President Barack Obama's speech at the Democratic National Convention was inspiring in its long-term vision but utterly depressing in what it said about the nation's ability to overcome a near-term crisis.
The thrust of Obama's address involved income mobility. He talked about "the basic bargain at the heart of America's story: the promise that hard work will pay off; that responsibility will be rewarded; that everyone gets a fair shot."
On the individual level, that "fair shot" is the ability to participate meaningfully in the capitalist system. It is not a right to be wealthy or even to be in the middle class; it is merely a promise that hard work and responsibility are enough to offer Americans a "chance to go to college, to buy their own home."
On a societal level, income mobility is essential. It is not about fairness but about the long-term sustainability of our nation. During the past 40 years, income and wealth polarization have separated us into a wealthy class and an impoverished class. A child who grows up in poverty has less and less of a chance to escape it. A child who grows up wealthy is almost assured of retaining most comforts.
It is not the financial gap that threatens the nation, but the near impossibility of bridging it.
Most of Obama's policies and proposals are aimed at providing "ladders of opportunity to this nation of dreamers." His focus on health care and education — including post-secondary education, which is a near prerequisite to reaching middle-class income — is all about income mobility.
Humanitarians can adore his proposals because they fulfill our mission to help the neediest among us. Ironically, it was GOP vice presidential nominee Paul Ryan — who would eliminate health care for millions to fund tax breaks for the wealthy — who articulated this humanitarian vision: "The truest measure of any society is how it treats those who cannot defend or care for themselves."
But political scientists recognize the disaster that awaits when a significant percentage of the people realize neither they nor their children have any way to escape poverty. Saying that America is the "land of opportunity" does not make it so.
The top 1 percent of our population holds 43 percent of the nation's financial wealth. The next 19 percent holds 50 percent. The bottom 80 percent holds 7 percent of America's financial wealth.
Since 1979, the average pre-tax income for the bottom 90 percent of households has decreased by $900, while that of the top 1 percent increased by more than $700,000. From 2009-10, the top 1 percent collected $93 of every $100 in income growth. Increases in productivity, once shared by workers and business owners, now go almost exclusively to those with capital.
So Obama's long-term vision is inspiring, not just for the poor but for those who fear the social turmoil of our developing caste system.
In the short term, however, we need to shake the lingering effects of the recession. And Obama's speech said precious little about how he would accomplish this.
The recession resulted from plummeting consumer demand. What economists have understood since the Great Depression is that the path out of a recessionary spiral is short-term deficit spending, or stimulus. Government spending replaces the loss in consumer demand. Businesses must hire employees to meet the artificial demand. The employees then have the income to buy goods, and consumer demand eventually recovers.
Obsessed by the deficit — which jumped because of the lost revenue caused by the recession, the increase in recession-related expenditures and the prosecution of two wars — the GOP opposes any stimulus. Indeed, the budget Mitt Romney supports calls for huge cuts in federal spending, an austerity approach that has had devastating results in Europe, just as it did in the United States in the early days of the Great Depression.
Obama — either not understanding the severity of the recession or not anticipating the loss of Congressional cooperation that would come in January 2010, when Democrats lost a filibuster-proof majority in the Senate — pushed through an inadequate stimulus in the early days of his presidency. It was enough to replace the drop in spending by state governments, but did not offset the massive drop in consumer spending.
Obama, along with most economists, apparently knows we need more stimulus. He repeatedly has pushed stimulus bills that died in the House.
The topic barely came up, however, in Thursday's speech. He was brimming with long-term plans, but left out the one solution America needs to get out of its immediate economic turmoil.
That leaves the American people with no way to escape the ongoing economic malaise. The GOP is ideologically opposed to the steps necessary to stimulate the economy, and Obama apparently has surrendered to an obstructionist Congress.
America is in a mess, and neither candidate is offering a way out.
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