Obama's Great Speech: Here's What He Proposed
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This is an summary of Drum Major Institute's full issue-by-issue analysis of Obama's budget speech to Congress.
In a little over a month, President Obama has succeeded in advancing remarkable change for Americans striving to attain or hold onto a middle-class standard of living. Millions of students and their families will find a college education - increasingly the gateway to the middle-class -- more affordable thanks to increases in federal grants and tax credits. Middle-class employees out of work through no fault of their own are able to rely on a reinforced unemployment safety net. Four million children who lacked the fundamental middle-class requisite of health insurance will become eligible for public coverage. Middle-class commuters will travel on safer roads and bridges and move more quickly on new and modernized transit lines. And every American who will benefit from a cleaner and safer environment due to investments in renewable energy.
These achievements embody a positive and progressive vision of government's power to improve the lives of ordinary Americans. As the President said: "I reject the view that says our problems will simply take care of themselves; that says government has no role in laying the foundation for our common prosperity. For history tells a different story. History reminds us that at every moment of economic upheaval and transformation, this nation has responded with bold action and big ideas."
The President's vision is an inspiration, and his accomplishments so far are significant. But in the context of the most severe economic crisis the nation has faced in generations, our actions must be still bolder. To reignite economic growth and emerge with a middle class that is stronger and much broader, the President must think still bigger. Crucial as its investments are, the stimulus package just signed into law will not be sufficient by itself to put Americans back to work. Necessary as the orientation toward preventing foreclosure is, the housing plan outlined by the Administration won't keep enough middle-class families in their homes. And tremendous as the price tag for bailing out financial institutions is, it will not stabilize the system unless the government overcomes its fear of nationalization. The President is correct to recognize that the nation's great challenges are interconnected and must be addressed together. It is to his great credit that he appreciates that "transformative investments" are needed to move the nation forward. And everyone must acknowledge that the serious and interlinked crises America faces were fostered and exacerbated by the irresponsibility of previous administrations.
But succumbing to artificial preconceptions about the scope of solutions government can offer sets us up to fall short in meeting the great challenges we face. Indeed, President Obama's ambitious - and necessary - health care agenda risks failure in Congress unless he can convey the need to surpass outdated presumptions about the value of a free market that has Americans paying more than other nations for health and getting worse results. And while middle-class Americans benefit from a government that exercises prudence in both taxing and spending, the President must ensure that efforts to reduce the deficit do not become another self-imposed shackle holding the nation back from addressing its serious problems.
President Obama's homeownership plan helps make the point that it is in the national interest to help homeowners in distress. High mortgage debt and foreclosures not only destabilize families, but threaten entire communities by increasing abandonment and blight, dragging down surrounding property values, eroding the tax base, and creating transient populations. Yet the President has limited the reach and effectiveness of his own plan by making lenders' participation in foreclosure prevention voluntary and by excluding homeowners who owe more on their homes than they are worth from government refinancing.
If major financial institutions collapse, the nation's economic crisis would dramatically worsen, devastating middle-class Americans already facing difficult times. But as President Obama recognizes, the Bush Administration's approach of giving a blank check to banks has failed to stabilize the system or reignite lending. Instead, we must invest in a financial system that is transparent, accountable, and worthy of the public trust. Transparency is just the beginning: in providing needed capital to troubled banks, the government must ensure that middle-class taxpayers are not forced to take on the costs of bank shareholders' failed investment strategy. The Administration must be prepared to temporarily nationalize failed banks if this is necessary to protect taxpayers.
America's health care system is the most expensive in the world, yet we consistently lag the health outcomes other developed countries that spend far less. The inefficient health system is a drag on the nation's economic competitiveness and the leading fiscal problem for local, state, and federal governments. Middle-class Americans pay the cost as patients, employees, taxpayers, and small business owners. President Obama can succeed in his plan to achieve universal health coverage while reducing costs only if he stands firm on commitments to create a public health plan that competes with private insurers and incorporates the results of research on the effectiveness of different medical treatments into cost-cutting strategies.
President Obama is right to emphasize the need for investments in education to foster economic growth and competitiveness. Educated citizens ensure higher rates of productivity and aggregate growth for a country as a whole. But the dropout epidemic threatens to create a lost generation unprepared to compete in an economy where advanced skills are undeniable prerequisites for attaining the mobility, security, and prosperity associated with a middle-class livelihood. Strengthening the cognitive capacity of young people will have positive economic consequences for productivity and growth--both in terms of individual earning power and national GDP.