‘We Cannot Rebuild this Economy on the Same Pile of Sand’

Related subjects: Economic Recovery, Education Policy, Energy Supply, Healthcare Policy, J.E. Robertson, Mortgage & Credit Crisis, Obama administration, Obama's 1st 100 days, U.S. Economy, U.S. Politics, U.S. news Comments (8)

14 April 2009 :: J.E. Robertson

Pres. Obama today gave an address at Georgetown University, in which he explained his economic policies and how his budget and recovery plan will achieve not only better healthcare for more Americans and a green energy agenda, but real substantive entitlement reform, new financial regulations intended to both curb abuses and spur sustainable investments in future prosperity, and protect against long-term decline stemming from mass under-education.

He named “five pillars” of long-term economic recovery:

1. new rules for Wall Street that will reward drive, innovation and the creation of value, not reckless speculation and abuse;
2. new education initiatives to make our workforce more skilled and competitive;
3. new investment in energy innovation;
4. new investment in healthcare that will save small businesses money;
5. new measures to keep federal budget deficits low over long-term…

Obama explained that:

… most of all, I want every American to know that each action we take and each policy we pursue is driven by a larger vision of America’s future – a future where sustained economic growth creates good jobs and rising incomes; a future where prosperity is fueled not by excessive debt, or reckless speculation, or fleeting profit, but is instead built by skilled, productive workers; by sound investments that will spread opportunity at home and allow this nation to lead the world in the technologies, innovations, and discoveries that will shape the 21st century.  That is the America I see.  That is the America that Georgetown University is preparing you for. That is the future I know we can have.

1. Tough New Rules of the Road for Wall Street

Just as after the Great Depression, new rules were created to prevent a repeat of economic disaster rooted in “shortcuts and abuse”, we need to do the same, so our economic growth is rooted in something more sustainable and real. Obama expects bill with comprehensive new financial regulatory framework “to arrive on my desk before the year is through”.

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2. Education

When the US led the world in education performance and breadth of public education at high levels, it came to lead the world in economic growth, innovation and long-term stability. By 2020, the US will lead the world in highest rates of college-graduates. Efforts will begin now with early childhood education, incentives for good teachers, assistance so that all Americans can engage at least one year of higher education.

Obama education vision includes focus on “making things”, promoting education in science and engineering. Obama said awkwardly that too long have we prioritized talents directed toward those who can “innovate” in the use of financial instruments and markets.

3. Energy innovation to spur clean-energy economy

Recovery act will double US supply of renewable energy in just three years. The aim of creating a home-grown, localized sustainable clean-energy economy, is part of crafting, through the opportunity of this moment of crisis and over the medium-term, the infrastructure and market framework for a viable, affordable clean-energy economy over the long-term, a basic root element of truly sustainable economic growth.

Closing the “carbon loophole” will spur investment in clean-energy technologies, resources and infrastructure. This shift is necessary to curb the impact of human-induced global climate destabilization, reduce reliance on foreign oil, which jeopardizes national security, and create a new energy infrastructure that requires and sustains local employment on a massive scale.

4. Healthcare reform to create affordable market for all Americans

Over one million American homes may be lost due to the crippling costs of a broken healthcare system. The aim of reform is to make “quality healthcare affordable for every American”. Bringing everyone into the system is the first step to reducing costs to market-sensible levels that don’t generate personal bankruptcies.

5. Restoring fiscal discipline

“Already, we’ve identified $2 trillion in deficit reductions over the next decade”, said Obama, adding that just by examining the elimination of no-bid contracts, over $40 billion will be saved. The new budget will reduce discretionary spending as a share of the total economy by 10% over 10 years, the lowest level seen in decades.

Answering the criticism that his administration has been “spending with reckless abandon”, pushing a high-cost social agenda while mortaging future generations’ fiscal wellbeing for momentary gains, Obama said “we cannot sacrifice the long-term investments we need to make” in order to line our pockets in the short term.

“We as a country have to make current choices with an eye to the future; if we don’t invest now in renewable energy, if we don’t invest now in a skilled workforce, if we don’t invest now in renewable energy, this economy will not grow as it should”, Obama intoned, calling on all in his audience to adopt a more responsible long-term vision for economic investment and prosperity.

Obama noted the deep “structural gap” in the federal budget that stems from the government taking in too little revenue as baby-boomers retire in large numbers to cover the entitlements for those same individuals. He also said the nation must remain committed to serious reforms that will work to mend that gap, citing the fallacy that cutting funding for the National Endowment for the Arts would somehow fix the problem.

Obama explained that his complex broad-view reform plan for economic recovery is designed to actually make it possible to “solve real problems” by “rolling up sleeves” and doing the hard work needed. He warned that there is in Washington too often a transition “from shock to trance” when facing serious problems, leading to a shortening of attention spans and a political unwillingness to deal with anything serious.

Addressing members of Congress, he said “We have been called to govern in extraordinary times”, noting that the multiple crises of the moment assign to those in office at present an historic range of responsibilities to ensure that the economic house the US seeks to build be “built upon a rock”, not “the same pile of sand” that led to the current collapse.