Obama Needs to Keep Pushing on America’s Other Deficits


obama flickr 1.jpgPresident Barack Obama gave a speech on the federal budget last night that is being applauded by many who were once his most ardent supporters but who have been skeptical of him of late — and pilloried by those on the right who sense their power in just saying no to anything the White House proposes.
Many progressives heard in the President’s words hopes that he may be with them again, at least through the election, standing for those who need jobs, health care, and a better social contract all around — and standing against privileged wealthy and firms who don’t pay their fair share. This all may be illusory given that Obama’s selection of a new Chief of Staff, Bill Daley, was designed to signal to the business community that the President would be with them — and by implication, tending the interests of rich folks too.
I found Obama’s speech to be a return to the kind of vision that he articulated when running for the presidency. He offered us prescriptions for what a better economy, better budget, and better national investments could look like, at least to some degree.
What was missing though was an admission that the White House and its allies failed to rewire an economy with the resources, the stimulus, that they had in their hands. We are debating budgetary politics today while the household sector and significant portion of the private sector continues to deleverage their economic positions. Housing prices have not stabilized. Home foreclosures are still the norm. While there has been a slight float up of consumption, there is still a gap between the consumption levels of July 2009 and where we are today — and Americans who have paid down debt and are saving more, those who can anyway, are not likely to jump into spending patterns that will keep the country’s growth in healthy shape.
And thus, as Richard Koo explains in a brilliant presentation he recently offered at the Bretton Woods conference last weekend organized by the Institute for New Economic Thinking, it is very dangerous to an economy for a government to cut spending during a time when the private sector is still de-leveraging. This is what happened in 1937 in the United States when Congress believed that the US economy was through the worst parts of the depression — and pushed the Roosevelt White House to slash spending.
It is important to think about fiscal responsibility — but it is equally important to think about the array of deficits in the American economic portfolio right now. There remains an enormous trade deficit which itself is a significant part of the current account deficit, a jobs deficit of about 20 million positions, and a massive infrastructure deficit.
These deficits matter greatly — and while I would suggest that cutting back spending is important — one has to be careful of not creating more problems than one is trying to fix, and that the most important thing the US economy needs is a “competition budget” that will focus national dollars on restoring and reinvigorating America’s technological innovation capacity.
I think that it’s possible still to have a debate about cutting back entitlements and the like but simultaneously discuss strategies to deal with these other, as important, deficits.
In my view, President Obama has highlighted the importance of some of these investments, like a major push to get a million electric cars on the roads and the importance of restoring infrastructure, but he has not tied this investment and competition agenda into national budget discussions as much as I think he needs to. Obama should be forcing his political opposition to show its hand not just on the binary, up-down aggregate numbers on the budget but also to show where they are on strategies that would correct America’s other deficits.
— Steve Clemons


9 comments on “Obama Needs to Keep Pushing on America’s Other Deficits

  1. garima mishra says:

    I think it is good to push on the deficits of America.


  2. questions says:

    Problem with Koo’s wonderful presentation — it doesn’t hit the politics side of things even though it’s pretty convincing on the economic side.
    You can be completely right about something, and lose the election.
    And then, what’s the wage of being right?
    What Obama’s speech was totally correct about is that there are two streams running through the US political consciousness right about now, Ryanian/Randian libertarianism and some version of the preference for the social democratic welfare state.
    Good thinkers have shown over and over again the many problems with Rand’s libertarianism. I’m not going to run over them for the nth time. Libertarianism is simply flawed and self-destructive. It’s also sexy for a bunch of our fellow citizens.
    In a popular sovereignty system like the one we’ve inherited, the positioning for the marginal votes IS the guiding force of the system. If you don’t get elected, you don’t get your policy options through. If your policy options irritate that slice of the center of the electorate that swings elections, well, then you lose.
    Take a moment to think about Mitt Romney.
    He just sat with some committee or some group of advisers or his own conscience perhaps and thought to himself, do I do the full frontal Trump birther thing, or do I say forcefully that the current president of the US is actually a natural born citizen of the US, that when the officials in Hawaii say the certificate of live birth is correct and acceptable, that’s ok. And that when Jan Brewer pushes on a bill to make the long form be shown in AZ in order to get on the AZ ballots, there’s something screwy.
    Now note, this step of Romney’s had to be thought through. He is positioning. He has decided his only chance is to be the grown up, the rational one, in the Republican Party.
    It’s all positioning for that thin slice of the electorate that swings elections.
    So what should Obama do when the thin slice of the 2012 election wants to feel its libertarian oats, get some good services, and not pay much money, and wants the budget balanced and really does think foreign aid is about all we spend money on, that and lazy people I guess.
    What does Obama do? Why does his rhetoric sound empty to some? Well, how does he have to position himself?
    Somehow, to get anything through Congress at all, he MUST have Republican support.
    Somehow, to win in 2012 (the real future, in a political sense) he has to get a slice of the middle.
    Somehow, to deal with the budget mess created by the wars, the tax breaks, the Medicare drug program (which kept my mom alive for her last year or two, by the way), somehow, he has to say two things at once — yes we’re rugged individualists and yes, we need to be communal. Yes your money is yours, but it also needs to help others; yes you have your fantasies, but someone has to plan for reality while you’re all lost in your future discount silliness.
    And he has to say to the left, yes there’s really a LOT of capital that is not doing anything at all, that could be put to use in all sorts of ways so that the flow of money, like the flow of blood through our veins, can keep us alive and kicking, dancing and singing, eating, and getting trauma surgery as needed. But you know, until the people who are clinging to their guns-n-roses or whatever are willing to share, we might not be able to do a whole bunch to get at that money. You people of the land willingly parted with huge sums of money for houses, telecom, clothing, investment deals, all kinds of stuff, and that money didn’t come back to your communities. It lined the pockets of the oligarchs. You picked a huge bank so you could have ATMs and debit cards all over the place. You got a pricey cell phone, an iPod…and you’re paying fees to the oligarchs. Your mortgage…well, next time don’t do it. Just keep renting the roach-infested dive you had before you bought the half million dollar house for nothing down.
    What does a policy maker do when, yes there’s corruption, but there’s also some choice involved. Yes there’s an oligarchy, but it doesn’t just steal our money, it convinces us that this is how we want to spend it. It uses our freedom to destroy us. But we kind of sort of let it happen because of all the shiny objects we got in return.
    Keeping all of this in mind, remember that Prosser won in Wisconsin. Feingold lost in Wisconsin. Rick Scott won in Florida. Keep those midterm elections in mind. They are significant. People wanted the Republicans to win all over the place. And Wisconsin tells us that half the state is still pretty happy about the cut backs.
    And then reread Obama’s speech in the light of this.
    He defends in no uncertain terms the value of the social welfare state, while saying, yes indeed, there are liberty issues and there are libertarians. And then he bashes the libertarian-in-chief, Paul Ryan, for his naked selfish greed. This is all to the good.
    But Ryan speaks for a lot of people. So there’s that, too.
    What’s a president to do?
    In my humble opinion, he did what was possible. He called for us to think about which future we actually want, libertarianism or social welfare. We actually need to figure this out. If more than half the country really does want a libertarians state, well, then, it’s proper in a popular sovereignty system to put that into effect.
    The goals and preferences of the electorate, and of the citizenry, are opaque, indeterminate, muddled in some ways, contradictory in some ways, but there are broad outlines that can be drawn.
    What I’d recommend at this point is a massive outreach campaign in which hastily trained staffers, activists, and people who care are sent out all over the country to hold town meetings in which the basic values of libertarianism and the social welfare state are discussed.
    If too many people think that the US spends a fifth of its budget on foreign aid, then print up pie charts of the budget and send them out with tax returns. Post them at grocery stores and laundromats. Put price tags on every good and service the US gov’t provides. Let us know what things cost, how much of our tax money goes to what. Put a price tag on everything in our environment and let us know what we’re doing.
    Maybe then, people will have something to work with as they try to figure out if they should stay with their traditional party choice, switch parties, pressure their reps to vote differently.
    If education can work at all, perhaps we should try it.
    Start with the pie chart, in lively colors. Remember what the national averages are for math test scores, and make it easy to understand. Plenty of people struggle with percentages.
    Get with Edward Tufte to help design the posters.
    And hold a lot of face to face events where people can get fair, objective information about what’s at stake.


  3. Kathleen Grasso Andersen says:

    OMG…the seminal question Obama should ask those soggy old teabaggers is “Now who’s pulling the plug on Grandam?” N’uff said.
    I’ve been AWOL for many moons now because my spirit is so profoudly disillisioned and disgusted with the steady stream of hypocrisy and bullshit that passes for policy, strategy and news….I can barely stand a split second of news…there is so much fundamenrally wrong with the Consititional process through misuse of the filibuster now, I can’t do nuance. The last time my sense of civic duty got the best of me and I turned on the Nooooze, I got to witness Wisconsin’s war on workers and Newt the Brewt coming clean on his all too patriotic pecker… there’s a brain twister for you…I don’t EEEEEven want to wrap my brain around that one… I guess he was buying American made Viagra.
    Puhleeeeze=, Pull the plug on the Teabags… they’re only good for one dunk or two..a handful of polyester people with a little patch of astro-turf does not a grassroots movement make…
    Time for a coup de grace, already…


  4. erichwwk says:

    Along that line, check out the latest “Yes Man” prank, likely prompted by the comments to Joe Nocera’s outrageous NYT oped “Who could blame G.E.?
    I was received the original press release, and getting bounces, redirects, immediately revealed this was a prank. What does this say about AP “news”, and MSM in general, that this very minimal vetting did not occur before passing it on?
    [In fairness to AP, it was not as simple- ie links on first page of hits did not yield page description that clearly verified that AP did, in fact, fall for this prank, although the claim that they did appears widespread]
    Kudos to Steve’s reporting, although I remain skeptical that Obama does not represent the interests of the very rich, the occasional bones offered being part of what is required to get blood from turnips.


  5. DakotabornKansan says:

    Fool me once


  6. erichwwk says:

    IMO,ONE deficit stands out before all others- “a jobs deficit of about 20 million positions”
    THAT is a tremendous amount of potential wealth, that will not only be lost forever, but will lead to cumulative losses as folks lose work habits, ability to connect w/others to enact consumption efficiencies, and future workers work w/ less infrastructure and hence less productivity.
    On the plus side, it is reported that Carl Levin, chair stated:
    Sen. Carl Levin (D-Mich.) said on Wednesday that he plans to refer Goldman officials, and potentially officials from other organizations, to the Justice Department for possible prosecution and to the Securities and Exchange Commission for possible civil proceedings.


  7. PissedOffAmerican says:

    Tick tock, tick tock……..
    “In 2007, a new fault system was discovered, the Shoreline Fault, just a mile off shore from the Diablo plant, making a tsunami a greater possibility.”
    “During the licensing process, PG&E bought up Shell


  8. Jeff Markel says:

    I can’t see this speech as anything but ‘more of the same.’ The
    same rhetoric that won Obama the presidency but turned out to
    be empty.
    The biggest problem is that Obama is doing no agenda-setting
    of his own, he’s following a script written by the Republicans and
    their Corporate masters. Sure, he suggests mitigating the very
    worst depredations of Rep. Ryan’s proposals, but at heart he
    accepts without challenge the (false) premise that “We can no
    longer afford .” There’s as much (if not more) money
    available now than at almost any time in the last 60 years – but
    it has all “trickled down” into the hands of the wealthiest 0.5% of
    the population. I appreciate that political considerations may
    prevent him from enacting a lot of things that ought to be
    enacted, but the power of the “bully pulpit” is his to use, and he
    uses it not at all. Given his rhetorical skills, that can only be
    because he does not want to.


  9. PissedOffAmerican says:

    Here we go again; Discussing Obama’s words as if they have meaning.
    How many flowery speeches with empty intent must Obama give before it sinks in that he has no conviction or political courage?
    His words mean nothing. Are we to ignore his track record of political equivication and backstepping?
    More important to take note of, is the pathetic bickering and destructive partisanship that inevitably follows Obama’s empty rhetoric. Even as his words warrant little optimism that he can actually deliver on them, these elitist fops in DC slap each other around to the point of mutual impotency. Can the people’s interests really be advanced in such an environment of partisan animous and meaningless rhetoric that is designed to do nothing more than seduce the masses into a false sense that they are being “represented”?


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