This Truly Was A Centrist Speech

by Slinkerwink on January 26, 2011

Ed. Note: The following was a popular Daily Kos diary from last night.

The speech delivered by President Barack Obama tonight was centrist in tone, and adopted a neoliberal business-friendly approach towards our economy and getting jobs back on track through free trade deals with foreign countries. While there were parts of the speech that were good, like getting rid of subsidies for oil companies to encourage investment in renewable energy, there were parts that were strikingly neoliberal. I’ll highlight those parts below and put forth my opinion in an argument in a reasonable way to express why the neoliberal approach behind some of these provisions is highly misinformed and mistaken: (a) 5-year domestic spending freeze, (b) Medical Malpractice and Tort Reform, (c) the neoliberal approach to education in the Race To The Top program, (d) Regulations review and (e) assumption that our jobs problem is that we don’t innovate enough, or educate our workers enough.

The Five Year Domestic Spending Freeze

So tonight, I am proposing that starting this year, we freeze annual domestic spending for the next five years. This would reduce the deficit by more than $400 billion over the next decade, and will bring discretionary spending to the lowest share of our economy since Dwight Eisenhower was president.

This freeze will require painful cuts. Already, we have frozen the salaries of hardworking federal employees for the next two years. I’ve proposed cuts to things I care deeply about, like community action programs. The Secretary of Defense has also agreed to cut tens of billions of dollars in spending that he and his generals believe our military can do without.

I recognize that some in this Chamber have already proposed deeper cuts, and I’m willing to eliminate whatever we can honestly afford to do without. But let’s make sure that we’re not doing it on the backs of our most vulnerable citizens. And let’s make sure what we’re cutting is really excess weight. Cutting the deficit by gutting our investments in innovation and education is like lightening an overloaded airplane by removing its engine. It may feel like you’re flying high at first, but it won’t take long before you’ll feel the impact.

As we’ve seen before, nearly a century ago, freezing federal spending during a recession doesn’t help the economy turn around. The Republicans had called for a five-year federal spending freeze in 2009 as a way to pay for the Bush tax cuts, and Chris Matthews, the MSNBC host, called this Hooverism writ large: “No, because it sounds very much like Hoover. This is a doctrine which was tried in 1932 and failed. In a period of international deflation, the worst thing you can do is join in the deflation by cutting spending.”

And now our President has called for a five-year domestic spending freeze in his speech. The economists at the Economic Policy Institute have written about what the GOP’s proposed $100 billion freeze for the remainder of FY2011, and the results are quite devastating. Imagine what a five-year freeze of $400 billion in funds will do to these programs as listed here. The President is quite right when he says these cuts are painful.

Ezra Klein also correctly notes that the five-year spending freeze feels like a negotiating strategy that you’d get at the end of the process, rather than at the beginning:

In this case, they’re starting with one. The idea is that they’ll get credit with voters for being serious about cutting spending, which will both help them fend off Republican demands to go further and strengthen their hand when they argue for targeted investments in areas such as education and infrastructure.

The usual liberal critique of this approach is that starting with a reasonable compromise just means you end with a less-reasonable compromise, and the Obama administration would be better off rejecting calls for across-the-board cuts or freezes and trying to persuade Americans that the Republican approach here is wrong, and tax cuts for the wealthy are a much bigger contributor to the deficit than spending on food safety (which is true, incidentally). They might not win that fight, but maybe they’d end up with a three-year spending freeze rather than a five-year spending freeze.

I’d change the last sentence of his speech above to “Cutting the federal spending by gutting our investments in government programs is like lightening an overloaded airplane by removing its engine. It may feel like you’re flying high at first, but it won’t take long before you’ll feel the impact” of these spending freezes in our government programs. That’s what I’d say if I was the President arguing against draconian spending freezes to our government, but then again, that’s just me.

Medical Malpractice and Tort Reform

“Still, I’m willing to look at other ideas to bring down costs, including one that Republicans suggested last year: medical malpractice reform to rein in frivolous lawsuits.”

Tort reform long has been the holy grail of Republicans, insurance companies, pharmaceutical companies, HMO groups, and doctors to prevent being held accountable for victims of medical negligence. And now our President is giving this issue to the Republicans on a silver platter at the cost of those who have suffered grossly from medical negligence. This also is one of the proposals from the deficit commission which the President has embraced. The proposal was brought up as an offset to pay for the fix to the sustainable growth rate formula (SGR) which is responsible for Medicare pay cuts to doctors:

Another health wonk e-mails in to me: “I find the idea that malpractice reform would be an offset for the doc fix repugnant. Sounds like the AMA did an excellent lobbying job on the commissioners to get such a two-fer (with relatively modest scoreable savings — their staff estimate is a little high versus CBO’s previous work on this). And the other offsets are basically deeper reimbursement cuts on top of the ACA — which is hard to imagine happening when the GOP just ran against the cuts in the ACA, but maybe in a deficit-reduction proposal that would fly after all.”

Atul Gawande, which President Obama has referenced before, wrote in the New Yorker about how the tort reform law in Texas did nothing to bring down health care costs in Texas. The Republican notion that tort reform reduces health care costs is false, and it’s a popular red herring that those in Washington D.C. love to employ because it sounds good on the face, but on the underneath side of it, the facts tell a different story. Tort reform does nothing to bring down or lower health care costs, and validating that myth is unfortunately an example of neoliberalism.

The Race To The Top Education Program

“That’s why instead of just pouring money into a system that’s not working, we launched a competition called Race to the Top. To all fifty states, we said, “If you show us the most innovative plans to improve teacher quality and student achievement, we’ll show you the money.”

Race to the Top is the most meaningful reform of our public schools in a generation. For less than one percent of what we spend on education each year, it has led over 40 states to raise their standards for teaching and learning. These standards were developed, not by Washington, but by Republican and Democratic governors throughout the country. And Race to the Top should be the approach we follow this year as we replace No Child Left Behind with a law that is more flexible and focused on what’s best for our kids.”

The belief that the “Race To The Top” education program is the most meaningful reform of public schools in a generation is not a belief that is commonly held among teachers, unions, and educators. In the program, teachers are evaluated based on their students’ scores, schools that don’t perform well get turned into charter schools or end up privatized, and mass-firings of administrators and teachers in these low-performing schools. Diane Ravitch,Professor at New York University, points out the problems with the Race To The Top program, and its heavy reliance on standardized testing to measure teacher performance:

All of these elements are problematic. Evaluating teachers in relation to student test scores will have many adverse consequences. It will make the current standardized tests of basic skills more important than ever, and even more time and resources will be devoted to raising scores on these tests. The curriculum will be narrowed even more than under George W. Bush’s No Child Left Behind, because of the link between wages and scores. There will be even less time available for the arts, science, history, civics, foreign language, even physical education. Teachers will teach to the test. There will be more cheating, more gaming the system.

Furthermore, charter schools on average do not get better results than regular public schools, yet Obama and Duncan are pushing them hard. Duncan acknowledges that there are many mediocre or bad charter schools, but chooses to believe that in the future, the new charters will only be high performing ones. Right.

The President should re-examine his reliance on standardized testing to identify the best teachers and schools and the worst teachers and schools. The tests are simply not adequate to their expectations.

As you can see, there is broad disagreement over the value of the Race To The Top program, and what is worrisome is the continued reliance of standardized testing to measure teacher performance when studies have shown such measurements are not accurate.

Regulations Review

“To reduce barriers to growth and investment, I’ve ordered a review of government regulations. When we find rules that put an unnecessary burden on businesses, we will fix them. But I will not hesitate to create or enforce commonsense safeguards to protect the American people. That’s what we’ve done in this country for more than a century. It’s why our food is safe to eat, our water is safe to drink, and our air is safe to breathe. It’s why we have speed limits and child labor laws. It’s why last year, we put in place consumer protections against hidden fees and penalties by credit card companies, and new rules to prevent another financial crisis. And it’s why we passed reform that finally prevents the health insurance industry from exploiting patients. “

Rena Steinzor, the President of Center for Progressive Reform, is right when she pointed out the validation of Republican beliefs by President Obama that regulations have been an obstacle to hiring and economic growth. The repeated validation of the Republican framing on this issue isn’t helpful to advocates and those in the Democratic Party who want to fight on the side of consumers to make sure they are protected fully from potential business abuses:

The principal example of outdated regulations that the President cites is the listing of saccharin as a hazardous waste. EPA removed saccharin from the list recently, a decade after the science supporting the move came together. But in the intervening years, it’s not as if there’s evidence the regulation has been costing us jobs. Companies weren’t told to dig special saccharin waste dumps to dispose of the stuff, after all. So it’s business friendly rhetoric that has the unfortunate by-product of making the agencies sound more than a little silly, but it doesn’t make the case that outdated regulations are costing us jobs. Forcing beleaguered agencies to “look back” and find more saccharin examples will have real costs, though, because they are already pushed to their limits by funding shortfalls that give them, in many cases, the same budgets in real dollars as they had in the mid-1980’s, when the White House also was hounding them to control themselves. Does the President really intend regulators to freeze-frame efforts to solve public health crises that abound all around them so that they can engage in a draining search to placate companies already rushing to Republicans in Congress with regulatory “hit lists?”

As for the argument that we need to loosen regulation in order to create jobs, the believers in this superficially appealing bit of dogma have yet to cite research showing that regulations are slowing the economic recovery. They just serve up the assertion, in part to distract us from the hard reality that it was deregulatory fervor that got us into this mess in the first place. And while President Obama may not accept it, he’s apparently willing to let the debate be conducted in those terms.

At least this regulations review proposal has the full thumbs-up of big business groups represented by the Chamber of Commerce. Tom Donohue, the President of the Chamber of Commerce, was downright effusive in his op-ed praising the pro-business approach towards government regulations. That’s something at least.

Out-Innovate and Out-Educate

“Now it’s our turn. We know what it takes to compete for the jobs and industries of our time. We need to out-innovate, out-educate, and out-build the rest of the world. We have to make America the best place on Earth to do business. We need to take responsibility for our deficit, and reform our government. That’s how our people will prosper. That’s how we’ll win the future. And tonight, I’d like to talk about how we get there.

Because people need to be able to train for new jobs and careers in today’s fast-changing economy, we are also revitalizing America’s community colleges. Last month, I saw the promise of these schools at Forsyth Tech in North Carolina. Many of the students there used to work in the surrounding factories that have since left town. One mother of two, a woman named Kathy Proctor, had worked in the furniture industry since she was 18 years old. And she told me she’s earning her degree in biotechnology now, at 55 years old, not just because the furniture jobs are gone, but because she wants to inspire her children to pursue their dreams too. As Kathy said, “I hope it tells them to never give up.”

Now what we see here is the belief in Washington D.C., that the jobs problem stems from not having a smarter workforce ready to “out-innovate” out of this present situation. Jonathan Tasini, one of our bloggers here at Dailykos, writes ably about this mistaken neoliberal belief:

Over and over again, the people of our country hear that the solution to inadequate wages, disappearing heath care, vanishing pensions, and staggering personal debt is quite simple: get educated. It may sound right but it’s utterly phony. Hardly a day goes by when politicians or pundits don’t slip in a plug for a “smarter” workforce.

Though I’ve written repeatedly over the years about education as a phony solution, I also understand its allure. First, it appeals to our inner child because, after all, so many of us were told, throughout our school years, that if you didn’t do your homework, you wouldn’t get into college. Second, and perhaps more important, it’s an easier solution to grasp. Most of us still think of China and India and other “Third World” countries as places where massive plants turn out lower-skilled products (assembly-line electronics, clothes and other durable goods). Heck, people assume, let them have that work and we’ll just fatten up our brains and corner the market making the higher-end stuff like airplanes and biotechnology products.

Surprise. China is well on its way to making products up and down the skill level—at a fraction of the labor cost. In his book “The Chinese Century,” Oded Shenkar writes, “China’s goal, and that of its government is not merely to catch up with the major industrialized powers but to overpass them. No other developing country has sets its sights so high, and none…has laid such a detailed road map to take it there.”

Third, focusing on education means you don’t have to wrestle with the real challenge: corporate power. Offering cheaper education (personally, I advocate a free, four-year education for every person willing to work their first post-graduation year for a non-profit community group) is a whole lot easier than putting an end to so-called “free trade,” imposing some community investment demands on the flows of capital and demanding worldwide minimum standards that end the most ferocious competition based solely on wages.

Many of those currently laid off are in their late forties and fifties. Age discrimination is rampant in employment, and how will more “education” of these workers make them more attractive to those corporations? These corporations don’t want to deal with the health problem of these workers and continuing their salaries when they can get a younger person in for less the salary. Given that the unemployment rate is rather high, and is not slated to come down for a few more years, it seems odd that the focus isn’t put on these corporations to hire people, but on the workforce instead to make corporations “hire” them.

Also, along with free trade, the race to the bottom scenario keeps being employed with more jobs going overseas. We all remember how NAFTA turned out. It was heralded as bringing more jobs to America by President Clinton, and the inverse happened with a dessication of the manufacturing sector and losses in union jobs.

For a deeper look on how “more education” really isn’t the answer to the jobs problem, please feel free to read The Atlantic’s Daniel Indiviglio on the paper from the Economic Policy Institute which presents a compelling argument on this issue:

In fact, it’s pretty easy to see that education isn’t the answer to solving the unemployment problem if you make one key assumption: the unemployment problem is cyclical, not structural. This means that those unemployed today will eventually be able to find jobs in the respective industries, relying on their current skill sets. If the problem was structural, then specific dead industries segments would be responsible for the high unemployment problem, and those workers would need to develop other skills to find new work.

In his paper, Mishel argues at length that the unemployment problem is cyclical. His argument is relatively straightforward, and pretty compelling. In fact, in some ways it resembles a post here a few weeks earlier, which argued that the unemployment problem is only a little bit structural. It’s pretty clear that there simply aren’t enough job openings at this time to accommodate all of the unemployed Americans. Once the economy improves enough to spur substantial job creation, work should return in almost all industries.

Instead of putting the onus on the workers to solve the jobs problem by “educating” themselves more or “innovating” more, we need to correctly put the focus on corporations and on the economy itself.

With that said, this is my response to the neoliberal provisions of the President’s speech tonight. I am sure that there will be other diaries extolling the speech, but this is the diary for those on the flip side of that. I thank you for taking the time to read my diary, and look forward to the discussion below in the comments.

Slinkerwinks is the Director of New Media Operations at Back to Basics PAC, but the opinions in Daily Kos diaries are strictly the author’s.

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