Obama gets it: “Robust” growth is the solution

At last! We have a political leader who has found a way to say “Deficits don’t matter under the right conditions” without becoming the target of ridicule and partisan barbs as happened to Dick Cheney. I consider that a huge and important step in the right direction.

Obama said the following in a recent interview with Bloomberg (...and thanks to William B. for the tip):

One of the biggest variables in this whole thing is economic growth.

And, most importantly…

If we are growing at a robust rate, then we can pay for the government that we need without having to raise taxes.

I give that sentence an A-minus. That puts Obama way, way ahead of all other politicians, who deserve D-minuses and F’s in the category of understanding and communicating the overwhelming importance of “robust economic growth.”

Mind you, I’m not complaining, but if I could have tweaked that sentence just a little, it would have read as follows (my tweaks are in boldface):

If the private sector is growing at a robust rate, then we can pay for the government that we need without having to raise anybody’s tax rates.

Presumably, we can all agree that "growing" means "creating new jobs, products, and services"; I hope at least that is nearly unanimous. But tweaks aside, this is very encouraging; we’re making important headway, at least rhetorically. Now all we have to do is make “robust growth” happen in reality—which requires a lengthy and important debate, to which I will be happy to contribute.

For now, however, I’d like to enjoy the moment. “Robust growth” is at last out there for us to think about and talk about with our family, friends, and neighbors, thanks to President Obama's communications skills. He's a great talker, and that's an indispensable first step.

Comments

[David L. Kendall]

Obama speaks of "the government we need" as if he or anyone else can give meaning to that phrase. Just who is "we" and just how would Obama or anyone else even define "need"?

This kind of talk makes great rhetoric for politicians, but can't bear up under even mild scrutiny. Appealing to robust private sector growth so that more government interference can be financed without raising taxes rather misses the point, don't you think?

There is no "we" that has a common and agreed "need." Instead, we are all individuals, and we all have different wants and values. I agree that Obama is more clever than most politicians, but he suffers from the same conceits as all the rest. Obama can't know what we all need, because we all don't need anything. How can such a basic point be missed by so many?

[Optimist123]

The definition of the government we need is a never-ending debate; the government we actually get is tweaked every two years. I'll never forget when the 1990s Republicans oversimplified the message demanding government spending reductions to balance the budget. The Democrats and Clinton obliged: we reduced national security spending to its lowest share of GDP since pre-WW2, which helped create the almighty surplus, which still overshadows a few things we failed to prevent while we were "saving" all that money: embassy bombings, the Cole, and 911. We worshiped at the altar of the surplus, and we got the government we deserved.

The government we need (or get) is one debate. How we can finance the government we get is a different debate, and Obama has taken a big step in the right direction. A mix of taxes and borrowing in a growing economy is no less healthy a way to finance the government than a mix of debt and equity is for a growing corporation. How ironic that the Republicans, supposedly quintessential capitalists, muffed that important point when they were in power -- and now it's one of their opponents who is at last communicating it effectively.

It's past due, it's important, and I'll take it. Obama is trying to take a red herring off the table, where it has been hogging too much of our attention and wasting too much of our time. Cheney tried, and was ridiculed. Obama tried more skillfully, and now it has a chance of succeeding. There will be time for debating spending priorities and tax policies, but now we can add one more topic: the growth effects of those.

Follow-up questions are in order, of course... such as, "Given that robust growth is a top priority, would raising tax rates on any given individual help or hurt that individual's ability to help the economy grow?"

[Bob]

Yawn. Talk is cheap. Wake me when our energy mess is being addressed without solar panels and food for fuel.

Here's my 5 month report card. This is the evidence I am weighing thus far.

Energy. F, thus far. Conserve and hunker down.

Chrysler bailout. F. Chrysler should have been vulture fodder.

GM Bailout. D. Not an F because I'll give on the systemic issues. We'll never see a return on the $50 billion though.

Stimulus plan. No grade yet.

Health care. He's focusing on insurance when we should be focusing on costs. He told the AMA no tort reform. Quick quiz grade. F.

Financial system reform. No grade yet but haven't addressed Too Big Too Fail.

Meanwhile, Bobby Jindal gets it:

http://www.ledlouisiana.com/news--multimedia/news-releases/new-american-car-company-will-make-history-in-louisiana.aspx

[bfaul]

I understand that growth is the goal. But the problem I have been having with that concept for some time is that growth requires cheap energy. Energy is cheaper at the moment, true, but that is courtesy of the economic downturn. As soon as production begins to ramp up, assuming it does, we will start to bump up against the oil supply/demand problem all over again. Growth requires more energy consumption. That only works if they can continue to supply growing energy demand. If they can't, the cost of energy (and therefore the cost of everything) goes up. How do you continue to grow with the fundamental physics working against you?

A question that hasn't been asked enough is this: What happens if we are unable to grow the economy? What happens when we have to raise interest rates to continue to be able to borrow money?

I don't think Obama is facing this realistically. I am uneasy with borrowing on the promise of growth because I don't see how we can duplicate the last two decades of growth.

[Grodge]

"Instead, we are all individuals, and we all have different wants and values."

True, to a degree. There are certain things that are "necessary" on a society-wide basis and one cannot deny the federal govt's place in regulation and funding.

Every society needs to agree with which priorities needs to be addressed on such a broad scale.

Rural electrification in the 1930's, Interstate highways in the 1950's and now universal health care (which, IMO is long overdue).

Our economic growth will be enhanced if (big IF) we can come up with a workable health care system. "System" is the operative word and currently we have just a mish-mash of standards and payment plans and only the federal govt has the reach to correct this situation.

Medicare-for-all would be better than the proposals currently being entertained, but that's a political non-starter for some unknown reason.

I wonder if Steve has any insight on how employer-based health insurance affects economic growth. What would be the effect of disengaging health insurance from the employer, like we do with auto and home and other insurance?

[beancounter]

The red herring has been government interference. No, I am not making a value judgement on government interference, nor am I saying more government interference is better in all cases. What I'm saying is for years any politician who dared talk about growth was branded as a big government type who was willing to micromanage the economy. This is why Cheney had to speak of deficit and not growth directly, and even had to trot out Reagan to shield himself. It's taken an economic disaster for the word growth to be even mentioned because it's been maligned as a synonym of government interference.

Now I have one question for anti-tax advocates; do you support a negative income tax? If lower taxes increases growth, then so-called handouts could also increase growth -- why does growth stop at zero? Of course moral hazard, but then the goal should be to prevent moral hazard rather than assume it always happens. Eventually libertarians have got to admit that they and conservatives are at odds; conservatives are pragmatists concerned with real results and real numbers who generally support some form of progressive taxation while libertarians are mainly concerned about abstract issues like personal liberty and less coersion and support no taxation. What else explains why they assume maximum growth at zero tax? Maximum growth could certainly be below zero for certain individuals, which would arouse anger and hatred in libertarians at "handouts" and "welfare" and having their "rights" violated. Obama's 250k class warfare attack is awful, but few understand McCain's attack on anybody receiving a refund cheque as a welfare bum is as bad if not far worse.

[GOCinAtlanta]

Unfortunately, Obama's policies (high taxes, cap and trade) are anti-growth.

[Optimist123]

Right; several of his policies are anti-growth. And now that he has stated publicly that growth is essentially the only way to pay for everything, he will soon have an important, either-or choice to make.

I'll be weighing in on the side advocating dumping the anti-growth populist nonsense.

[AlmostChosen]

Watch what he *DOES* not what he says.

In fact, watch what he does, not even what the *LAW* says.