Barack Obama can't give a bad speech. His voice and smooth delivery are enough to wow most observers. The "listening meter," if that's what it's called, on MSNBC indicated that throughout the speech, both Republicans and Democrats gave him consistently high marks. If the objective was to calm fears and provide hope, he may have succeeded with the broad public.
The chatter on Wall St. this morning is less effusive. The talking right-wing head nuts on CNBC say he still is lacking details. But given their political biases and lack of journalistic integrity, that shouldn't surprise anyone. "Wall St.," by their interpretations, is what the market does today, this hour, this minute.
(I've actually heard someone on CNBC say during a speech that the "market reacted positively to so-and so's speech," when all it did was tick up a couple of points. They are financially ADD, with both the attention span and the intellect of gnats. But that's another story.)
A speech with details of his banking solution would probably have been wasted on most listeners. Hope and confidence is are what's missing right now, so it's understandable that he would focus on those broad themes.
But I had the feeling throughout the speech that there was nothing new here and that he wasted an opportunity to explain things in ways that would have restored confidence not just in the public’s own fortunes but more precisely, in their confidence in him.
He tried to channel FDR's first fireside chat in his explanation of the credit markets.
You see, the flow of credit is the lifeblood of our economy. The ability to get a loan is how you finance the purchase of everything from a home to a car to a college education; how stores stock their shelves, farms buy equipment, and businesses make payroll.
But credit has stopped flowing the way it should. Too many bad loans from the housing crisis have made their way onto the books of too many banks. With so much debt and so little confidence, these banks are now fearful of lending out any more money to households, to businesses, or to each other. When there is no lending, families can't afford to buy homes or cars. So businesses are forced to make layoffs. Our economy suffers even more, and credit dries up even further.
But after that, there were wasted opportunities. When he talked about the danger of the economy struggling for years if we don't act boldly, that would have been a good time to better explain how that spiral worked in the "lost decade" in Japan. He might also have talked about how China is moving much more aggressively in infrastructure spending to support its economy, as a way of preparing the public for more such spending.
He emphasized his willingness to confront the banking industry, but could have also talked about what this teaches us about the lack of fairness and balance in our economic system. It's not just the CEOs, but the entire management teams and highly paid traders and brokers who have proven themselves incompetent. It He could have drawn the parallels between the debate of the financial crisis and the auto industry crisis. The financial elite argue that only the banking elite can lead us out of the problem they got us into and that we shouldn't punish those on Wall St. who benefited from irresponsible risk, while at the same time, these apologists want auto workers to sacrifice for the bad decisions of top management. If auto workers must work for less, why not traders? He might also have pointed out that what this entire economic collapse has taught us is that huge compensation packages don't guarantee competent management.
He might also have pointed out that boards of directors bear partial responsibility for this debacle. Too often, they are simply cronies of the management who are paid lavishly to attend a few meetings and fail their fiduciary duties of oversight. They, too, must be held accountable, and the system for choosing boards and holding them responsible must be changed.
He also could have given us greater assurances and explained how we all benefit when we help responsible home owners keep their homes. A missing piece is his home financing plan is some sort of give back to the taxpayer when prices recover. Not all the benefit should go to the homeowner.
He needs a better explanation of why healthcare, energy, the banking industry and education are interrelated and why it's imperative that we take this opportunity to address the systemic problems. A few anecdotes that explain the interconnection would have helped.
He also needed to make the case for government. Those who say keep government out of our lives are selective in their criticism. I wonder how many of the free market advocates would be OK with removing all tax deductions for business expenses. True free markets would mean if you buy someone lunch to close a business deal or equipment to improve your processes, that money comes off the bottom line. Taxpayers will not subsidize those expenses. Of course, that would provoke a right-wing hue and cry. They like government involvement when it serves their purposes. Government is already integral to the economy. We are not trying to increase government involvement; we are simply trying to make it fair for everyone.
He could also have tied energy development to the stimulus bill. We are not only improving our competitiveness, we're putting people to work. He did it a bit but not to the extent I think necessary. Explain the extent to which developing "technologies like wind power and solar power; advanced biofuels, clean coal, and more fuel-efficient cars and trucks built right here in America" puts people to work, the kinds of jobs it requires and the connection to his education programs.
In his health care discussion, I wish he had said, "While we have the most expensive health care system in the world, it is far from the best. We don't live as long as people in other countries and our infant deaths are higher than other nations. We need to not only decrease costs; we need to improve our results."
In his discussions of taxes, he should have put it in historical perspective. At the end of WWII, we were in a similar situation. Our debt was even a greater portion of our GDP. We came out of it by investing in infrastructure and transforming our economy. And we did it when we had tax rates much higher on the wealthy. Much higher than Obama is proposing. Taxes, as former Republican advisor Mark Zandi has pointed out, have a minimal impact on the economy. Minor changes in the tax code also do not impact investing, despite the right's argument to the contrary. You can't argue that changing an investor's return from 100% to 98% is going to cause them to stuff their money in a mattress.
I wish he also had not reinforced the idea that Social Security is in peril. As Robert Kutner pointed out in yesterday's op-ed in The Washington Post, that's a minor problem that he easily fixed when we reinforce the value of work and level the compensation playing field. Obama could also have more clearly related the Medicare problem to the ineffective, costly system of health care we have today.
The president's three stories toward the end of the speech were effective. I wish there were more of them to explain the problems we have. The end was also effective, challenging Congress to live up to its expectations.
Obama has a gift for delivery, but I'm not so certain it he takes full advantage of it. Financial issues make most of our eyes glaze over. We need someone to explain things -- and himself and his policies -- more effectively if his significant support is to continue.
