Massive Holes in Obama's Speech

I very much liked the "populist" speech that President Obama gave yesterday, one that (in many ways) reminded me of his Teddy Roosevelt Speech that he gave in Osawatomie, Kansas back in 2011.

Below I quoted some of (what I thought were) the most relevant passages from his speech yesterday, as they pertained to jobs and the economy.

But I also found three massive holes in his speech on topics that Obama had quickly skipped through, without giving us very many details at all. (Scroll down to see my 3 alerts and 3 notes in red)

(The full transcript is here at the White House website)

America built the largest middle class the world has ever known. And for the three decades after World War II, it was the engine of our prosperity.

But starting in the late ‘70s, this social compact began to unravel. Technology made it easier for companies to do more with less, eliminating certain job occupations. A more competitive world lets companies ship jobs anywhere. And as good manufacturing jobs automated or headed offshore, workers lost their leverage, jobs paid less and offered fewer benefits.

Businesses lobbied Washington to weaken unions and the value of the minimum wage. As a trickle-down ideology became more prominent, taxes were slashed for the wealthiest, while investments in things that make us all richer, like schools and infrastructure, were allowed to wither.

And for a certain period of time, we could ignore this weakening economic foundation, in part because more families were relying on two earners as women entered the workforce. We took on more debt financed by a juiced-up housing market.

But when the music stopped, and the crisis hit, millions of families were stripped of whatever cushion they had left.

Since 1979, when I graduated from high school, our productivity is up by more than 90 percent, but the income of the typical family has increased by less than eight percent. Since 1979, our economy has more than doubled in size, but most of that growth has flowed to a fortunate few.

The top 10 percent no longer takes in one-third of our income -- it now takes half. Whereas in the past, the average CEO made about 20 to 30 times the income of the average worker, today’s CEO now makes 273 times more. And meanwhile, a family in the top 1 percent has a net worth 288 times higher than the typical family, which is a record for this country.

This increasing inequality is most pronounced in our country. Alongside increased inequality, we’ve seen diminished levels of upward mobility. The combined trends of increased inequality and decreasing mobility pose a fundamental threat to the American Dream.

When families have less to spend, that means businesses have fewer customers, and households rack up greater mortgage and credit card debt.

And greater inequality is associated with less mobility between generations. That means it’s not just temporary; the effects last. It creates a vicious cycle.

And finally, rising inequality and declining mobility are bad for our democracy. Ordinary folks can’t write massive campaign checks or hire high-priced lobbyists and lawyers to secure policies that tilt the playing field in their favor at everyone else’s expense.

The decades-long shifts in the economy have hurt all groups: poor and middle class; inner city and rural folks; men and women; and Americans of all races. The opportunity gap in America is now as much about class as it is about race, and that gap is growing.

We’ve got to move beyond the false notion that this is an issue exclusively of minority concern. And we have to reject a politics that suggests any effort to address it in a meaningful way somehow pits the interests of a deserving middle class against those of an undeserving poor in search of handouts.

We’ve also seen how government action time and again can make an enormous difference in increasing opportunity and bolstering ladders into the middle class. Investments in education, laws establishing collective bargaining, and a minimum wage -- these all contributed to rising standards of living for massive numbers of Americans.

Without Social Security, nearly half of seniors would be living in poverty --- half. Today, fewer than 1 in 10 do. Before Medicare, only half of all seniors had some form of health insurance.

That’s our generation’s task -- to rebuild America’s economic and civic foundation to continue the expansion of opportunity for this generation and the next generation.

[Businesses] created nearly 8 million new jobs over the past 44 months. We've got to keep working to make America a magnet for good, middle-class jobs to replace the ones that we’ve lost in recent decades -- jobs in manufacturing and energy and infrastructure and technology.

And that means simplifying our corporate tax code in a way that closes wasteful loopholes and ends incentives to ship jobs overseas. And by broadening the base, we can actually lower rates to encourage more companies to hire here and use some of the money we save to create good jobs rebuilding our roads and our bridges and our airports, and all the infrastructure our businesses need. It means a trade agenda that grows exports and works for the middle class.

* ALERT #1 - Here's what Obama meant by the corporate tax loopholes. (Bruce Bartlett at the New York Times wrote an article about effective corporate tax rates.) But what did Obama mean by "broadening the base and lowering rates"? That's Mitt Romney's tax plan! And Obama said nothing at all about taxing capital gains as regular wages. And he said nothing at all about raising or eliminating the income cap for Social Security taxes. (Read How Congress Lets the Rich Pay Less)

* ALERT #2 - And what did Obama mean by "use some of the money we save"? Money saved from where? Does he mean money "saved" by cutting benefits to seniors, the disabled and our Vets by using chained-CPI for future cost-of-living-adjustments? Obama never mentioned Senator Tom Harkin's plan, the Strengthening Social Security Act. The Republicans are currently attempting to divide those in the military and senior citizens by introducing legislation that would cancel out the next two years of sequestration cuts for the Pentagon by putting a heavier burden on senior citizens by changing the way cost-of-living adjustments are calculated for Social Security.

* ALERT #3 - Obama also mentioned "a trade agenda that grows exports", but he also wants to "fast track" the TPP trade agreement. A new study from the Center for Economic and Policy Research shows that the vast majority of U.S. workers would see wage losses as a result of this pending "free trade agreement" --- and it would also vastly extend the power of corporations over democracies (the TPP has been described as NAFTA on steroids).

It’s time to ensure our collective bargaining laws function as they’re supposed to so unions have a level playing field to organize for a better deal for workers and better wages for the middle class. It’s time to pass the Paycheck Fairness Act so that women will have more tools to fight pay discrimination.

It’s well past the time to raise a minimum wage that in real terms right now is below where it was when Harry Truman was in office. If you work hard, you should be able to support a family. There’s no solid evidence that a higher minimum wage costs jobs, and research shows it raises incomes for low-wage workers and boosts short-term economic growth.

We still need targeted programs for the communities and workers that have been hit hardest by economic change and the Great Recession. These communities are no longer limited to the inner city. They’re found in neighborhoods hammered by the housing crisis, manufacturing towns hit hard by years of plants packing up, landlocked rural areas where young folks oftentimes feel like they've got to leave just to find a job. There are communities that just aren’t generating enough jobs anymore. So in a few weeks, we’ll announce the first of these Promise Zones.

We're also going to have to do more for the long-term unemployed. For people who have been out of work for more than six months, often through no fault of their own, life is a catch-22. Companies won’t give their résumé an honest look because they’ve been laid off so long --- but they’ve been laid off so long because companies won’t give their résumé an honest look.

* As an aside: Obama also mentioned extending federal unemployment benefits. By the end of this month, 1.3 million lob Americans will lose these benefits. Here's my post disputing the false cause and correlation claims about unemployment benefits causing unemployment; or that extending federal jobless benefits also extends the durations of joblessness.

Nearly half of full-time workers and 80 percent of part-time workers don’t have a pension or retirement account at their job. About half of all households don’t have any retirement savings. So we’re going to have to do more to encourage private savings and shore up the promise of Social Security for future generations.

* As an aside: A group of Republican senators has introduced a bill to slash retirement pensions for new federal employees, saying "the current system unfairly compensates public-sector workers as compared to their private-sector counterparts." But guess what's happening to their private-sector counterparts? Hundreds of thousands of retired union workers are also facing pension cuts that could slash their monthly payments in half , or even more. (And we already know what CEOs and corporate raiders like Mitt Romney do with workers' pensions.) And a judge's ruling in Detroit's recent bankruptcy legally allows their workers' pensions to be stolen as well.

The point is these programs [food stamps and unemployment benefits] are not typically hammocks for people to just lie back and relax. These programs are almost always temporary means for hardworking people to stay afloat while they try to find a new job or go into school to retrain themselves for the jobs that are out there, or sometimes just to cope with a bout of bad luck. But understand that these programs of social insurance benefit all of us, because we don't know when we might have a run of bad luck.

* As an aside: A study found that every year, low-wage employers like Walmart (the largest private-sector employer in the U.S.) costs the taxpayers $730 per employee in healthcare and another $1,222 in other forms of assistance, such as food stamps and subsidized housing --- meaning, these government "benefits" are really corporate "wage subsides".

(Obama then goes on at great length about Obamacare, which we'll skip...)

So let me end by addressing the elephant in the room here, which is the seeming inability to get anything done in Washington these days. I realize we are not going to resolve all of our political debates over the best ways to reduce inequality and increase upward mobility this year, or next year, or in the next five years. But it is important that we have a serious debate about these issues. For the longer that current trends are allowed to continue, the more it will feed the cynicism and fear that many Americans are feeling right now -- that they’ll never be able to repay the debt they took on to go to college, they’ll never be able to save enough to retire, they’ll never see their own children land a good job that supports a family.

(Then, towards the end of his speech, while addressing the Republicans, Obama says...)

You owe it to the American people to tell us what you are for, not just what you’re against. It’s not enough anymore to just say we should just get our government out of the way and let the unfettered market take care of it --- for our experience tells us that’s just not true. Government can’t stand on the sidelines in our efforts, because government is us.