The New Center: Progressive Government

The man can give a speech. Confident, relaxed, bold, serious, President Obama made his case to the American people with boffo reviews from all who saw it from both parties.

And that case was a clear and bold statement of the need for progressive government as the vital instrument to move us out of this crisis and into the future. The recovery plan to put people back to work. Banking reform and “new rules of the road” to get banks working once more. The mortgage initiative to help homeowners stay in their homes.

But more, the need for sustained public investment and leadership to move us into the future with new energy, reform of our broken health care system, and provision of a world class education from birth to a career for every child.

He vowed to bring the deficit down – once recovery begins – to half of its current levels by the end of his term. A return to growth will do most of that. Every other choice was a progressive one: savings from Cold War weapons and no-bid military contracts, from billions provided insurance companies to compete with Medicare, from agribusiness (and unspecified education programs that don’t work). And then progressive taxes – reversing the Bush tax cuts for those making over $250,000, ending tax breaks for companies taking jobs abroad (and unmentioned in the speech, sustaining the estate tax and raising the capital gains tax). He also called for moving now on cap and trade on carbon emissions – and his budget will project revenue from this effort, so he won’t just let companies pocket the proceeds.

The signature riff, to my mind, was his argument that activist government is as American as apple pie.

“I reject the view that says our problems will simply take care of themselves, that says government has no role in laying the foundation for our common prosperity, for history tells a different story.
“History reminds us that, at every moment of economic upheaval and transformation, this nation has responded with bold action and big ideas.

In the midst of civil war, we laid railroad tracks from one coast to another that spurred commerce and industry.

From the turmoil of the Industrial Revolution came a system of public high schools that prepared our citizens for a new age.

In the wake of war and depression, the G.I. Bill sent a generation to college and created the largest middle-class in history.

And a twilight struggle for freedom led to a nation of highways, an American on the moon, and an explosion of technology that still shapes our world.

In each case, government didn't supplant private enterprise; it catalyzed private enterprise. It created the conditions for thousands of entrepreneurs and new businesses to adapt and to thrive.
We are a nation that has seen promise amid peril and claimed opportunity from ordeal. Now we must be that nation again.

Providing the Republican contrast, Louisiana Governor Bobby Jindal argued simply that government can’t work. Don’t do investment; do tax cuts. In the end, as the governor said, “It comes down to an honest and fundamental disagreement about the proper role of government.”

Republicans scorn common purpose and the need for government to set rules for markets. That may be a hard sell in an economic collapse triggered by speculative excesses of a deregulated financial system.

Solve the Problem

The president says it is time to act “wisely and boldly.” But there is good reason to doubt whether his program is bold enough and big enough to solve the problems that we face.

The stimulus is too small and too weak, diluted by ineffective tax cuts that will produce few jobs. His banking plan has not yet taken the bold action needed to reorganize the major banks and put the zombies out of their misery. His mortgage plan will both spark populist outrage across the country and do too little to put the floor under housing prices.

By focusing on halving the deficit by the end of his first term, the president is making heroic assumptions that the recovery will be firmly underway two years from now and can be sustained while the federal government removes, say, a trillion dollars in demand over the next two years. This seems unlikely and the commitment to get there is dangerous. It could set up a repeat of the mistake made by Roosevelt in 1937 and the Japanese during their lost decade of the 1990s, when leaders eager to get deficits under control moved to raise taxes and cut spending too soon and drove the economy back into decline.

In attempting to provide hope, the president must avoid misleading people about the depth of the hole we are in.

Virtually absent from the speech was any discussion of foreign policy. But the costs of retaining troops in Iraq and escalating our presence in Afghanistan could mire this administration in a costly quagmire that sinks its domestic hopes and consensus. Lyndon Johnson’s war on poverty was lost in the jungles of Vietnam. We must work to insure that Obama’s investment in America’s future isn’t squandered in the mountains of Afghanistan.

The President demonstrated clearly that he is a leader who can educate and inspire Americans. And he uses that mastery to make the case for a progressive and active government investing in our future. No longer will the president scorn the government that he leads.

Views expressed on this page are those of the authors and not necessarily those of Campaign for America's Future or Institute for America's Future