Keith Chrostowski: Obama’s rhetoric in Kansas City speech overshadowed key economic points

08/05/2014 9:58 AM

09/01/2014 11:20 PM

It’s unfortunate that rhetorical jibes often overrun whatever substance there is in speeches by politicians.

Last week after President Barack Obama’s speech in Kansas City about the economy, the most news play went to his attack on intransigent Republicans in Congress: “Stop being mad all the time. Stop just hating all the time.”

While greeted with laughter and applause, it derailed attention from the chunks of meat in the speech. (Yes, that’s a nod to barbecue.)

The substantive parts of his speech demonstrated that he understands what happened as a result of the financial crisis, how globalization is making it more difficult to recover, and what in a large sense needs to be done. Go read it at whitehouse.gov.

Obama argued we should be optimistic about the economy. Perhaps surprising critics, while noting that solar and wind energy production is creating thousands of jobs, he practically bragged that “the world’s No. 1 oil and gas producer — that’s not Saudi Arabia; that’s not Russia — it’s the United States of America.”

And he boasted about the U.S. business climate overall: “For the first time in more than a decade, if you ask business leaders around the world what’s the No. 1 place to invest, they don’t say China anymore. They say the United States of America. And our lead is growing.”

His solutions for strengthening the economy are traditional ones that could find agreement from Americans of all ideologies. They’ve been repeated by presidents for decades:

“We should be relentlessly focused on what I call an opportunity agenda, one that creates more jobs by investing in what’s always made our economy strong … making sure that we’re rebuilding our infrastructure — our roads,our airports, our locks, our dams. Making sure that advanced manufacturing is happening right here in the United States so we can start bringing manufacturing jobs back to the Midwest and all across the country, jobs that pay a good wage. Investing in research and science that lead to new American industries. Training our workers…”

The speech was laced with praise for individual initiative. The recovery came “thanks to the resilience and resolve of the American people.” But here’s a key overlooked point: He linked a stronger middle class, and what government can do to help with education, access to healthcare and fixing roads and bridges, to the success of business.

By “making sure that hard work pays off with higher wages and higher incomes … we’re going to strengthen the middle class.… Business, by the way, will do better. If folks have more money in their pocket, then businesses will have more customers. If businesses have more customers, they hire even more workers.… But it starts not from the top down, it starts from the middle out, the bottom up.”

That’s something many don’t seem to be able to grasp.

But enough of giving the president his due because I’m from the city where he spoke. First, a minor point:

Last week it was announced that the GDP grew at a 4 percent clip in the second quarter. Consumer confidence was up, the Fed was happy, and we gained jobs again in July. Heck, even Sprint reported it made a profit.

While Obama’s timing was certainly right, let’s not get ahead of ourselves. With the 2.1 percent first-quarter contraction, overall growth this year will still be just 1.6 percent. That’s less than last year.

More importantly, the rhetoric and tone of the speech showed that Obama was intent on — and seemed to enjoy — attacking Republicans on the hot topics of the day: the minimum wage, pay equity for women, “inversions” by companies moving overseas to escape or avoid the U.S. corporate tax rate, and immigration reform.

Those issues are indeed important, but aren’t they just relatively small cogs in a sweeping “opportunity agenda”?

The minimum wage hasn’t been raised for years and as a matter of simple fairness it should be increased to at least $10.10. But not that many actually make the minimum, so its economic effect will be blunted. A raise will hardly put anyone in the middle class.

Pay equity for women will similarly help some, but its impact on the overall economy will be minor. And it needs to ultimately be solved by CEOs and in boardrooms.

Inversions should be limited through corporate tax reform. But while the latest rounds of inversions could drain $20 billion from the U.S. Treasury over the next decade, over that same time the U.S. will spend a whopping $40 trillion. That’s a 0.05 percent problem.

Hard-working new immigrants will help the economy long term. But over the short term, reform would be a blow as we absorb possibly millions of new workers.

“The hardest thing to do is to bring about real change,” Obama said. “It’s hard. You’ve got a stubborn status quo.”

But mainly what the president did with his speech here was preach to the choir and anger Republicans. It was maybe his clearest expression yet that he’s given up on working with the opposition. And while he may have good reasons for doing so, many critics say that it doesn’t seem presidential and that he just wants the issues stalemated to rally Democrats in November.

So he made the status quo that much more stubborn.

To reach Keith Chrostowski, business editor of The Star, call 816-234-4466 or email chrostowski@kcstar.com. Twitter: @keithc3

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