President Obama gave a major talk on the economic crisis on Friday. While the choice of Las Vegas for its location might be considered ironic, given the fact that Big Bank gambling created the crisis, there's good news: The President's speech could serve as a blueprint for an improved economic and political outlook -- if the President and his party back it up with action.
"Our first mission," he began, "was to break the freefall of the deepest and most vicious recession since the Great Depression." That's exactly the framing that's been needed for some time. The President should not say that the Dodd-Frank bill will "prevent a crisis like this from happening again," as he did last week,, since that's probably not true. In Vegas, he presented it as the first step in a series of needed reforms and stimulus measures, which the public is more likely to accept. And how can reformers push for additional action once they've claimed to have "prevented the next crisis"?
Politically, the President and his party have to take credit for stopping a massive monthly loss of jobs and creating a slight upward trend, and he did. But they also have to say exactly what he said on Friday: "Of course, that's not nearly enough. I don't have to tell you that." As with financial reform, he must walk a thin line between making the case for what's been done so far and recognizing the urgency of what remains to be done. He struck the right balance this time.
The President's talk was given after three major (and interconnected) news stories struck Washington: First, large business interests led by the US Chamber of Commerce announced that they plan to raise $200 million to fight Democrats in November. Second, a Carville/Greenberg poll showed that 55% of likely voters think the President is "a socialist." Lastly, a sudden rash of lobbyist-fed news stories suggested that big corporations aren't doing their part to help the recovery because their leaders believe that the President is "anti-business." (We discussed one egregious example here.)
Since it's Vegas, wanna bet it's merely coincidental that those were the three leading political stories of the week? Didn't think so.
Granted, that "socialist" result is a headline-grabber, and it's the logical product of a year-long propaganda campaign on the right. But here's one finding from the same poll that didn't get much coverage: 56% of likely voters either think that the economy isn't getting any better (34%) or think it will get worse (22%). Here's another: Likely voters were almost evenly split when asked to choose between a statement that said "Obama and the Democrats are more concerned with creating jobs for ordinary Americans" (45%) and one that said "Obama and the Democrats are more concerned with bailing out Wall Street" (44%).
In other words, people saw a lot of money go to big banks in the bailout, but things don't look better for them. In their eyes that's "socialism," all right -- but it's "Wall Street socialism."
The President was off to a good start in responding to these three narratives. "I believe the greatest generator of jobs in America is our private sector," he said. That's a good move. He needs to send the message that he and his party are pro-business. But which business? In an (admittedly oversimplified, yet) important sense, there are two kinds of businesses in the United States: non-productive banking businesses, the largest of whom are places where people get fabulously wealthy by skimming money from the economy and keeping it for themselves. Then there are the other kinds of businesses -- the ones that hire people and provide goods or services.
The President has to make it clear that he's for businesses that do things, but that he'll fight any business that wants to prosper from parasitism or reckless gambling. After all, polls show that Americans like business but hate Wall Street. Legislators and the White House must understand that distinction. They must show that they're fighting for productive businesses -- especially medium-sized and small businesses, since that's where most of the jobs are -- and fighting those who threaten the economy.
Nor should Democrats take the "socialism" bait and decide that public sector jobs should be stigmatized. Public sector jobs are a necessary part of the stimulus process. And while the public may lament "socialism," public sector careers are among our most beloved and respected: Teacher. Public health worker. Cop. Soldier.
The implicit blueprint in the President's speech should be made explicit: "We're creating jobs, fighting big bankers, and helping real businesses grow." That means targeted tax credits to stimulate hiring, a comprehensive and focused stimulus plan, and reform which forces banks to lend out the money they get at low interest from the Federal Reserve. In other words, a key part of the government's strategy should be to help businesses that help people. Call it "entrepreneurial populism."
The Las Vegas speech was a start. "We've cut dozens of taxes for the middle class and small business people," said the President. We must "break down barriers that stand in the way of innovation" and "unleash (our) ingenuity." He promoted a tax credit to clean energy companies and promised to ask for more. Regarding Dodd-Frank, he said that "we fought to eliminate wasteful subsidies that go to banks" (for administering student loans)" while enacting reforms that will "help prevent another crisis." (His use of the word "help" was nuanced correctly -- it positions the bill as a start, but acknowledges there's more to be done.)
Obama wasn't reluctant to take on the Republicans in Vegas, either, decrying "a wall of opposition and obstruction from leaders across the aisle." That's the right kind of talk -- but it needs to be backed up with action. Too often the President and Congressional leaders have cut backroom deals with Republicans to win their support, only to have it withdrawn anyway. Or they've refrained from introducing bills whose passage is in doubt, because Republicans and some Blue Dog Democrats will resist.
After a year and half of this appeasement, the public thinks he's a "socialist" anyway. That means a different approach is called for, one that matches this new rhetoric: Introduce the bills, let their opponents make their opposition public, and give voters the opportunity to hold them accountable in November. The President kept alluding to Harry Reid's early career as a boxer, but as another former fighter (rockabilly singer Ronnie Hawkins) once said: "You can work the heavy bag as much as you want, but it's no substitute for getting in the ring." The sound you hear is the bell being run for the next round.
Here's what wasn't in the President's speech, thankfully: The words "national debt" or "Federal deficit." In another piece of interesting timing, a recent story suggested that the President's "political advisors" are telling him that the public is worried about Federal spending. so they're advising against stimulus spending. But context is everything: As the Carville poll suggests, the real problem is that voters have seen a lot of money go to Wall Street and they're still struggling. Who wouldn't be opposed to massive spending under those circumstances, when it appears to benefit only the wealthy? Cutting their social safety net would only increase their fear and anger.
Wall Street contributions to Democratic congressional candidates are already down 65% this year, so why not make the implicit positions in the President's Las Vegas speech explicit? It's time to say that "Wall Street socialism" was the last administration's specialty, and now that it's been saved it's time to make bankers fulfill their part of the bargain. It's time to talk about helping Main Street businesses thrive so that people can go back to work and the economy can get moving. This speech began to lay out the approach. Now the President and Congress have to go back to Washington and put it into action.
Let's hope that, for once, what happens in Vegas doesn't stay in Vegas.
(Note: Speech quotes are from the prepared transcript.)
Richard (RJ) Eskow, a consultant and writer (and former insurance/finance executive), is a Senior Fellow with the Campaign for America's Future. This post was produced as part of the Curbing Wall Street project. Richard also blogs at A Night Light.
He can be reached at "firstname.lastname@example.org."
Website: Eskow and Associates