On the economy, Obama says, ‘Washington has taken its eye off the ball’

Video: During a speech at Knox College in Illinois, President Obama said that while the economy is steadily improving, it has not completely recovered from the recession.

GALESBURG, Ill. — President Obama on Wednesday said the fragile economic recovery is being undermined by worsening partisan politics in Washington and urged the country to stand behind him as Republicans try to roll back his vision of government.

Echoing the populist themes that helped him win reelection last year, Obama angrily denounced House Republicans for opposing legislation that he says would benefit the economy and said political obstruction is hampering a steady climb out of the worst recession in generations.

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President Obama says political distractions are keeping the U.S. economy from fully recovering from the recession.

President Obama says political distractions are keeping the U.S. economy from fully recovering from the recession.

The hour-long speech broke little policy ground but introduced a less-restrained Obama ahead of a major economic debate this fall over the federal budget and the best way to ensure sustained growth.

“The stakes for our middle class could not be higher,” Obama told an audience of several hundred at Knox College, a small liberal arts school here that he visited in 2005 as a new U.S. senator.

“The countries that are passive in the face of a global economy will lose the competition for good jobs and high living standards,” he continued. “That’s why America has to make the investments necessary to promote long-term growth and shared prosperity.”

The event here Wednesday was the first in a series of speeches that Obama plans to deliver over the next two months on the economic challenges facing the country, advisers said. The president is seeking to shape the debate over budget priorities — his own and the Republican opposition’s — before a divided Congress takes up spending bills this fall.

White House advisers see the budget debate as Obama’s last chance to end the deep, across-the-board spending cuts known as sequestration before Democrats try to recapture full control of Congress next year — a long shot by most estimates. The government will shut down on Sept. 30 without passage of a new measure to fund operations, while Congress will need to raise the federal limit on borrowing by early November or risk default on the national debt.

Obama and the Republicans remain far apart on what they want to happen in the fall. The debate promises to once again pit Obama’s vision of government investment in the economy, funded by higher taxes on the wealthy, against the Republican view that sharp reductions in federal spending and the elimination of programs like the health-care overhaul will boost jobs and growth.

The president attempted to begin framing that debate Wednesday, echoing the central message of his reelection campaign against Republican Mitt Romney, a former governor and wealthy businessman whom Obama had portrayed as out of touch with the middle class. Obama is now casting House Republicans in a similar role — an approach that may do more to anger than persuade them.

“I will not allow gridlock, inaction or willful indifference to get in our way,” he said at Knox College, to rousing applause. “Whatever executive authority I have to help the middle class, I’ll use it.”

Republicans immediately mocked Obama’s remarks as a tired partisan attack from a president whose previous speeches have achieved little.

“All right, so exactly what will change? What’s the point? What’s it going to accomplish?” Speaker John A. Boehner (R-Ohio) said on the House floor Wednesday. “You’ve probably got the answer: nothing. It’s a hollow shell. It’s an Easter egg with no candy in it.”

Second-term difficulties

Obama has faced major difficulties at the start of his second term, with his approval rating slipping below 50 percent this month, according to a new Washington Post-ABC News poll. Revelations of surveillance programs at the National Security Agency, allegations of political bias at the Internal Revenue Service and broad unrest in the Middle East have largely overshadowed economic issues.

The president argued Wednesday that the government must play a role in promoting manufacturing, making college affordable, training future workers and ensuring a strong safety net to protect the middle class from calamity as the economy shifts.

His economic agenda has been challenged this year, leaving the type of goals he laid out Wednesday more aspirational than achievable. Payroll taxes increased for all working Americans at the start of the year, and he misjudged whether Republicans would allow the sequestration cuts.

And while the unemployment rate has come down from 9.8 percent to 7.6 percent over his term, there remain worrisome signs about the health of the job market, including data showing that the percentage of the U.S. population that is working has declined since his tenure began.

Obama’s message Wednesday was designed to better connect his economic prescriptions with the day-to-day concerns of the middle class, which he argues is threatened by the world’s changing economic landscape and by Republican policies. He labeled those policies “social Darwinism” in his commencement address at Knox College eight years ago, a message he echoed in spirit Wednesday.

“In many ways, the trends that I spoke of here in 2005 — of a winner-take-all economy where a few do better and better while everybody else just treads water — have been made worse by the recession,” he said. “This growing inequality isn’t just morally wrong; it’s bad economics.”

Obama said that when middle-class families have less to spend, businesses have fewer customers, and when the rich have most of the wealth, it can lead to dangerous financial bubbles.

“That’s why reversing these trends must be Washington’s highest priority. It’s certainly my highest priority,” he said. “Unfortunately, over the past couple of years in particular, Washington hasn’t just ignored the problem; too often, it’s made things worse.”

Economists say the top 1 percent of American earners have continued to benefit most from the uneven recovery, mostly because the stock market has soared past its pre-recession levels. Median income, meanwhile, has been flat at around $50,000.

Obama raised taxes on the rich at the beginning of the year, which will have a modest effect on reducing after-tax inequality.

“It’s not enough to cite positive macro trends without considering whether they’re reaching the broad swath of households whose economic prospects have been disconnected from growth for many years,” Jared Bernstein, a senior economic adviser in the Obama administration during its first term, wrote this week. “We may shift into higher gears, but if we’re zipping along through gated neighborhoods in a Ferrari with no passengers from the bottom 99 percent, we’ll still be in trouble.”

Blaming partisan ‘gridlock’

In Illinois, Obama placed much of the blame for the widening gap in wealth and the halting recovery squarely on what he described as “a sizable group of Republican lawmakers.”

“Over the last six months, this gridlock has gotten worse,” he said. “With an endless parade of distractions, political posturing and phony scandals, Washington has taken its eye off the ball. And I am here to say this needs to stop. Short-term thinking and stale debates are not what this moment requires.”

Senate Minority Leader Mitch McConnell (R-Ky.) dismissed Obama’s remarks and his economic philosophy, saying the president “can’t seem to let go of ivory tower economic theories, even after 41 / 2 years of an economy treading water.”

Republicans, McConnell said, “understand the necessity of empowering private enterprise if we’re ever going to drive a sustained recovery for middle-class families.”

Later on Wednesday, Obama appeared at the University of Central Missouri in Warrensburg, highlighting the school’s mix of academics and job-training programs. He will hit the road again Thursday for an economy-focused appearance at the port in Jacksonville, Fla.

Goldfarb reported from Washington.

 
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