Changing Hope

Barack Obama has not taken office yet, but he has come out and made his Big Economic Speech. I did not see it, but I did read it. There was much in it to like: he gives a good short summary of the economic crisis. Better yet, he shies away from blaming it on Evil Bush or sinister plutocrats. He identifies the decision makers in Washington and Wall Street as those with the most blood on their hands, but is careful to avoid naming names or party identification. He also rightly identified this as a problem "largely of OUR own making," which effectively socializes responsibility. 

For the first time, Obama actually manages to get quite specific, and some of his suggested solutions are very appealing. I like his idea of increasing infrastructure spending. I especially  like his idea of modernizing the nation's power grid, which has too many bottlenecks. However my preference for these ideas is tempered by the fact that such projects will be needlessly expensive because of the endless litigation such projects inspire, especially among the environmental set. If Obama can't deal effectively with that, these dollars will not be well, or quickly spent. 

Of course, the point of all this is job creation, if not job salvation. There is one great line in the speech (I mean besides "may God bless America"): "(the) Plan recognizes both the paradox and promise of this moment-the fact that there are millions of Americans trying to find work, even as, all around the country, there is much work to be done." Damn right. But Obama's numbers do not rise to a level that would justify the crisis-mongering that he indulges in. He talks of the loss of 2 million jobs, and how his plan will "save or create 3 million." Huh? There are 300 million Americans, most of whom are able bodied adults. 2 or 3 million is a significant number, but do they really justify all of this hand wringing? 

Not only that, some of Obama's specific solutions are positively limp. He talks about alternative energy, but limits himself to wind and solar. No mention of nuclear - the only alternate energy that we could put into use immediately. He talks about sparking a "clean energy economy" by "modernizing more than 75% of federal buildings." 75%! I feel cleaner already! He talks about lowering health care costs ... by computerizing health care records! (Oddly, he makes no mention of government run health care. Guess he's softening us up before the kill). 

Obama makes a lot of noise about reforming the financial regulatory system, as well he should. It's a (populist) system largely set up in the 1930's that has simply run its course. Certainly, the bad actors have learned how to get around it. But, disappointingly, Obama makes no proposals. In fact, for all the talk about the evils of de-regulation, I have yet to hear of any serious proposals (think tank white papers don't count) for reforming securities and banking regulation. 

The biggest problem: Obama, like Bill Clinton, is much too enamored of new technology and extended education. They each love to talk about innovation as if they were sitting around the Oval Office approving a dazzling series of high tech projects. One of my least favorite aspects of the Clinton presidency was the "gee willickers" way he would talk about the High Tech Revolution that was creating the New Economy which had effectively repealed the business cycle. Not only was he obviously wrong, that sort of talk led DIRECTLY to the tech bubble AND to the sort of market tinkering that led to the present crisis (remember The Committee To Save The World?) We don't need more promises of "green," "tech," "21st Century" jobs. America has huge industries -  transport, manufacturing, construction, agriculture - that lack glamor, but are engine of wealth and job creation. They should be allowed to thrive. Instead, they are the ones often burdened by government regulations, unfavorable tax treatment, and artificially elevated wages. Just once I'd like to see Obama (or anyone) apply the lax regulatory scheme that finance benefited from the last 25 years to industries that do real work. I don't see that here. 

As for education, Obama, like all good Democrats, is clearly comfortable with assuaging complaints about unemployment with calls for more education, rather than easing the regulatory and tax burdens that often impede the growth of manufacturing and construction jobs. Similarly, Obama says he wants to spend $$$ putting computers into class rooms, so that "students in Chicago and Boston can compete with kids in Beijing for the high-tech, high wage jobs of the future." B.S. If you want to compete with Asian students, then you need to use that computer money to increase teacher pay, especially that of math and science teachers. American kids get plenty of computer experience, but many of them don't understand basic math, let alone algebra or geometry. Calling for computers may make Obama look cutting edge, but it's a bogus solution. 

Finally, I think it needs to be pointed out that the trillion dollar deficit that Obama is proposing is, ahem, a bit large. I have to wonder if he even comprehends how much money that is. I also have to wonder if it is even possible to spend that much money in the short window of time that Obama seems to be contemplating. He definitely doesn't want to let this crisis go to waste. But, come on, if there's really a crisis, then you would want to have some safeguards to make sure that "crisis measures" don't become "permanent measures." Many of Bush's proposals, like his tax cuts or the Patriot Act, were passed with extensive sunset provisions. Such measures do not seem to be part of the calculation here. Obama might think he can buy Republican acquiescence with his tax cut proposal. I would be happier if I knew we could at least revisit his proposals at a later date.