Obama's Oddly Revealing Economic Speech

Listening to Barack Obama's economic speech yesterday, I was reminded of a scene from The Princess Bride where two of the characters have a battle of wits over which of two cups of wine also contains poison:

The Man in Black: You're trying to trick me into giving away something—it won't work.

Vizzini: It has worked—you've given everything away—I know where the poison is.

What should have been a fairly routine rehash was quite, though perhaps unintentionally, revealing. Here is what I learned:

1) Obama thinks climate change is gradually becoming a political negative. Obama's climate-change plan would make reducing carbon emissions the fundamental organizing principle of the American economy. But he mentioned it only once in his long speech on economic policy—and merely in passing at that. Can you imagine a Reagan speech in 1980 with only a single, brief mention of tax cuts? But you can't really blame Obama. Do people actually want to hear about why they should be paying even more for energy with gas at $4 a gallon?

2) Obama will try to make Bush responsible for the housing crisis. Now it's one thing to say Bush hasn't responded forcefully to the housing downturn. Perhaps. But to actually blame him for an asset bubble more likely caused by a combo of record-low interest rates, Clinton-era housing policy, and plain old human greed? That seems a stretch. I mean, was Bill Clinton to blame for the bubble in tech stocks?

3) Obama is playing the Social Security card. He's losing older voters, like those in Florida, to John McCain, so Obama is apparently taking a hard line on SS—no benefit cuts, no extending the retirement age. Just raise taxes on younger Americans—you know, all those folks making laudatory YouTube videos about him.

4) Obama is playing the populist card. Plenty of liberal and conservative economists think corporate taxes make little sense. They hurt national competitiveness and reduce worker wages. Yet Obama views cutting taxes on employers—using controversial Exxon Mobil as the poster company for all of corporate America—just the same as cutting taxes for wealthy folks. He could easily pay for corporate tax cuts by using the proceeds from his carbon cap plan, but those trillions are already promised elsewhere in his plan.

5) Obama believes government spending makes an economy grow. I didn't hear anything about what government can do to lessen the tax or regulatory burden on investors or employers, only about how Uncle Sam can spend money on research and infrastructure investments that will supposedly create 5 million green jobs. Hey, if the government spends billions on anything, jobs will be created. That's no biggie. But you are only shifting jobs from elsewhere in the economy. New jobs are not the same as net new jobs.