Pethokoukis, Economics, U.S. Economy

What does Obama really think has gone wrong with the US economy?

Image Credit: http://www.youtube.com/watch?v=UZdl44R6HEQ

Image Credit: http://www.youtube.com/watch?v=UZdl44R6HEQ

Maybe President Obama should have given a heroin speech. Well, not exactly a speech on dangerous drug use. But maybe his State of the Union address should have been less a laundry list of stuff Congress won’t pass and more a thematic explainer. That’s what Vermont’s governor did recently when he devoted an entire State of the State message to heroin and opiate addiction.

Obama has called too much income inequality and too little upward mobility the “defining challenge” of our time. But while he certainly talked about those topics, he sort of skimmed over causality and fast forwarded to his small-bore policy ideas. Not that all those ideas are unwise. Raising the maximum Earned Income Tax Credit  and making it available to more low-wage workers was one of the better ones. So was extending emergency unemployment insurance. And a business tax-infrastructure petite bargain continues to be a potentially intriguing swap. Still, while he was ticking off proposals, too bad Obama didn’t offer the sort of comprehensive, pro-work unemployment insurance reform that AEI’s Mike Strain has been developing.

More importantly, Americans could have used a more thorough briefing from the former University of Chicago instructor on the deep structural forces behind inequality and immobility, how they relate to each other, and how they might play out going forward. Checking out the recent blockbuster study from the Equality of Opportunity Project would have given the president and his speechwriters a lot to talk about, other than a bit of boilerplate about technology and globalization. The EOP study concluded, for instance, that  the “fraction of children living in single-parent households is the strongest correlate of upward income mobility” among all the variables the research team explored. Not high-end income inequality. But Obama mentioned “family” in any context only twice during his speech, reflecting the liberal-left belief that there is no substantive remedy for family breakdown.

The EOP study also focuses on K-12 education. But this issue is a blind spot for may folks on the left. National Journal’s Josh Kraushaar: “Left unmentioned are the efforts on the supply side—expanding school choice, improving teacher quality, and strengthening curriculum. In most poor, city neighborhoods, students are locked into failing schools, with few options for parents to turn to. Unions are invested in protecting an educational monopoly, fearing that increased competition could drag down salaries and threaten employment for less-than-qualified teachers.” Would have liked to have heard that sort of thing from Obama. But, you know … .

Finally, Obama should have made clear that the impact of technology and globalization is an ongoing story. These macro forces, particularly, automation, will continue to alter and shape the US labor market, as outlined by economists such as Tyler Cowen and Erik Brynjolfsson. And even more so in the future than up until now. And this will require a rethink about what people should expect from a career and how to go about creating a fulfilling one when machines can do most of the routine work. With that understanding, what to do next about education, entrepreneurship, the safety becomes a bit clearer. And then Washington can really offer an agenda appropriate in scale to the defining economic challenges of our age.

Follow James Pethokoukis on Twitter at @JimPethokoukis, and AEIdeas at @AEIdeas.

9 thoughts on “What does Obama really think has gone wrong with the US economy?

  1. James:
    More of the same leftist fist pounding from an empty, empty, empty suit. Wake me up in a couple of years when this nightmare ends.

  2. The title of this article is not the most important question. Rather, the most important questions are: What was wrong with the economy when Obama first came to office? And what has Obama done to change what was wrong? Those on the Left answer the first question by saying that the economy is not under the democratic control of the workers. The Left’s answer to the second question is Obama has done nothing to fix the problem.

    At the same time, when those on the Right say what they have proposed to improve education, the Left would say that there is more to include than the talking points which the Right has declared. Does “improved” teacher quality result in paying teachers fairly? Does school choice either avoids taking resources away from public schools or offer enough resources for every child? And what is the Right proposing to fix the non-school issues of public education?

  3. Obama apparently thinks the economy is doing fine. Hence why he can expand additional federal programs and federal employment numbers.

    I don’t think the President genuinely views unemployment as a problem.

  4. But incomes have been rising and crime falling for the last 50 years…this is success not failure (the Great Recession a Fed-induced aberration).
    The federal givernment has no role in promoting families or religion.
    Families have been dissolving along with church attendance and we are better off than ever.
    Free markets in large modern nations may in fact speed family dissolution and increase secular perspectives.
    Is this a concern?

  5. Both Clinton and Obama quickly lost their Congressional majorities. Clinton chose to work with Republicans to reduce the size of government, create growth and jobs, and thus create prosperity. Obama sees his goal as growing government, not growing the economy.

    We no longer have a free market economy, we have government spending 40% of it, and regulation compliance costs of another 10-20%. The stumbling economy suits Democrats just fine because they can buy additional votes with the increasing power of government and welfare they push as solutions or bandaids.

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