President Obama's speech to Congress tonight reset the political battle lines and put Progressives back on the offensive.
The speech included provisions that Republicans in Congress may actually agree to pass -- like continuing the payroll tax holiday that if allowed to lapse would affect the paychecks of virtually every American worker. But it also made the case for bold initiatives to rebuild America's infrastructure and directly create jobs through a teacher corps and youth jobs program. These bolder proposals are critically necessary to jump start the economy, and Obama is betting -- correctly -- that if they fail to support them, Republicans will pay a political price next year.
What was needed was a package of proposals that were bold, projected urgency, and will create jobs now. The president delivered.
Obama explicitly rejected the dangerous, fallacious notion that the path to long-term economic growth runs through the valley of economic austerity.
He clearly defined the fundamental difference in values -- and economic philosophy -- between progressive Democrats and right wing Republicans.
The president provided the perfect counter point to Rick Perry's outrageous statement in the Republican debate, that the Obama economic record had proved once and for all that "Keynesianism was dead." Of course, just the opposite is true.
Any one who has taken a semester of Economics 101 knows that problem at the root recessions is too little economic demand to purchase the available supply of goods and services. Seeing their customer base shrink, businesses make fewer investments, and layoff more workers and the economy enters a downward -- deadly spiral.
What is needed to restore the economy to health is not "confidence" but customers. And the only economic actor that can provide those customers is the government. We must all collectively act through our government to restart the economy because if everyone is left to act in their own rational individual economic self interests they will make matters worse, not better. With less demand from customers, it is rational for businesses to hold on to their cash and lay off workers, but that only increases the number of people who are unemployed and unable to buy new products.
The 2009 stimulus bill halted the slid of the economy into depression. Without it we would have had another Great Depression. But it turns out the stimulus wasn't large enough to restart the engine of self-sustaining growth.
That's because we now know from new economic data that the Republican policies that lead to the melt down on Wall Street and triggered the recession, had inflicted even more damage on the economy than anyone knew at the time.
That means that to get us out of this economic swamp, the government must act to create more jobs now -- so that more people have money in their pockets and can buy more products and demonstrate to businesses that it makes economic sense to hire more workers and invest in more plants and equipment.
The notion that you can create more jobs by cutting government spending is not just another theory or point of view -- it is verifiably wrong. And in his speech the president made it clear that the Republican "emperor has no cloths."
When the Republicans prevented continued aid to state and local government, half a million teachers, firemen, health care workers, and cops were laid off -- its that simple.
If we were to cut the Social Security or Medicare benefits of middle class seniors they would have less money to buy things and that would mean that businesses hire less workers -- this is not hard.
As for the Republican's fixation on eliminating "regulatory burdens" and cutting taxes for wealthy "job creators" -- that is exactly the plan that lead to the deregulation of Wall Street and the crash -- and that generated exactly zero private sector job growth during the Bush years -- that's right zero. We've been there and tried that. It didn't work when Herbert Hoover tried it before the Great Depression and it didn't work when George Bush tried it before the Great Recession.
And of course in both cases that policy lead more and more of the fruits of our economy to go to the top two percent of Americans and less and less to the middle class. Today 400 families control as much wealth as 150 million Americans. That kind of gaping inequality creates the conditions that lead to economic stagnation, because when the income of everyday workers don't increase to keep pace with increases in worker productivity, it is mathematically impossible for workers to buy the new products they create.
Henry Ford understood that to be successful he had to pay his workers enough so that they, themselves, could by the cars they produced. Rick Perry and the Republicans don't get that simple fact. Luckily, President Obama does.
But this speech did more than clearly define the difference between progressive and right wing economic philosophy. It had huge political benefits for the president and Democrats.
First, Obama rejected the Republican view that there is nothing we can do to create new jobs but cut government spending and pray. He argued that we can take the future into our own hands -- that we are not just the victims of forces that are so big and so powerful that we are simply at their mercy. People don't want to be told they are helpless or that they must simply get used to the "new normal" and watch the American Dream go up in smoke. They want leadership, and Obama provided it.
Second, Obama recognizes the political fact that jobs trump short-term deficits. According to a July Gallup poll, concern over the economy and jobs top concern for the deficit by at 58% to 16% margin. The great deficit discussion -- Republican frame for debate that has dominated the summer -- completely missed the mark when it comes to the interests of most Americans.
Finally, Obama signaled the kind of campaign he will run in 2012. No incumbent president has won re-election in the last century when the economy was not either good -- or materially improving -- except for one. Harry Truman won in 1948 in the midst of bad economic news, by running against the "do-nothing Republican Congress."
Obama political adviser David Axelrod was quoted in the Washington Post as saying that "Obama will make clear that Republicans are to blame if they don't agree to the jobs measures... Harry Truman once said if you can't make them see the light, make them feel the heat. And that's what the president is going to do."
That is exactly the kind of message that will simultaneously attract swing voters who want strong leadership to create jobs -- and at the same time re-inspire the progressive base.
Even if they want to go further than the president when it comes to the scale of a jobs program, progressives were elated that the President has sounded the call to battle on this critical issue -- that he has drawn an indelible contrast between the failed right wing economic policies of the past -- and progressive policies that will lead to widely shared long term economic growth.
If we take it, progressives and Democrats have the high political ground when it comes to the all important jobs debate. But that requires that we stand up proudly for our economic principles and contrast them sharply with the failed right wing economic policies of the past. Our principles provide solid political ground from which fight the battle of 2012. Obama's speech signaled that is precisely where he intends to make his stand.
Robert Creamer is a long-time political organizer and strategist, and author of the book: Stand Up Straight: How Progressives Can Win, available on Amazon.com. He is a partner in Democracy Partners. Follow him on Twitter @rbcreamer.