Game Over, Austerity—Obama's Speech Clinches the Case Against Right-Wing Economics

If we don’t make this investment, we’ll put our kids, our workers, and our country at a competitive disadvantage for decades. So we must begin in the earliest years. That’s why I’ll keep pushing to make high-quality preschool available to every four-year-old in America – not just because we know it works for our kids, but because it provides a vital support system for working parents. I’ll also take action to spur innovations in our schools that don’t require Congress. Today, for example, federal agencies are moving on my plan to connect 99% of America’s students to high-speed internet over the next five years. And we’ve begun meeting with business leaders, tech entrepreneurs, and innovative educators to identify the best ideas for redesigning our high schools so that they teach the skills required for a high-tech economy.

We’ll also keep pushing new efforts to train workers for changing jobs….

Families and taxpayers can’t just keep paying more and more into an undisciplined [higher education] system; we’ve got to get more out of what we pay for… And in the coming months, I will lay out an aggressive strategy to shake up the system, tackle rising costs, and improve value for middle-class students and their families.

The president completed his vision for rebuilding “an economy that grows from the middle out” by calling for increased access to affordable health care and retirement security and a minimum wage that is a living wage: “And because no one who works full-time in America should have to live in poverty, I will keep making the case that we need to raise a minimum wage that in real terms is lower than it was when Ronald Reagan took office.”

The one subject on which Obama sounded more like a conservative than a progressive was retirement security. “Today, a rising stock market has millions of retirement balances rising. But we still live with an upside-down system where those at the top get generous tax incentives to save, while tens of millions of hardworking Americans get none at all.”

But “millions of retirement balances are rising” in a “rising stock market” only because the Fed Reserve’s policy of quantitative easing has “artificially juiced up” an asset bubble. Is the same president, who earlier in the speech criticized the pre-2008 bubble economy, now taking credit for the bubble-like reflation of the stock market? Alas, it appears so.

Instead of expanding the successful Social Security program, President Obama echoes the Wall Street wing of the Right with a call to expand the failed, inefficient system of private savings accounts like 401(k)s and IRAs. “As we work to reform our tax code, we should find new ways to make it easier for workers to put money away, and free middle-class families from the fear that they’ll never be able to retire.”

No, Mr. President, we don’t need to “find new ways to make it easier for workers to put money away” in volatile private retirement savings accounts, with banks or money managers skimming exorbitant fees. We need to  expand Social Security.

With the lamentable exception of his right-leaning, Wall Street-friendly approach to retirement security, the president has provided a road map that most progressives can endorse.

For a radical contrast, we can turn to the “ House Republican Plan for Economic Growth and Jobs” that was publicized as an alternative to Obama’s speech. Unlike Obama, the House Republican leadership does not bother to set forth a historical narrative about the de-linking of productivity growth and income for most Americans in the last generation. But then, we already know the conservative Republican historical narrative — the U.S. economy was just fine in the age of the Robber Barons between the 1870s and the 1920s, with even more concentrated wealth and even more extreme inequality, before Franklin Roosevelt screwed everything up. Reform for today’s radicalized right means undoing almost every reform enacted since the New Deal, if not the Progressive era, and trying to restore the savage, unregulated capitalism of the late nineteenth century.