There is much in the US approach that would recommend itself to our political leaders, writes NOEL WHELAN.
THIS WEEK in a major economic address at Georgetown University, US president Barack Obama took a more prose-like approach rather than his usual poetic style. In fact, the speech was specifically billed as being of the “meat and potatoes” variety – plain-spoken and explanatory rather than with glowing oratory.
His approach was one which communications experts classically advise for those making a speech or setting out an argument: tell them what you’re going to say, say it and tell them what you’ve said.
In opening, Obama pointed out that his new government had been very busy in its first 12 weeks and that while some had accused him of taking on too much, others had accused him of not doing enough.
He said he was conscious that many Americans were left wondering how the various policies and programmes fit together in a single overarching strategy designed to move the US economy from recession to recovery and ultimately back to prosperity.
He set out the purpose of his speech as follows: “So today, I want to step back for a moment and explain our strategy as clearly as I can. I want to talk about what we’ve done, why we’ve done it, and what we have left to do.
“I want to update you on the progress we’ve made, and be honest about the pitfalls that may lie ahead.”
Obama set out the key five steps in his economic strategy, namely: the stimulus package put in place with Congress and funded largely by additional borrowing; his plan to solve the problems in the financial system; his proposed partial bailout of the car-manufacturing industry; his determination to tackle healthcare funding; and, finally, his work with other world leaders in the G20 to tackle the global economic crisis.
Before dealing with each step in detail, Obama took time to explain to voters how America got into the current economic crisis, arguing that: “To understand how we get there, we first need to understand how we got here.” Unlike current leaders here in Ireland, Obama can distance himself from responsibility for America’s economic crisis, although his party cannot do so entirely.
However, it was what Obama said about “healing” the US financial system which is most interesting in the context of decisions being made here in Ireland. First, he stated bluntly that the reason why the US government has to spend money solving the banking problem is so that credit can flow again to the businesses and families who rely on it. In the US – as in Ireland – at the heart of the financial crisis is the fact that too many banks and other financial institutions simply stopped lending money.
America’s banks are currently being stress-tested to assess how much additional capital will be needed to support lending. While, like the Irish Government, Obama hoped that the additional capital the banks need might be met by private investors, he recognises, as we have had to in Ireland, that banks will require substantial additional resources from government.
To those who argue that the government should stand back and simply let banks fail, he pointed out that “whether we like it or not, history has repeatedly shown that when nations do not take early and aggressive action to get credit flowing again, they have crises that last years and years instead of months and months – years of low growth, low job creation, and low investment that cost those nations far more than a course of bold, upfront action”.
In both Ireland and America there are many who understandably think that government money would be better spent directly on families and businesses instead of banks – “where’s our bailout?” they ask – but as Obama pointed out a dollar (or a euro) of capital in a bank can result in eight or 10 dollars of loans to families and businesses – “a multiplier effect that can ultimately lead to a faster pace of economic growth”.
In the US – as in Ireland – some critics argue that the government should have stepped in and taken over major financial institutions.
They accuse Washington of coddling Wall Street. Obama’s response to such criticism was “let me be clear: the reason we have not taken this step has nothing to do with any ideological or political judgment we’ve made about government involvement in banks, and it’s certainly not because of any concern we have for the management and shareholders whose actions have helped cause this mess.
“Rather, it is because we believe that pre-emptive government takeovers are likely to end up costing taxpayers even more in the end, and because it is more likely to undermine than to create confidence.” Obama argued that governments should practice the same principle as doctors: “First, do no harm.”
I am not among those who believe that what Irish politics now needs are some Churchill or Obama-like oratorical flourishes.
However, there is much in Obama’s considered, low-key approach to this particular address which should recommend itself to our own political leaders as they set out, in the aftermath of the emergency Budget, to sell their economic strategy, and especially in seeking to explain their approach to addressing the banking crisis.