Bloomberg News

Obama Says U.S. at ‘Make-or-Break Moment’ in Economy Debate

December 13, 2011

Dec. 7 (Bloomberg) -- President Barack Obama, setting out the themes that will carry into his re-election campaign, said growing income inequality is damaging to the U.S. economy and leaving millions of Americans feeling that “the basic bargain that made this country great has eroded.”

Obama told an audience in solidly Republican Kansas that the nation’s tax and regulatory systems must be based on “fair play.” He criticized congressional Republicans, who he said continue pushing a “brand of ‘you’re on your own’ economics” that hasn’t worked in the past and isn’t true to American values.

“This is the defining issue of our time,” Obama said in a speech at a high school in Osawatomie, Kansas. “This is a make- or-break moment for the middle class, and for all those who are fighting to get into the middle class.”

The president’s message leading into the 2012 elections has been taking shape since Obama unveiled a jobs plan in September that made the payroll tax cut its centerpiece and called for higher taxes on millionaires to pay the cost. Obama yesterday sought to channel the populism of Theodore Roosevelt, delivering his speech in the town where the 26th U.S. president, a Republican, gave his historic “New Nationalism” address in August 1910, more than a year after he left office.

Roosevelt “knew that the free market has never been a free license to take whatever you can from whomever you can,” Obama said. “It only works when there are rules of the road to ensure that competition is fair, open, and honest.”

Reminder to Voters

Bruce Buchanan, a professor of government at the University of Texas who has written six books on presidential politics, said that, while he doubted Obama’s “populist turn” will spur action by Congress, “it’s good election-season politics to remind voters who’s on their side and who isn’t.”

The president sought to portray his opponents as defending the wealthy at the expense of middle-income Americans.

Along with cutting the payroll tax for another year, Obama wants Congress to extend additional unemployment insurance and the Senate to confirm his choice to lead the Consumer Financial Protection Bureau. Obama’s nomination of Richard Cordray to head the agency set up under the Dodd-Frank Act regulating the financial industry is being held up by Senate Republicans, who want the bureau restructured.

Congressional Republicans, Obama said, “are fighting as hard as they can” to make sure rules on financial institutions passed in the wake of $700 billion financial-market bailout in 2008 aren’t enforced.

‘Deficit of Trust’

The financial crisis and the battle over regulation “has left a huge deficit of trust between Main Street and Wall Street,” he said. “Gaping inequality gives lie to the promise that’s at the very heart of America: that this is the place where you can make it if you try.”

He said the income gap “drags down the entire economy” because many working families can’t afford what businesses are selling.

Obama made reference to the Tea Party and Occupy Wall Street movements, saying both are evidence of the dissatisfaction felt by many. He said “there are some” who want to “go back to the same policies that have stacked the deck against middle-class Americans for too many years.”

“I believe that this country succeeds when everyone gets a fair shot, when everyone does their fair share and when everyone plays by the same rules,” Obama said. “Those aren’t Democratic or Republican values; These aren’t 1 percent values or 99 percent values. They’re American values, and we have to reclaim them.”

Need for Results

Charles Cook, publisher of the nonpartisan Cook Political Report in Washington, expressed doubt that a speech in Kansas would do much for Obama’s legislation or his political fortunes.

“He needs results. We’re passed the rhetoric,” Cook said. “There’s a time when voters hit the mute button.”

While employers added 120,000 jobs to their payrolls last month and unemployment fell to 8.6 percent, the recovery remains fragile and jobs aren’t being created fast enough, according to Alan Krueger, chairman of the White House Council of Economic advisers. Wage gains were limited, restraining consumers’ ability to boost spending that accounts for 70 percent of the economy.

Gross domestic product climbed at a 2 percent annual rate from July through September, less than projected and down from a 2.5 percent prior estimate, the Commerce Department reported last month.

Kansas’s Economy

In Kansas, which has gone to the Democratic presidential candidate only five times since Roosevelt gave his speech, the state’s economic health has declined 9.2 percent since Obama took office, according to the Bloomberg Economic Evaluation of States Index, which uses data on real estate, jobs, taxes and stock prices to gauge the growth rate in 50 states and the District of Columbia. That ranks Kansas 40th in the nation.

Former Massachusetts Governor Mitt Romney, among the leading contenders for the Republican presidential nomination, criticized Obama for urging higher levies on wealthy taxpayers to pay for the cut in the payroll tax.

“The right course for America is not to raise taxes on people,” Romney said in an interview on the Fox News Channel last night. “This president has no vision for our economy.”

Obama is trying “to appeal to working-class and middle- class voters who otherwise are unhappy with the economy and the lack of new jobs,” said Stu Rothenberg, editor of the Rothenberg Political Report in Washington. “The president simply can’t afford to have the election be an up-or-down vote on his performance to date.”

In 1910, Roosevelt said that under the New Nationalism he would use “the executive power as the steward of the public welfare,” and that Congress should “represent all the people rather than any one class or section of the people.”

“The New Nationalism puts the national need before sectional or personal advantage,” Roosevelt said. “I stand for the square deal” and “fair play.”

Roosevelt ran for president again in 1912 on the Progressive ticket, garnering 27 percent of the national vote. Democrat Woodrow Wilson won Kansas and the election.

--With assistance from Steven Sloan and Kate Anderson Brower in Washington. Editors: Joe Sobczyk, Jim Rubin.

To contact the reporter on this story: Roger Runningen in Osawatomie, Kansas, at rrunningen@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net


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