The Economic Speech Obama Ought To Give

Mea Culpa: The president is planning a major speech in Illinois Wednesday on economic policy. You don't need a crystal ball to predict what he'll say. But here's what he arguably should say.

My fellow Americans, eight years ago, I stood here on the steps of Knox College to deliver a commencement address, and I took the opportunity to lay out my vision for economic opportunity.

The speech was an indictment of President Bush's idea of a go-it-alone "ownership society." The key to America's greatness, I argued, came from government programs like Social Security, from government regulations, and from government spending. Collective action was the beating heart of the American experiment, I said.

Two and half years later, events seemed to prove me right. The economy stumbled into a deep and prolonged recession that claimed millions of jobs. Everyone, myself included, blamed Bush's deregulation and tax cuts for unleashing a wave of recklessness and greed.

Better still, as president, I had the unique opportunity to put all those ideas I'd espoused here into action - unfettered by the opposition party - since voters not only handed me the presidency, but huge majorities in the House and Senate.

In two years, we rushed through the biggest government stimulus program in the history of the country - nearly $1 trillion. We passed a comprehensive Wall Street reform bill. We enacted ObamaCare.

The stimulus alone, I said at the time, would unleash "a new wave of innovation, activity and construction ... ignite spending by businesses and consumers" and bring "real and lasting change for generations to come."

But now I realize I was wrong. About everything.

The recession wasn't caused by deregulation and tax cuts. Bush actually added regulations faster than any president before. And his tax cuts were starting to stimulate jobs and growth once they took full effect in 2003.

The mortgage meltdown wasn't the result of too little government, but too much. The government tried to boost homeownership by forcing banks to lower their lending standards. That, in turn, caused a massive housing bubble that eventually had to burst.

And my grand experiment in Keynesian economics turned out to be a monumental failure.

We ran deficits that topped $1 trillion for four years. We spent billions on roads. We expanded food stamps and unemployment. We tried "Cash for Clunkers" to goose car sales. We piled on subsidies to higher education. We raised taxes on the "rich."

But instead of sparking growth, the rich got richer and the poor got poorer, and my policies produced the worst recovery since the Great Depression. Yes, the economy is finally growing, but at an agonizingly slow pace.

Had my policies managed to produce a merely average recovery, the economy would be $1.2 trillion - that's trillion with a "t" - bigger today. And 7.6 million more people would have jobs.

Instead of bottom-up prosperity, my policies produced the exact opposite - with gains at the top, but ongoing misery everywhere else.

The stock market has climbed and corporate profits are up. But median family income fell more during my recovery than it did during the recession itself. There are 2.7 million more people in poverty and 14 million more on food stamps.

On top of all this, over the past four years I've repeatedly witnessed the dead end of my vision for activist government - from the economic collapse of Greece to the bankruptcy of Detroit.

I now realize that had I put more faith in the free market, in the genius of the American people to solve problems on their own, rather than in Washington politicians and bureaucrats, we'd be in a far, far better place today.

So I'm no longer clinging blindly to the ideology I espoused on this spot eight years ago in hopes that someday, somehow, it will work as I'd hoped.

I am humble enough to admit when I'm wrong, and strong enough to change course. And I love this country too much to settle for economic malaise, when I know there's a better path.

It's a path our founders knew well. One that strictly limits the federal government. That entrusts the people with the freedom to make their own choices, enjoy the fruits of their own labor and accept responsibility for their own failures. And that measures generosity by personal acts of charity, not by government programs that spread other people's money around.

I now know that this path, not European-style social welfare programs, led to our incredible prosperity. And I know we've veered far from it over the past four years. But it's not too late. And getting back on track will be the singular focus of my remaining years in office. I hope you'll join me in this effort.

Thank you. And God bless the United States of America.