Obama Speech: Stimulus Does Not Motivate

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President-elect Barack Obama’s speech today covered his outlook for the economy and new economic stimulus plan. From Brian Knowlton, New York Times:

President-elect Barack Obama on Thursday urged Congress to act quickly to pass sweeping economic stimulus measures, including a tax cut and an infusion of as much as $800 billion, or face the likelihood that “this recession could linger for years.”

He said he aimed to double the production of alternative energy within three years, a seemingly ambitious target; computerize all medical records in the country within five years, a move he said could save lives, money and jobs; modernize 75 percent of federal buildings and improve energy efficiency in 2 million homes; upgrade classrooms, libraries and laboratories in thousands of schools, and expand broadband access to rural areas .

Mr. Obama blamed the current economic morass — in particularly stark terms — on “an era of profound irresponsibility that stretched from corporate boardrooms to the halls of power in Washington.”

While Mr. Obama did not question the American capacity to recover or its potential for “future greatness,” he cautioned that “it will take time, perhaps many years.”

Obama is delivering as promised
, committing government resources towards a better energy economy, bridging the technological divide, and school upgrades. The hook is that these are all long-term upgrades. Doubtless, a more efficient healthcare system, a competitive sustainable economy, and better-educated kids will make the United States much more competitive. But these are long-term outcomes, for which the dialectic panders to Congress. What Obama needs to do now is play on his strength and address the people with specifics, beyond blanket optimism, beyond a few hopeful phrases here and there.

Right now, most people are worried about where their next paycheck will come from, whether they can continue to run their small businesses, and whether their remaining money is safe. I want to be reassured that the economic firefighters are on the job as well as the long-term cash infusions. Obama, in your next speech, please answer this:

-Paulson & Co. seem to have thrown billions of dollars into a big black hole. What is working in the Paulson plan?

-There’s an outbreak of violence going on right now, people with guns whose rage gets the better of them. What are you going to do about situations like the Pfizer shooting, the Oakland riots, the hundreds of other violent crimes that will take place this year? People fundamentally have trouble dealing with their stuff getting taken away. I want to see a social and economic leader.

-Why didn’t you repeal the Bush tax cuts?

-Do you have a contingency plan in place in case China decides to get rid of its US debt holdings, eg. treasuries? Do you have a way of convincing China not to do that?

Some are skeptical of Obama’s prognosis, saying that he is fear-mongering and avoiding key issues. I think that his grim outlook is realistic, but he needs to empower his flock more. Americans aren’t culturally prepared for lean times, as is evidenced by the propensity to vent through murder. If it’s not getting better for years, Obama, throw some motivation our way. It is sorely needed.

  • Emily Ng

    Barack Obama said in this speech – “A world that depends on the strength of our economy is now watching and waiting for America to lead once more. And that is what we will do.”

    This is absolutely right. US leadership in kickstarting the international economy is crucial. But the case for this is also partly because the United States itself is dependent on the good health of the world economy.

    The Bank of England said this just now in explaining its latest historic interest rate cut – “The world economy appears to be undergoing an unusually sharp and synchronised downturn. Measures of business and consumer confidence have fallen markedly. World trade growth this year is likely to be the weakest for some considerable time.” As Obama said soon after the election – “We must also remember that the financial crisis is increasingly global and requires a global response.”

    In the discussions of recent months it has become increasingly clear to me that both the US and the wider global economies need:
    1. coordinated macro-economic stimulus (both through monetary and fiscal policy)
    2. strong international economic institutions like the IMF and World Bank (both of which seem to have been contributing positively to dealing with the current crisis), and
    3. every possible measure to maintain an open international trading system and to avoid the perils of protectionism.

    This is very much in line with what we can learn from the now-revived John Maynard Keynes (as understood from Skidelsky’s and Moggridge’s biographies, and Markwell’s study of Keynes and international relations).

    It is good to see Barack Obama place emphasis on the international context, and the importance of US leadership. It would be even better to see him commit clearly to those three points, including to be clear that he will stand strongly against the self-destructive economic nationalism and protectionism that has done so much harm in the past.

    US economic leadership in this way will serve the interests both of the United States and of the wider world.