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Obama’s Laborfest Speech Hails Infrastructure Spending

In remarks at Milwaukee Laborfest, President Obama outlined his plan for immediate infrastructure spending, while Republican leaders immediately attacked the idea.

Taking on a populist tone in advance of midterm elections that look gloomy for the party in power, Obama said that “for generations, it was the great American middle class that made our economy the envy of the world. It’s got to be that way again.” He denounced the trickle-down theories of the past, the policies of “rewarding greed and recklessness,” and put forward the infrastructure strategy as part of a “new foundation” for economic growth in the short and long term. While he said that the Recovery Act kicked off these investments, in areas like the smart electrical grid and broadband Internet rollout and high speed rail, one in five construction workers remain out of work “at a time when there is so much of America to rebuild.” So this is how he pitched his bid to use that excess idle labor:

Over the next six years, we are going to rebuild 150,000 miles of our roads – enough to circle the world six times. We’re going to lay and maintain 4,000 miles of our railways – enough to stretch coast-to-coast. We’re going to restore 150 miles of runways and advance a next generation air-traffic control system to reduce travel time and delays for American travelers – something I think folks across the political spectrum could agree on.

This is a plan that will be fully paid for and will not add to the deficit over time – we’re going to work with Congress to see to that. It sets up an Infrastructure Bank to leverage federal dollars and focus on the smartest investments. It will continue our strategy to build a national high-speed rail network that reduces congestion, travel times, and harmful emissions. It will cut waste and bureaucracy by consolidating and collapsing more than 100 different, often duplicative programs. And it will change the way Washington spends your tax dollars; reforming the haphazard and patchwork way we fund and maintain our infrastructure to focus less on wasteful earmarks and outdated formulas, and more on competition and innovation that gives us the best bang for the buck.

All of this will not only create jobs now, but will make our economy run better over the long haul. It’s a plan that history tells us can and should attract bipartisan support. It’s a plan that says even in the still-smoldering aftermath of the worst recession in our lifetimes, America can act to shape our own destiny, to move this country forward, to leave our children something better – something lasting.

John Boehner got an early response in to this proposal today, saying that “If we’ve learned anything from the past 18 months, it’s that we can’t spend our way to prosperity.”

Of course, in the long term, this policy would represent no spending at all. The President wants to front-load some spending and pay for it on the back end, perhaps by eliminating fossil fuel subsidies (something every industrialized nation in the world agreed to at the G-20 summit in Toronto this summer). That front-loaded spending, about $50 billion dollars, would perhaps decrease the unemployment rate by 0.3% in the first year, provided such spending can actually be ramped up in that time frame. Brad Delong calls this, along with the other rumors like an R&D tax credit (something that always gets renewed every year anyway, and won’t represent a stimulus at all), another “Obama bunts” policy.

Don’t get me wrong: boosting federal infrastructure spending is almost certainly a very good idea. Tax cuts for “small business” much less so–unlikely to reduce wedges between social and private returns on a micro level, and likely to have a low bang-for-buck on the macro level.

But the thing that stands out–again–is the radical disjunction between the scale of the economy’s problems and the proposed solution. And so the press corps, rightly, says not that Obama proposes plans to fix the economy but that he proposes “a pre-election effort to show he’s trying to stimulate the sputtering economy.”

What’s more, Republicans fiercely oppose it even at the “Obama bunts” level – meaning that a policy that doesn’t just nod but forcefully flies in the right direction might as well be employed, because that’s what the other side will call it anyway.

I agree with DeLong. A national infrastructure bank is a very sound policy. So is canceling the fossil fuel subsidies. But, we’re in a crisis. And these policies don’t really reflect that.

Later in the speech, Obama engages in some fiery rhetoric, specifically saying Republicans are running on “No We Can’t”, specifically charging that they would rather score political points than solve problems, specifically echoing Ted Kennedy: “what is it about working men and women that they find so offensive?” He’s definitely in campaign mode, actually mentioning who broke the economy (“I’m not bringing this up to re-litigate the past; I’m bringing it up because I don’t want to re-live the past”) and saying they have no new ideas to offer but tax cuts for millionaires and ending of all regulation. He added a nice little rousing slogan at the end, saying that Americans don’t quit and “we will rise or fall together – as one nation, and one people.” All very inspiring.

The reality of what he’s running on is quite a bit smaller than the campaign rhetoric.

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Obama’s Laborfest Speech Hails Infrastructure Spending

David Dayen

David Dayen