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Does Government Investment Trump Privatization?

President Barack Obama’s first address to a joint session of Congress stood light-years apart from President George Bush’s 2005 State of the Union address.

Flushed with confidence from his re-election, Bush began, Tonight, with a healthy, growing economy, with more Americans going back to work the state of our union is confident and strong.

America’s economy is the fastest growing of any major industrialized nation, Bush said. In the past four years, we’ve provided tax relief to every person who pays income taxes, overcome a recession, opened up new markets abroad, prosecuted corporate criminals, raised homeownership to its highest level in history and, in the last year alone, the United States has added 2.3 million new jobs.

Bush offered an agenda of privatization ā€¯freedom from needless regulation, protection for job-creators from junk lawsuits, restrained federal spending and reduction in government programs.

He touted tax cuts, more tax cuts and permanent tax cuts.

Over 20 percent of his speech focused on Social Security. To be exact, 1,115 out of 5,044 words were dedicated to privatizing Social Security, what he called voluntary personal retirement accounts.

We’ll make sure that your earnings are not eaten up by hidden Wall Street fees, Bush promised. We’ll make sure there are good options to protect your investments from sudden market swings on the eve of your retirement.

Enter Barack Obama four years later.

You don’t need to hear another list of statistics to know that our economy is in crisis, said Obama. The impact of this recession is real, and it is everywhere.

Obama said: We have lived through an era where too often, short-term gains were prized over long-term prosperity; where we failed to look beyond the next payment, the next quarter, or the next election. A surplus became an excuse to transfer wealth to the wealthy instead of an opportunity to invest in our future. Regulations were gutted for the sake of a quick profit at the expense of a healthy market.

With some 6,000 words, Obama spelled out a different vision: a plan for energetic government investment in the American economy by focusing on energy, health care and education.

He talked about his plan using the full force of the federal government and requiring significant resources from the federal government.

I reject the view that says our problems will simply take care of themselves; that says government has no role in laying the foundation for our common prosperity, said Obama.

For history tells a different story. History reminds us that at every moment of economic upheaval and transformation, this nation has responded with bold action and big ideas, he said. In the midst of civil war, we laid railroad tracks from one coast to another that spurred commerce and industry. From the turmoil of the Industrial Revolution came a system of public high schools that prepared our citizens for a new age. In the wake of war and depression, the GI Bill sent a generation to college and created the largest middle class in history. And a twilight struggle for freedom led to a nation of highways, an American on the moon, and an explosion of technology that still shapes our world.

If Bush’s mantra was tax cuts, tax cuts and tax cuts, Obama’s mantra was government investment, investment and investment.

Unlike Bush, who wanted permanent tax cuts for the rich, Obama sought no permanence for government investment. Instead, he argued for investment to restart the economy, to revive the credit markets and rebuild the nation for the long term.

Bush’s term in office ended in disaster at every turn. Corporations went unregulated. Corporate corruption went unpunished. Unemployment went up. Homeownership went down. Billions of taxpayer dollars to banks and in Iraq went missing. Retirement accounts went to record lows. The deficit went stratospheric.

Hyper-individualism, predatory capitalism and idolatrous trust in the invisible hand created a financial and economic crisis. Privatization did not work.

Will energetic government investment work?

We had better hope so.

Robert Parham is executive editor of EthicsDaily.com and executive director of its parent organization, the Baptist Center for Ethics.