The President on the Economy
by Charles Lemos, Tue Aug 31, 2010 at 02:19:35 AM EDT
The text courtesy of the White House:
THE PRESIDENT: Good afternoon, everybody. I just finished a meeting with my economic team about the current state of our economy and some of the additional steps that we should take to move forward.
It’s been nearly two years since that terrible September when our economy teetered on the brink of collapse. And at the time, no one knew just how deep the recession would go, or the havoc that it would wreak on families and businesses across this country. What we did know was that it took nearly a decade -- how we doing on sound, guys? Is it still going in the press -- okay. What we did know was that it was going to take nearly a decade in order -- can you guys still hear us? Okay. Let me try this one more time.
What we did know was that it took nearly a decade to dig the hole that we’re in -– and that it would take longer than any of us would like to climb our way out. And while we have taken a series of measures and come a long way since then, the fact is, that too many businesses are still struggling; too many Americans are still looking for work; and too many communities are far from being whole again.
And that’s why my administration remains focused every single day on pushing this economy forward, repairing the damage that’s been done to the middle class over the past decade, and promoting the growth we need to get our people back to work.
So, as Congress prepares to return to session, my economic team is hard at work in identifying additional measures that could make a difference in both promoting growth and hiring in the short term, and increasing our economy’s competitiveness in the long term -- steps like extending the tax cuts for the middle class that are set to expire this year; redoubling our investment in clean energy and R&D; rebuilding more of our infrastructure for the future; further tax cuts to encourage businesses to put their capital to work creating jobs here in the United States. And I’ll be addressing these proposals in further detail in the days and weeks to come.
In the meantime, there’s one thing we know we should do -– something that should be Congress’ first order of business when it gets back -- and that is making it easier for our small businesses to grow and hire.
We know that in the final few months of last year, small businesses accounted for more than 60 percent of the job losses in America. That’s why we’ve passed eight different tax cuts for small businesses and worked to expand credit for them.
But we have to do more. And there’s currently a jobs bill before Congress that would do two big things for small business owners: cut more taxes and make available more loans. It would help them get the credit they need, and eliminate capital gains taxes on key investments so they have more incentive to invest right now. And it would accelerate $55 billion of tax relief to encourage American businesses, small and large, to expand their investments over the next 14 months.
Unfortunately, this bill has been languishing in the Senate for months, held up by a partisan minority that won’t even allow it to go to a vote. That makes no sense. This bill is fully paid for. It will not add to the deficit. And there is no reason to block it besides pure partisan politics.
The small business owners and the communities that rely on them, they don’t have time for political games. They shouldn’t have to wait any longer. In fact, just this morning, a story showed that small businesses have put hiring and expanding on hold while waiting for the Senate to act on this bill. Simply put, holding this bill hostage is directly detrimental to our economic growth.
So I ask Senate Republicans to drop the blockade. I know we’re entering election season, but the people who sent us here expect us to work together to get things done and improve this economy.
Now, no single step is the silver bullet that will reverse the damage done by the bubble-and-bust cycles that caused our economy into this slide. It’s going to take a full-scale effort, a full-scale attack that not only helps in the short term, but builds a firmer foundation that makes our nation stronger for the long haul. But this step will benefit small business owners and our economy right away. That’s why it’s got to get done.
There’s no doubt we still face serious challenges. But if we rise above the politics of the moment to summon an equal seriousness of purpose, I’m absolutely confident that we will meet them. I’ve got confidence in the American economy. And most importantly, I’ve got confidence in the American people. We’ve just got to start working together to get this done.
Thank you very much.
While it is reassuring to hear the President speak out on the economy, I am still left somewhat wanting by his remarks. Over the weekend, I chatted with my good friend Norm Jensen who runs the free-thinking blog One Good Move and he remarked that Obama "knows how to give a campaign speech but doesn't know how to give a Presidential one." I think that's a fair assessment but Obama's problems in getting his message across seem deeper than that. If this is his clarion call to action, I suspect the response is going to be muted.
To begin with, I would prefer that the President framed the crisis not just differently but also more succinctly. This is not simply a decade long debacle attributable to George W. Bush, this is a 30 year crisis in the making that needs to be pinned on Ronald Reagan and his misbeggotten policies. I think it important to remember that Reagan didn't just run against Jimmy Carter, he ran against FDR. This entire mess has to be pinned on the GOP going back to Reagan, not for political reasons, but for economic ones. Give the devil his due, this is Reaganomics biting our collective butts.
The economic crisis that we are now living is not some cyclical event where the business cycle needs to work through excess capacity but a structural crisis that is a result of the purposeful assault on the American working class. In 1972, the CPI adjusted wages for the average worker was $738.48 per week. As of July 2010, that figure was $740. for the average American worker, the past forty years has been one of treading water hoping to keep his head above water. To maintain his lifestyle, the recourse has been to drown in debt. Meanwhile, the top one percent have seen their after-tax income triple since 1980 as a percentage of the nation's total income, while the bottom 90 percent have seen their share of the national income erode by 20 percent.
Now contrast that with the situation from 1945 through 1975. Family incomes grew virtually at the same rate in all sections of the population during the first three decades after World War II, with those of the poor growing slightly faster. The lowest fifth of American saw a 120 percent increase in their incomes, the second fifth witnessed a 101 percent rise, the third 107 percent, the fourth 114 percent and the fifth 94 percent.
There are a number of reasons as to why we are seeing the erosion of the American middle class to which I can point : the decline of organized labor, the erosion of the minimum wage, the shift from a manufacturing-based to a service-based economy, the transformation to a more globalized economy, and the lack of a progressive income tax. Except for the rise of globalization, the rest of these reasons are grounded in policy choices made over the past 30 years. They can be reversed.
We can strengthen our unions and the American working family by passing the Employee Free Choice Act, we can raise the minimum wage to $10.00 an hour, we can choose to have an industrial policy that encourages the manufacturing sector and we can return to the progressive tax structure that once governed this country.
James K. Galbraith, the noted economist at the University of Texas, has noted that "inequality produces unemployment while unemployment produces inequality." Policies that reduce inequality also reduce unemployment. Thus the Administration should concentrate on reversing the Bush tax cuts for the top decile and on passing the Employee Free Choice Act that will strengthen unions. But the President must speak forcefully and with conviction on the topic of economic inequality. Harry Truman once said, "A society will be judged by how it treats its weakest members." The President must stand up for the poor here and now because if the GOP returns to power, it's not a double dip recession that awaits us but a full blown depression. Because depressions are the natural outcome of Republican policies that favor the wealthy.