It Is Still The Economy, Stupid (Part 2)

President Obama called out the proponents of "laissez-faire" capitalism in Congress and among the Republican presidential candidates in a speech in Osawatomie, Kansas designed to echo Theodore Roosevelt's "New Nationalism" speech to set the stage for future battles in Congress and the 2012 election.

In his speech in 1910 Teddy Roosevelt established the philosophical basis for progressive politics: 

Roosevelt stated:

"The American people are right in demanding that new Nationalism without which we cannot hope to deal with new problems. The new Nationalism puts the National need before sectional or personal advantage. It is impatient of the utter confusion that results from local legislatures attempting to treat National issues as local issues. It is still more impatient of the impotence which springs from over-division of governmental powers, the impotence which makes it possible for local selfishness or for legal cunning, hired by wealthy special interests, to bring National activities to a deadlock. This new Nationalism regards the executive power as the steward of public welfare. It demands of the judiciary that it shall be interested primarily in human welfare rather than in property, just as it demands that the representative body shall represent all the people rather than any one class or section of the people … .

I believe in shaping the ends of government to protect property as well as human welfare. Normally…the ends are the same, but whenever the alternative must be faced I am for men and not for property… ."

In his speech President Obama embraced the progressive philosphy espoused by Roosevelt that emphasized the importance of shared success by creating opportunities through national economic policies that raise people up; he rejected "trickle down" economic theories that the prosperity of the elite and the invisible hand of the market will correct economic ills and spur growth. He noted that lowered taxes on the wealthy and deregulation  had not worked in Teddy Roosevelt's day, before the Great Depression and during the George W. Bush Administration, when wages stagnated, deficits grew and the concentration of wealth in the top .1% grew by 400%. The President called for programs to spur the economy and support those in need based on the economic principles of John Maynard Keynes while also promoting a governmental role grounded in regulation for the public welfare and progressive taxation championed by Teddy Roosevelt, who confronted "the Robber Barons" of his day.

The President drew direct comparisons between today and economic crises in the past:

"Now, just as there was in Teddy Roosevelt’s time, there’s been a certain crowd in Washington for the last few decades who respond to this economic challenge with the same old tune. “The market will take care of everything,” they tell us. If only we cut more regulations and cut more taxes - especially for the wealthy - our economy will grow stronger. Sure, there will be winners and losers. But if the winners do really well, jobs and prosperity will eventually trickle down to everyone else. And even if prosperity doesn’t trickle down, they argue, that’s the price of liberty.

It’s a simple theory - one that speaks to our rugged individualism and healthy skepticism of too much government. It fits well on a bumper sticker. Here’s the problem: It doesn’t work. It’s never worked. It didn’t work when it was tried in the decade before the Great Depression. It’s not what led to the incredible post-war boom of the 50s and 60s. And it didn’t work when we tried it during the last decade.

Remember that in those years, in 2001 and 2003, Congress passed two of the most expensive tax cuts for the wealthy in history, and what did they get us? The slowest job growth in half a century. Massive deficits that have made it much harder to pay for the investments that built this country and provided the basic security that helped millions of Americans reach and stay in the middle class - things like education and infrastructure; science and technology; Medicare and Social Security.

Remember that in those years, thanks to some of the same folks who are running Congress now, we had weak regulation and little oversight, and what did that get us? Insurance companies that jacked up people’s premiums with impunity, and denied care to the patients who were sick. Mortgage lenders that tricked families into buying homes they couldn’t afford. A financial sector where irresponsibility and lack of basic oversight nearly destroyed our entire economy.

We simply cannot return to this brand of you're-on-your-own economics if we’re serious about rebuilding the middle class in this country. We know that it doesn’t result in a strong economy. It results in an economy that invests too little in its people and its future. It doesn’t result in a prosperity that trickles down. It results in a prosperity that’s enjoyed by fewer and fewer of our citizens."

For a full transcript of the speech:  http://news.talkingpointsmemo.com/2011/12/obamas-teddy-roosevelt-speech---full-transcript.php?ref=fpblg