Michael Hudson Shreds Obama’s Orwellian Speech on Middle Class Prosperity From Yves Smith of Naked Capitalism

Michael Hudson was so incensed by what he called a “Blairesque” speech by Obama on Wednesday that he took it upon himself to comment on its all-too-frequent sleights of hand and outright fabrications. However, you’ll also notice that the speech contained so much bullshit (in the Harry Frankfurter sense of indifference to the truth ) that eventually Hudson’s comments thin out a bit.

The original speech is in black. Hudson’s remarks are in red. You’ll see he took mercy on you and edited the speech down a bit and also bolded some of the, erm, remarkable parts. I’ve added a few observations, in blue. I hope readers in comments will join in the fun by extracting sections or phrases from the speech and explaining what they really mean.

The worst is that Obama apparently plans a series of Big Lie speeches on his “vision for rebuilding an economy that puts the middle class — and those fighting to join it – front and center.” That’s at best an afterthought, since he’s given the economy over to an at best indifferent and at worst predatory elite that have no interest in giving it back.

/President Barack Obama returned to Knox College in Galesburg, Ill., Wednesday to discuss his plans for boosting the middle class. Here are Mr. Obama’s remarks, as prepared for delivery/:


In the period after World War II, a growing middle class was the engine of our prosperity. Whether you owned a company, swept its floors, or worked anywhere in between, this country offered you a basic bargain – a sense that your hard work would be rewarded with fair wages and benefits, the chance to buy a home, to save for retirement, and, above all, to hand down a better life for your kids.

But over time, that engine began to stall. *That bargain began to fray. Technology made some jobs obsolete. Global competition sent others overseas. It became harder for unions to fight for the middle class. Washington doled out bigger tax cuts to the rich and smaller minimum wage increases for the working poor. The link between higher productivity and people’s wages and salaries was severed – the income of the top 1% nearly quadrupled from 1979 to 2007, while the typical family’s barely budged*.

MH: Obama did not mention the role of debt in this, increasing the cost of labor and the financial overhead of its employers.

In this speech it is as if he thinks that telling people that he knows how squeezed they are means that he wants to solve their problems.Rather, their squeeze is the profit of his backers.

Towards the end of those *three decades, a housing bubble, credit cards, and a churning financial sector kept the economy artificially juiced up*.

MH: He doesn’t mention the legacy of debt that he had promised to write down, but didn’t.

But by the time I took office in 2009, the bubble had burst, [so it’s not his fault; he just inherited the problem – but what of his refusing to back Barney Frank’s proposal to link TARP to a mortgage-debt writedown by the banks receiving the funds?] costing millions of Americans their jobs, their homes, and their savings. The decades-long erosion of middle-class security was laid bare for all to see and feel.

MH: This “erosion” became the gains of the banks and Wall Street institutions that became his largest political campaign funders.

Today, five years after the start of that Great Recession, America has fought its way back.

Together, we saved the auto industry, took on a broken health care system, and invested in new American technologies to reverse our addiction to foreign oil and double wind and solar power.

Together, *we put in place tough new rules on big banks, and protections that cracked down on the worst practices of mortgage lenders and credit card companies. We changed a tax code too skewed in favor of the wealthiest at the expense of working families, locking in tax cuts for 98% of Americans, *and asking those at the top to pay a little more.

MH: This is unbelievable hutzpah. He increased the FICA wage withholding tax, he let the crooked mortgage lenders off without prosecuting them, and levied only a few pennies on the dollar of fines. He is trying to rewritehistory while most people are still engulfed in it.

Add it all up, and over the past 40 months, our businesses have created 7.2 million new jobs. This year, we are off to our strongest private-sector job growth since 1999. And because we bet on this country, foreign companies are, too.

MH: It is not “strong” job growth when the jobs being created are mainly service-sector jobs paying the minimum wage or barely above it. This is not growth; it is merely keeping up with population WITHOUT reviving wage levels in keeping with the cost of acquiring housing, health care and paying education debts.

Right now, more of Honda’s cars are made in America than anywhere else. Airbus will build new planes in Alabama. Companies like Ford are replacing outsourcing with insourcing and bringing more jobs home. We sell more products made in America to the rest of the world than ever before. We now produce more natural gas than any country on Earth. We’re about to produce more of our own oil than we buy from abroad for the first time in nearly 20 years. [there goes out water supply, which is being polluted simply to bring down oil prices and hurt Russia, Iran etc.] The cost of health care is growing at its slowest rate in 50 years. And our deficits are falling at the fastest rate in 60 years.

MH: In other words, the government is NOT spending enough into the economy to revive employment and wage levels.

Thanks to the grit and resilience of the American people, we’ve cleared away the rubble from the financial crisis and begun to lay a new foundation for stronger, more durable economic growth [He has steadfastly REFUSED to clear away the debt rubble that continues to impose debt deflation on the economy.] In our personal lives, we tightened our belts [this means, paying DOWN debt – and thus diverting spending AWAY from goods and services], shed debt[not shed much; paying it down out of salaries, at the cost of reducing consumerspending on needed toods and services is not “shedding” debt; that is what Obama promised to do, and which he stood by and told Geithner, “just trick the suckers. ‘Foam the runway’ for us to foreclose at a rate that won’t collapse the property market or the market value of bank mortgages] and refocused on the things that really matter [getting his backers, the banks, paid in full, NO debt write-down]. As a country, we’ve recovered faster and gone further than most other advanced nations in the world. With new American revolutions in energy, technology, manufacturing, and health care, we are actually poised to reverse the forces that have battered the middle class for so long, and rebuild an economy where everyone who works hard can get ahead.

But I’m here today to tell you what you already know – we’re not there yet. Even though our businesses are creating new jobs and have broken record profits, *nearly all the income gains of the past ten years have continued to flow to the top 1%*. [If he can’t deny it, best to come right out to say it – as if he’s shedding crocodile tears rather than delivering what he promised to his campaign contributors.] The average CEO has gotten a raise of nearly 40% since 2009, but the average American earns less than he or she did in 1999. And companies continue to hold back on hiring those who have been out of work for some time.

Today, more students are earning their degree, but soaring costs saddle them with unsustainable debt. Health care costs are slowing, but many working families haven’t seen the savings yet. And while the stock market rebound has helped families [he must mean the 1% which, as he noted above, own the lion’s share of stocks] get back much of what they lost in their 401ks, millions of Americans still have no idea how they’ll ever be able to retire. 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.*

This growing inequality isn’t just morally wrong; it’s bad economics [but very good politics when it comes to raising campaign contributions from Wall Street]. When middle-class families have less to spend, businesses have fewer customers. When wealth concentrates at the very top, it can inflate unstable bubbles that threaten the economy. When the rungs on the ladder of opportunity grow farther apart, it undermines the very essence of this country.

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


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