Next Thursday, September 8th, 2011 president Obama will give one of the most important speeches of his tenure: a national speech on economic issues. The focus is on jobs. We have all felt the effect: We may out of work, stuck in a bad job or know a close friend or relative who is unemployed. We all know the stats: Black unemployment is 16.7%(20% for Black men); national unemployment is 9.1%, inflation adjusted median wages have been stagnant for 20 years.
There are some small to medium sized problems. However making it all worse, for the president, is a group of people who are willing to exploit the tough times for their own ideological or political benefit.
This is the environment the President faces when he gives his speech.
So I give you three views: The speech we would like to hear, the speech we will probably here and a third speech called what actually makes sense.
1) "Today, as your president, I am announcing, with congressional support, a major fiscal policy imitative to put people back to work. When, we have a national underemployment rate of greater than 15% and a minority unemployment higher than 20% in some areas, it is time to act. American cannot waste it most value resource: the potential of it's people.
The initiative will fund short and long-term employment, training and skills development in four critical areas of our economy: improving infrastructure, fixing residential real estate, improving schools and reducing the cost of healthcare. We are going to get the poor and under employed working to build this country.
Coupled with this we are proposing additional revenue increase on upper income individual; a fairer tax system which eliminates corporate tax loop holes and does not reward financial speculation; and reduces spending on the military, social security and medicare. 'Everyone is going to have to pay a little more and get a little less, but the most vulnerable will be protected.' Thank you and God bless america."
2) "Today, my fellow citizens, the US has a little bit of a problem creating jobs. But it is nothing really to worry about. So, we are asking congress to fix the tax code, fund the infrastructure bank, let the bush tax cuts expire, and make the payroll tax cut permanent. We can get through this together but no one has to give anything up. Thank you and God bless america. "
3) "Today, my fellow citizens, the USA faces some small but important and difficult policy choices about our long-term society. Many of the issues are complex and will affect subsequent generations. However, the issues have been faced before, so we have some guide as to how to handle the job crisis.
A) Additional Fiscal stimulus: Fiscal policy does work. Basic economic theory tells us that cutting fiscal policy at the time of recession extends the recession. Now is the time for fiscal stimulus. Government money is not wasted on jobs (wage, benefits, skill development) unless the discounted return is less than the investment. And that is purely the financial view, it does not count important non financial returns (defense, law enforcement, education, R&D). We must spend money on the most job creating areas.
B) Investment: Now is also the time to borrow money for long-term national investments. The world is willing to lend the US money at near zero rates. So any national investment that pays above 0% return is a good deal. One the list would be fixing the residential real estate market, promoting energy efficiency / green energy; transportation spending; education; health-care cost reduction and national R&D.
C) Taxes: A simplified tax code that rewards value added activities like manufacturing, R&D and not financial manipulation and tax avoidance.
D) Government Spending: When the jobs crisis is over the US must look at the huge amount of defense spending, total health care costs and public retirement benefits.
E) Changing the model: My fellow Americans, this one is the most difficult areas to discuss. In order to develop the society we want, we must make some small changes to our economic model to compete in the 21st century. We must return to a time when the US led the world in innovation, made things and paid good wages. We must shift from society based on material consumption to a society based on innovation and service consumption. We must shift from a winner take all model built on financial gamesmanship to model where prosperity is more broadly based. It boils down to how can we make a society that is happy, harmonious, and relative fair for as many people as possible.
I call on the wisdom, intelligence and generosity of the American people to lead this fight. Thank you and God bless america."
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