversed the land in recent months, the idea that there's much more we should be doing to improve the quality of the nation's skeleton, as it were, is something I've heard from people from all walks of life. It's a great country, but it's old and needs work.
FAST! is still a great marriage of problem and solution, and in fact is likely up for a vote in the Senate any day now. Like I said, it's a heavy lift for good ideas to get filibuster-proof majorities these days, but you've got to be in this for the long fight.
The key here is to not get hung up on shovel ready -- like-it-or-not, we'll need the work for much longer than that. We need to think about large-scale ideas that go beyond roads and bridges. An advantage to projects like FAST! is that people can relate to this type of thing in their daily lives. In that light, I'd like to see a national project to bury electricity and phone lines, something that would be hugely popular here in the aging Bos-Wash corridor, where you can easily lose power for weeks when hit by those 30-year storms that now seem to show up every six months.
Tax Reform: Again, there are no direct jobs here -- it's not demand side policy -- so I wouldn't get hung up on it. But as the President stressed in the speech, public infrastructure investment costs money, so fiscal policy of course has to be in the mix. And you can't have an election without arguing about it.
But I'd keep it very simple. In fact, I'd bring it down to one thing: we're no longer going to favor one type of income over another. The distortions in the tax code around "investment income," like capital gains and dividends, are losing tons of revenue, feeding inequality, and at the heart of the "Buffett problem" -- the fact that many of the wealthiest households face lower rates than average folks. And, like all the above, this is both great politics and great policy.
Much more to come on all this... we're just getting started. I'd add manufacturing policy to the agenda, but even more so, I'd stress things we can do to improve the quality of low-wage, low value-added (at least in pure dollar terms), non-tradeable, service jobs -- I suspect we'll be adding a lot of these once the recovery actually takes hold (think home-health aides, cashiers, security guards).
Whoever wins the Republicans nomination, the competing vision will be between the YOYOs and their trickle-down on one side, and ideas like those above on the other. In essence, the conservative vision will be looking back toward GW Bush, arguing that everything's basically fine in the economy except that the President needs to go, the wealthy need to keep more of their pretax income, and the EPA needs to be shut down.
That will not resonate beyond the base. And neither will it win the day unless there's nothing on the other side. In that regard, the President took a great first step in Kansas.
This post originally appeared at Jared Bernstein's On The Economy blog.
Terrell Halaska: The Great Education Reads of 2011
I couldn't help but feel, that instead of channeling his inner Teddy Roosevelt, I was watching a replay of Alan Grayson and his infamous, Republicans want you to die.....quickly speech during the Obamacare debate.
The President exposed his election stategy on 60 Minutes when he said, "don't compare me to the ideal, but the alternative." He doesn't want a campaign on issues and his record........much too risky. Simply put, he wants to tell Americans..."I'm better than the alternative.".
Well, unfortunately for the President, we are a results oriented society. Simply asking for four more years b/c the GOP has been demonized by his billion dollar campaign is greatly underestimating the electorate.
This nation needs every citizen to pitch in and make a constructive contribution. With Canada withdrawing from the Kyoto Accords, the Eurozone headed for collapse as Germany imposes severe austerity both on itself and the rest of Europe, and with Occupy now turned against ordinary working Americans at ports up and down the West Coast, it's time to admit the obvious. Fifth-Generation, post LBJ Progressivism is in its death throes. Continuing to fight the failed Progressive battle is a waste of talent, effort, resources, and time that the nation cannot afford.
With the federal government doing NOTHING, the unemployment rate is finally coming down, the economy looks to be growing at 3% and accelerating while the rest of the world (esp, Europe and China) headed for the toilet, and confidence is returning to the broad swatch of America outside the Progressive echo chamber.
(con't)
"Move the needle" - - - asked and answered, the needle is moving for everyone who's out there shaking the tree (throwing tantrums won't get you a job).
"Politically viable" - - - President Obama stopped governing and started campaigning MONTHS ago.
"Higher ed" - - - We need to be a lot more like Germany, where 30% of HS grads go to college and 70% are trained for respected, well paying, secure jobs in the trades. Less college = more prosperity.
"Infrastructure" - - - the whole world sees this for the boondoggle that it is. Do the projects that need to get done, and nothing more.
"Tax reform" - - - whatever. Now that the truth is coming out about the way Buffett benefited from his advisory role to the administration, I sure wouldn't mention him in any positive context. And Buffett or any other mil/billionaire with a guilty conscience is welcomed and encouraged to do the right thing without waiting to be forced to: http://www.treasurydirect.gov/govt/reports/pd/gift/gift.htm Actions speak louder than words.
The only threat to the security and prosperity of the nation is an activist federal government. Why is it so hard to see that there is a LOT of work that needs to be done (regulation, oversight, enforcement, space program, border security, intellectual property protection, public health education, ad infinitum). Why, in the name of goodness, do federal government functionaries insist on IGNORING their basic responsibilities and IMPOSE themselves where they can do no good?
We cannot even get the lousy 1.5% Medicare Hospitalization tax paid by the 1%,,,,god forbid.......
Didn't he say much the same in 2007 and 2008? And then appoint Wall Street to every economic position of importance.
Hasn't the failure of Republican trickle down and starve the beast been true since long before he came to town? Why call them on it now after essentially adopting this bankrupt policy in his first 3 years?
I hope he's serious. But I doubt it.
Assuming he's talking about Republicans, which high ranking republican has actually said they'd like to sabotage the economy to sink the president?
Here's one republican who thinks the president is doing a pretty good job of sabotaging the economy and sinking all on his own.
distortions in the tax code around "investment income," like capital gains and dividends, are losing tons of revenue
belies a misunderstanding of the effect of taxes on behavior. Historically, the highest revenue from capital gains occur when rates are low...because there is less friction in the economy. It makes sense. High capital gains taxes yield less revenue because people can defer capital sales when they cost too much.
When dividneds are taxed as ordinary income there's a different effect: buy & sell behavior doesn't change; stock style selection changes to low dividend, growth companies.
Wouldn't it make more sense to grow the economy and yield more revenue than to vilify and penalize those who do that well?
Bernanke insured bankers gaming on us with trillions worth of our earned/future earned, property.
THAT is treason, after putting an end to that little game, we can adjust the treasonous, property usurping, tax code. Higher prices on lower earnings EQUALS debt when there is NO cushion for most Americans. Especially when they are racketeered out of their home value, and sometimes, even HOMES.
Though apparently the skin color that so many amplified has little bearing on the "Content and Character" of a man's heart as Dr. King so eloquently desired.
We live in a Democratic Republic based on hard work and Respect. "Community organizing" and Harvard lack both.
Maybe he paid too little attention to the Occupy movement when it cranked up 3 mos. ago. With this speech he's trying to catch up to a ship that's sailed with the electorate.