Converting the Campaign Platform to an Economic Agenda
President Obama’s 2nd press conference on March 24, focused on his vision of long-term renewal. The President united his major priorities — a commitment to education, health care cost reform and long-range government direction of energy planning — with his current economic agenda. This essentially is the heart of the new President’s political agenda. This is Barack Obama.
President Obama, amid some skepticism, focused on economic components of education, health care and energy policy to justify his approach. He contrasted the false prosperity of “bubble and bust” economics caused by widespread speculation and leveraging (borrowing to invest), with a vision of economic achievement based on an educated workforce, more economical health care and domestic energy production.
While reporters challenged the President’s big vision, questioning projected long-term deficits, the President argued that the primary causes of increasing future deficits, Medicare and Medicaid expenses, necessitate the very health care cost reform that the President is seeking in his reform agenda.
This basic challenge to the President’s campaign platform has been circulating since the election: Doesn’t the economic weakness, which brings lower tax revenue and higher costs for unemployment insurance and stimulus, and the inherited deficit, require the President to give up his ambitious plans for reform?
Broadcasters and pundits routinely malign the debt figures as if a critical tone substituted for economic perspective.
However, there is no question that something must change. The government’s commitment to provide health care to elderly, through Medicare, and the poor, through Medicaid, will cost more as the population ages and the cost for care continues to rise. Thus, the government will have to provide significantly less care, raise tax revenue or increase the deficit substantially to finance its health care commitments, unless system-wide reform achieves more for less.
In education, the President asserts that the American work force of the future must be competitive with that of India and China, not to mention the EU, in order for the American economy to compete internationally. Compete we must, as the days of borrow-and-spend financing, at least on a national scale, have ended.
Yet, the United States has never faced the kind of international competition it now faces, with China having taken over a significant share of the world’s manufacturing. China graduates roughly triple the engineers, and India about equal to the number of those graduating in the United States. We bought foreign goods for a couple of decades, but will have to sell goods abroad in order to maintain our standard of living, going forward.
Energy policy presents an even more difficult challenge than the other two. Following the free market has led us to rely heavily on fossil fuels including foreign oil, with economic, national security and environmental consequences. We must support investment in research and development of higher efficiency and alternative sources in order to take responsibility for the environmental consequences of greenhouse gases and work towards long term economic and national security goals. Realistically, real world change will take decades. But if we don’t invest in research and fund experiments that look promising now, we will never change. A new energy policy does not require public funding by necessity. There are policy options such as cap-and-trade that make economic sense as well. Long term standards go along way to giving private enterprise a framework within which to conduct research and development, propose new solutions and compete in an open market.
In this light, how do we define Mr. Obama’s approach? While critics would point to deficit spending and big governemnt, this not an honest analysis. The deficit was there when he arrived and it did not stop the Republican administration from big investments in national defense and other priorities. Bush military spending was not labeled “big government” because people on both sides of the isle believed the goals were worthy.
The weakness in education, the high costs of health care and the dependence on foreign oil and environmental irresponsibility have been growing problems in America for the past thirty years. The President is right to identify these areas for reform. He is also right to say that it is more important to get it right than to hesitate because it is costly. The country does depend on good solutions to these problems for its future prosperity.
