President Obama frames the debate: More spending vs. tax cuts

President Obama’s much-anticipated speech Thursday on the economy didn’t lay out any new initiatives or make any new arguments. It often sounded like a recap of his first three years, or another version of the familiar “how we got here” blamefest.

But his remarks at Cuyahoga Community College in Cleveland did offer voters a clear sense of how Obama’s vision for the future differs from that of the presumptive GOP nominee, former Massachusetts Gov. Mitt Romney. Obama presented himself as the one who believes the government has to keep spending -- on education, research, infrastructure and technology. According to Obama, that spending is the way to shore up the middle class and promote upward mobility, while Romney’s approach would simply benefit those at the top of the ladder.

“I believe that you can’t bring down the debt without a strong and growing economy. And I believe you can’t have a strong and growing economy without a strong and growing middle class. This has to be our North Star, an economy that’s built not from the top down but from a growing middle class; that provides ladders of opportunities for folks who aren’t yet in the middle class....

“The race I want us to win -- a race I know we can win -- is a race to the top. I see an America with the best-educated, best-trained workers in the world; an America with a commitment to research and development that is second to none, especially when it comes to new sources of energy and high-tech manufacturing.”

The choice Obama presented is a good way for voters on both sides to view the election because it’s clear and truthful. As the Wall Street Journal’s Gerald Seib noted, there is a $6-trillion gap between Obama’s spending plan for the coming decade and Romney’s. That’s not $6 trillion in additional debt and deficits -- both men’s plans get to roughly the same place on that front. It’s a difference in how much they would spend (and tax) at the federal level, reflecting the level of services each one wants to deliver (or, in Romney’s case, rein in).

The picture Obama painted wasn’t exactly the stirring vision for the future that Democratic operatives from the Clinton administration have urged him to offer. It felt more like an update of the speeches he gave last summer, when he started promoting a package of small-bore economic stimulus proposals that largely went nowhere in Congress. In fact, a chunk of Thursday’s address was devoted to those very measures.

Those proposals stalled because of the sharp split between Democrats and Republicans over what steps to take and how to pay for them. That split is ideological and philosophical, so it seems unlikely to go away in a second Obama term without significant turnover in Congress. Nevertheless, the president argued that voters can “break the stalemate” and “determine the path that we take as a nation, not just tomorrow but for years to come.”

The spending-vs.-tax-cuts choice was a main theme of the speech, but Obama also gave a nod to income inequity. To pay for generous tax cuts for the wealthy, Romney would have to eliminate deductions that have been a boon to the middle class, such as the home mortgage deduction, Obama argued. That may be true mathematically, but Obama failed to mention that Romney has proposed cutting everyone’s tax rates by 20% -- a reduction that would more than offset the loss of the deductions for some families.

Obama also made the case that the widening income gap is at least partially responsible for the current economic doldrums. Mixing in a Keynesian argument about lackluster aggregate demand with a populist blast at the 1%, Obama argued: “What makes our economy weak is when fewer and fewer people can afford to buy the goods and services our businesses sell. Businesses don’t have customers if folks are having such a hard time. What drags us all down is an economy in which there’s an ever-widening gap between a few folks who are doing extraordinarily well and a growing number of people who, no matter how hard they work, can barely make ends meet.”

The president really doesn’t want to make this election a referendum on why the economy isn’t doing well; after all, he’s the guy who’s been at the helm. Nevertheless, he opened his remarks with a familiar litany of criticisms of his predecessor’s economic legacy: slow growth, skyrocketing fortunes for the wealthiest Americans and stagnating income for the working class, mounting household debt, reckless lending and investing enabled by lax regulation.

He also tried to claim that his record in creating jobs was better than President Bush’s. According to Obama, U.S. businesses created more than 4 million jobs in the last 27 months, more than were created “in the entire seven years before this crisis.” But that’s so impressive considering how many of those positions merely restored jobs that were among the 9 million lost during the recession.

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