President Obama's changing economic problem definition and deficit strategy

by Keith Hennessey    (keith_hennessey@aweber.com)

President Obama's changing economic problem definition and deficit strategy

In advance of tomorrow's State of the Union address I have been rereading President Obama's major economic speeches. I had hoped to show a progression of argument, but that didn't pan out. Instead two things jumped out at me: the President's primary economic problem definition has varied widely over time, and his deficit message has changed even more.  I will attempt to summarize each in chronological order.

Here is how President Obama has defined America's primary economic problem and his policy response.  In each case the language is my paraphrase of the President's message.

• [2009-10] I inherited a mess - an economy in freefall.  My actions prevented a depression.
• [early 2009] We had a bubble-and-bust economy.  I am moving the economy from one built on financial bubbles to one built on a "new foundation" of financial reform, education, renewable energy, health care, and deficit reduction.
• [2009-10] Health care costs hurt families, businesses and the federal budget.  My bill will slow health cost growth and solve the deficit problem while insuring everyone.
• [spring 2010-present] For decades the middle class has been squeezed, owing more and making less.  My new foundation and tax increases on the rich will fix that.
• [fall 2010] The rich don't pay enough in taxes.  Let's raise their taxes.
• [early 2011] International competition: China and India have better new infrastructure than we do. Let's spend money on infrastructure, education, health care, and green jobs.
• [summer 2011] I want to fix the long-term deficit.
• [fall 2011-present] Income inequality is a huge problem and has been for decades. The rich are sticking it to the middle class.  I'm for the middle class, so let's raise taxes on the rich.

While the above list spans a fairly wide range, the arguments are at least roughly consistent with one another.  In contrast the President's policy and message on the deficit has ranged all over the map.

• [2009] We need to fix the economy first. Worry about the deficit later.
• [2009-10] Health care reform is the answer to long-term deficit problems.
• [early 2010] I'm appointing a fiscal commission to solve the long-term deficit problems.
• [early 2011] [I'm ignoring the fiscal commission and don't really have a deficit message and] I have other priorities to spend on infrastructure, education, health care, and green jobs.
• [spring 2011] I'm matching Republicans on deficits [not really] with a new budget proposal [or speech].
• [summer 2011] I want a grand bargain on the long-term deficit. I'm the centrist adult trying to work with Speaker Boehner but those crazy Tea Party Republicans won't cooperate.
• [fall 2011 - present] I want to raise taxes on the rich.

Tuesday night I'll be watching to see if the President sticks with his most recent economic problem definition and how he now proposes to address America's fiscal imbalance.

-kbh