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by Mary Kate Cary
Can the president have Reagan-like tough-mindedness on spending and unemployment?
In January 1953, President Eisenhower nominated Charles Wilson to be secretary of defense -- not the Charlie Wilson from Charlie Wilson's War -- but the then CEO of General Motors. During his confirmation hearings, Wilson was asked if, as secretary, he would be able to make a decision that was adverse to the interests of General Motors. Yes, he said, but added that he couldn't conceive of such a situation "because for years I thought what was good for the country was good for General Motors, and vice versa."
Over the years, that rather humble quote morphed into its current version: "What's good for GM is good for America." These days, better make that "What's good for GE," as in General Electric -- home of the chief of the president's new Council on Jobs and Competitiveness. The president has done away with the Economic Recovery Advisory Board headed by former Federal Reserve chair Paul Volcker and gone instead with the new council led by Jeffrey Immelt, GE's chief executive. He's switched from a banker working on recovery to a manufacturer working on jobs -- in his own version of "repeal and replace."
Think of all the people President Obama didn't choose: Ideas were floated that included a New York Times columnist, professors of economics, a former labor secretary, and even union leaders. Instead, the president went with a lifelong Republican whose company last year made a $15 million donation to the Reagan Library.
Speaking at that library last spring, Immelt said that America needs the former president's optimism and tough-mindedness as it works its way out of the recession. "It's time for this generation, my generation, to accept the responsibility of every generation: to create a more prosperous America than we inherited by solving problems that became acute during our watch," he said, listing the deficit, healthcare, and energy. You may recall that Ronald Reagan hosted General Electric Theater in the 1950s and early 1960s, but Immelt's admiration for Reagan is about more than an old TV show. Like Reagan, Immelt comes across as optimistic and tough-minded at the same time.
Immelt's appointment marks a turning point for Obama, whose economic team had comprised mostly university professors, former Senate aides, and think tank types with Ph.D.'s in economics -- folks who had never run a business. They were the perfect example of the phenomenon, made famous by futurist Herman Kahn, known as "educated incapacity." It explains the inability of highly trained experts to understand or even perceive a problem outside of their narrow focus. In this case, the Obama economic team was schooled in nothing but big-government solutions to economic difficulties.
That explains why, when then Speaker Nancy Pelosi called for an extension of unemployment benefits because "it injects demand into the economy" and "creates jobs faster than almost any other initiative you can name," White House officials didn't bat an eye. None of them had ever run a business that actually created jobs. They, like Pelosi, thought unemployment benefits created jobs. Most voters -- "untrained" but far better schooled in the real world -- knew that small businesses, not government handouts, create jobs and they voted accordingly in the midterms.
The president seems to have gotten the bigger midterm message. Obama also named Bill Daley as the new White House chief of staff. Daley has an extensive résumé of actual business experience and was Bill Clinton's secretary of commerce. He could help move the administration away from its previous penchant for massive deficit spending, Keynesian advisers, and anti-business rhetoric.
He and Immelt may already be having an effect.
Think back to last year's State of the Union address, when Obama criticized the Supreme Court for allowing elections to be "bankrolled by America's most powerful interests." He spoke of the cynicism that grows "each time a CEO rewards himself for failure or a banker puts the rest of us at risk for his own selfish gain." The anti-business, class warfare tone for several weeks afterward was unmistakable, and Obama's poll ratings last spring reflected voters' disapproval. I doubt Daley will allow that to happen twice.
In fact, this year's State of the Union, the president took a decidedly pro small business tone, sounding almost Republican at times on tax policy, immigration, and education. But he dropped the ball when it came to reducing our massive debt, saying his deficit reduction commission had made "important progress" but then not endorsing its recommendations. Instead he called for more "investment" -- in other words, spending -- as if happy days were here again. The contrast between his remarks and House Budget Committee Chairman Paul Ryan's response couldn't have been more stark.
The next few months will give the president an opportunity to show he's a new man when it comes to business. Will he include other manufacturers and business owners in his "kitchen cabinet"? Will his economic team continue their pro-business approach, or is this a fluke? Will he actually rein in spending on entitlements, or just continue to pay lip service to the fiscal responsibility we need for long-term economic growth? If he won't control spending, it seems clear Ryan will.
At the 1960 Democratic National Convention in Los Angeles, the historian and Kennedy aide Arthur Schlesinger Jr. wrote in his diary: "Under Truman the essence of the Democratic appeal was to promise benefits; under Kennedy it is to demand sacrifices." Under Obama, I'm not sure what the Democratic appeal is. Perhaps it is to promote government "investment" and innovation. One thing it isn't -- and that's to demand sacrifice for our children's sake.
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