Cliff Notes: The President’s Carnegie Mellon economic speech

Last Wednesday the President spoke about the economy at Carnegie Mellon University. Administration officials billed this as a major economic address, the follow-up to his speech last April at Georgetown. I think the most accurate and fairest way to understand the views of an elected official begins with what he or she says. The problem is that this speech is more than 5,000 words, so almost no one will read the whole thing.

In summarizing it I still ended up at around 1,300 words. Think of it as getting 75% savings.

I will respond to the speech soon. For now, this is my attempt at a non-judgmental summary. Where you don’t see quotation marks I am paraphrasing him, fairly I hope.

The speech naturally breaks into three parts:

• Part I: The Choice
• Part II: The Foundation
• Part III: The Laundry List

There are some obvious topical subdivisions which I have labeled.

Part I: The Choice

The oil spill is my top priority.

The macroeconomy

I inherited an extremely weak economy, “one of the worst economic storms in our history.”

I took bold and unpopular actions, and they worked. “These steps have succeeded in breaking the freefall.”

“We’re again moving in the right direction.”

“This economy is getting stronger by the day.”

[But] “It’s not going to be a real recovery until people can feel it in their own lives.”

“In the immediate future, this means doing whatever is necessary to keep the recovery going and to spur job growth.”

Why we need a new foundation

The last ten years were terrible economically for American families. “Some people have called the last 10 years ‘the lost decade.’”

There has been “a sense that the American Dream might slowly be slipping away.”

China and India and Europe are “building high-speed railroads and expanding broadband access.” They’re making serious investments in technology and clean energy because they want to win the competition for these jobs.

We can’t afford to return to the pre-crisis status quo. We can’t go back to an economy that was too dependent on bubbles and debt and financial speculation.”

“We have to build a new and stronger foundation for growth and prosperity … and that’s exactly what we’ve been doing for the last 16 months.

It’s a foundation based on investments in our people and their future; investments in the skills and education we need to compete; investments in a 21st century infrastructure for America, from high-speed railroads to high-speed Internet; investments in research and technology, like clean energy, that can lead to new jobs and new exports and new industries.

This new foundation is also based on reforms that will make our economy stronger and our businesses more competitive — reforms that will make health care cheaper, our financial system more secure, and our government less burdened with debt.”

International & Trade

“We have to keep working with the nations of the G20 to pursue more balanced growth.”

“We need to coordinate financial reform … so that we avoid a global race to the bottom.”

“We need to open new markets and meet the goal of my National Export Initiative: to double our exports over the next five years.”

“We need to ensure that our competitors play fair and our agreements are enforced.”

Republicans are partisan and for no government

Republicans keep saying no to everything we’re doing.

“And some of this, of course, is just politics.”

“But to be fair, a good deal of the other party’s opposition to our agenda has also been rooted in their sincere and fundamental belief about the role of government. It’s a belief that government has little or no role to play in helping this nation meet our collective challenges. It’s an agenda that basically offers two answers to every problem we face: more tax breaks for the wealthy and fewer rules for corporations.”

“The last administration called this recycled idea ‘The Ownership Society.’ But what it essentially means is that everyone is on their own. No matter how hard you work, if your paycheck isn’t enough to pay for college or health care or childcare, well, you’re on your own. If misfortune causes you to lose your job or your home, you’re on your own. And if you’re a Wall Street bank or an insurance company or an oil company, you pretty much get to play by your own rules, regardless of the consequences for everybody else.”

My philosophy of government is a middle ground, rejecting too much government

“Government cannot and should not replace businesses as the true engine of growth and job creation.”

“Too much government can deprive us of choice and burden us with debt.”

“But I also understand that throughout our nation’s history, we have balanced the threat of overreaching government against the dangers of an unfettered market.”

“[O]ne-third of the Recovery Act we designed was made up of tax cuts…”

“[D]espite calls for a single-payer, government-run health care plan, we passed reform that maintains our system of private health insurance.”

The choice

Republicans/Conservatives/Big Business have argued against many good things done by government: Social Security, Medicare, deposit insurance, seat belts, clean air and water.

“And all of these claims proved false. All of these reforms led to greater security and greater prosperity for our people and our economy. And what was true then is true today.”

“For much of the last 10 years we’ve tried it their way.”

“And now we have a choice as a nation. We can return to the failed economic policies of the past, or we can keep building a stronger future. We can go backward, or we can keep moving forward.”

Part II: The New Foundation

“The first step … has been to address the costs and risks that have made our economy less competitive — [1] outdated regulations, [2] crushing health care costs, and [3] a growing debt.”

Financial reform is good and “sweeping”

It “will help prevent another AIG”

“It will end taxpayer-funded bank bailouts.”

“It contains the strongest consumer protections in history.”

Health care reform

We did health care reform because “we can’t compete in a global economy if our citizens are forced to spend more and more of their income on medical bills; if our businesses are forced to choose between health care and hiring; if state and federal budgets are weighed down with skyrocketing health care costs.”

“The costs of health care are not going to come down overnight just because legislation passed, and in an ever-changing industry like health care, we’re going to continuously need to apply more cost-cutting measures as the years go by.”

Health care reform did good things.

“The other party has staked their claim this November on repealing these health insurance reforms instead of making them work. They want to go back. We need to move forward.”

Deficits and debt

Thanks to the Bush tax cuts and prescription drug benefit, I inherited a $1 trillion one-year deficit and projected deficits of $8 trillion over the next decade.

I inherited a severe recession “and the effects of the recession put a $3 trillion hole in our budget before I even walked through the door.” Additionally, the steps that we had to take to save the economy from depression temporarily added more to the deficit … about $1 trillion. Of course, if we had spiraled into a depression, our deficits and debt levels would be much worse.

“Now, the economy is still fragile, so we can’t put on the brakes too quickly. We have to do what it takes to ensure a strong recovery.”

We need to extend unemployment insurance.

We need to give more money to state and local governments so they don’t have to fire teachers.

“There are four key components to putting our budget on a sustainable path. Maintaining economic growth is number one. Health care reform is number two. The third component is the belt-tightening steps I’ve already outlined to reduce our deficit by $1 trillion. … The fourth component is [the Fiscal Commission.]”

Part III: The Laundry List

Education reform

• Race to the Top
• Replace guaranteed student loans with direct loans
• “Revitalize our community colleges”

Infrastructure

• High-speed rail
• High-speed broadband
• Clean energy subsidies

Energy

• “I supported a careful plan of offshore oil production as one part of our overall energy strategy. … But … only if it’s safe, and only if it’s used as a short-term solution while we transition to a clean energy economy.”
• “It means tapping into our natural gas reserves, and moving ahead with our play to expand our nation’s fleet of nuclear power plants.”
• We need to “put a price on carbon pollution.”
• We will get “a comprehensive energy and climate bill” done.

Research and innovation

• Make the research and experimentation tax credit permanent.

“The role of government has never been to plan every detail or dictate every outcome. At its best, government has simply knocked away barriers to opportunity and laid the foundation for a better future. Our people — with all their drive and ingenuity — always end up building the rest. And if we can do that again — if we can continue building that foundation and making those hard decisions on behalf of the next generation — I have no doubt that we will leave our children the America that we all hope for.”

(photo credit: Obama Visits Carnegie Mellon IX. by Patrick Gage)