Can our society reward politicians for doing the right thing to stop a crisis?
President Obama's speech on Thursday comes at a very difficult time. He pivoted toward deficit reduction in 2010 and alienated his base with validating "fist bumps" for Eric Cantor and golf outings with John Boehner while the latter pair were doing their debt ceiling game of chicken. Now he is either 1) expected to restore his base's enthusiasm with a vigorous vision of economic recovery or 2) pander to the Chamber of Commerce with supply side gimmicks that will have little impact on employment but create mini windfalls for donors. Romantics and cynics are equally inclined to project onto the event.
As observers, I sense we would be better to watch this speech and ask the question, "What can we infer about the structural deformations of our democracy when a smart man like Obama is saying [whatever he says] when heading toward an election campaign?"
We are in effect taking the temperature on the sickness of our democracy. We have two currencies of power in America: votes and dollars. The episode of TARP, a month before the 2008 presidential election, gave us evidence that dollars are the more powerful currency even at election time. We will learn where Obama thinks the balance lies from this speech.
When demand is stagnant and 16 percent of the population does not have full-time work, we are in an obvious and profound crisis. The vigor with which both parties embrace deficit reduction contrasts violently with the helpless timidity with which they address the challenge of jobs.
The fact is, we do not have a society that is stable and functional when our politics is insensitive to a crisis of this magnitude. As Jared Bernstein said last week on his blog:
...Have we, as a nation, lost the ability to self-correct?
Any system, whether it's biological, political, or economic, must be able to diagnose and fix its problems if it is to survive. I don't mean to be gloomy or dramatic, but I'm wondering if our political/economic system is up to that task.
Are we up to the challenge as a society? The question is not whether Obama is up to the task but whether our society, as it is structured in a post-Citizens United world, is capable of responding to the needs of large segments of our population. Can Obama pursue healthy policies and believe he can be re-elected for doing so? If not, we have real work to do in reforming our politics. I suspect that it is the case or we would already see the White House and Congress on a constructive path toward demanding stimulus and employment relief.
So what do I want to hear from Obama?
1. Corporate profits are at their highest level since the Korean War. Corporations need no more incentives to hire. Just more confidence in demand growth.
2. All this long-term deficit reduction we are planning to do is to buy space for a profound short-term stimulus over the next three years or so, until the unemployment rate is below six percent.
3. Stimulus should be focused on projects that will have lasting productivity benefits for the nation for years to come. Education investment, science spending, and infrastructure modernization all help.
4. We have to look seriously at how we subsidize foreign direct investment and change the tax code to support domestic investment. Subsidies for outsourcing and offshoring have to be terminated.
5. Single payer health insurance and negotiated drug prices are not only the essence of good budget policy in the long term, they are good policies for jobs and competitiveness because no other society has such ridiculously high prices, and employer-based health costs deter hiring.
6. Public financing of elections, and requiring our networks to donate public service time for elections, would be the best way to reduce pork and realign our incentives and would be great for budget policy and social balance in the long term.
If several of those six themes are addressed, I will be encouraged. If I see Obama make a stand and work diligently to make them into policy and openly take issue with officials in either party for opposing them, I will be inspired. It has been a long time since I have been inspired by the actions of the President of the United States.
Rob Johnson is a Senior Fellow and the Director of the Project on Global Finance at the Roosevelt Institute.