President Obama: “We do big things”

By William K. Black

President Obama’s State of the Union address stressed how we should be training future scientists and engineers.

And over the next ten years, with so many Baby Boomers retiring from our classrooms, we want to prepare 100,000 new teachers in the fields of science, technology, engineering, and math.

In fact, to every young person listening tonight who’s contemplating their career choice: If you want to make a difference in the life of our nation; if you want to make a difference in the life of a child – become a teacher. Your country needs you.

Obama correctly identified a critical need and stated that we must make dramatic changes to meet the need. Are we acting to add 100,000 (net) new teachers in those fields? Obama emphasized in his address that we need to respect teachers. So let’s ask the teachers what is happening. On May 27, 2010, the National Education Association warned.

Without $23 billion from Congress to keep public schools running next fall, 300,000 teachers … and support professionals will lose their jobs.

Everyone knew that the Great Recession would cause a disaster at the state and local government level because states and localities cannot run substantial deficits. Recessions cause tax revenues to fall and needs for social services to rise. In a Great Recession both effects are severe. School districts suffer the worst when home prices (and property tax revenues) fall after the collapse of the largest bubble in history. Virtually all economists support automatic stabilizers at the federal level, which reduce the length and severity of recessions and inflation. We want the federal government to spend in a countercyclical fashion, particularly during a serious recession. The federal government should increase its expenditures while tax revenues fall. Substantial federal deficits are vital and desirable to reduce the harm and length of recessions. Indeed, the automatic stabilizers are not large enough on their own against a severe recession. One of the reasons the automatic federal stabilizers are not large enough is that state and local financing is pro-cyclical. States and localities cut their expenditures and employment during a recession. That pro-cyclical pattern seriously reduces the anti-cyclical nature of the federal government’s expenditures. The result is that recessions last longer and are more severe. But another set of results is that state and local governments add to unemployment and reduce vital services.

There was an obvious, elegant answer to this suggested by many of us – revenue sharing. To its credit, the Obama administration proposed that answer as part of its stimulus bill. Revenue sharing was a good old-fashioned Republican idea (President Nixon). It would have prevented the terminations of over 100,000 teachers and hundreds of thousands of other public employees, including police officers. It would have reduced the severity and length of the recession. It was a win-win-win. Naturally, conservative Democrats (Blue Dogs) and Republicans decided to oppose revenue sharing. Had Obama fought for revenue sharing he would have developed tens of thousands of local government allies. He would have had the support of the great bulk of economists. Instead, Obama folded on a winning hand without a fight.

Obama premises our national strategy on education and research. That strategy is premised on hiring 100,000 new teachers. Instead, we are firing up to 300,000 teachers. And Obama’s answer to closing up to a 400,000 teacher gap – essential to the success of his entire strategy – is to encourage students to become teachers. What he doesn’t propose is anything that would give the school districts the money to retain and hire the 400,000 teachers. One of Obama’s applause lines was: “We do big things.” Yes, that is part of what has made America great. Indeed, we do giant things. Obama’s address was his chance to set out the big things he would do. We got instead an aspiration: “we want to prepare 100,000 new teachers….” Budgets are policies made real. If you don’t have a plan to get the money, what you “want” doesn’t happen. Obama isn’t even trying to get the additional money to the states and localities. He’s freezing those kinds of federal expenditures.

Obama also froze federal employees’ salaries, knowing that it will put political pressure on states and localities to freeze their employees’ salaries. How are we going to recruit “100,000 new teachers in the fields of science, technology, engineering, and math” when we’re firing hundreds of thousands of teachers and freezing the salaries and cutting the pensions of those that stay? Those four fields are highly sought after and command premium salaries in the private sector. Under Obama’s proposal to greatly increase research grants in science and engineering those salaries will rise materially. The gap between teacher salaries and private sector salaries in those four fields, already large, will increase sharply. The school districts are in acute financial distress. No one believes they can afford to raise salaries to compete with the private sector in these fields without large increases in federal aid.

Obama’s plan to increase college graduates also fails to live up to the promise that “we do big things.”

Of course, the education race doesn’t end with a high school diploma. To compete, higher education must be within reach of every American. That’s why we’ve ended the unwarranted taxpayer subsidies that went to banks, and used the savings to make college affordable for millions of students. And this year, I ask Congress to go further, and make permanent our tuition tax credit – worth $10,000 for four years of college.

Many students are graduating with over $100,000 in student loans and Obama’s answer is a tax credit “worth $10,000.” Not $10,000 annually – total. It’s a very bad thing when Obama knows he needs to come up with a “big thing”, tries to think of a “big thing”, and the only thing he can come up with is a small thing. Obama’s education plan is far superior to the Republican’s, but it is puny compared to the scale of the problem he sets out. A bold scholarship program would ensure that no student who had the ability to succeed would be denied a collegiate education.

19 responses to “President Obama: “We do big things”

  1. I dispute that all four of those fields are doing great. In fact I would argue that most of them have been doing poorly since many engineering and "technology" jobs have followed manufacturing to other countries. In fact I am an electrical engineer who used to design integrated circuits and I make two-thirds what I made before the telecom bubble bust. Look at the BLS projections for job growth in those areas! Two percent growth for the next decade. Why would anyone want to enter these fields?

  2. Beats me why anyone would want to enter any field outside of the FIRE sector? We see all the monies going there.The President was in dreamland last night unless he's planning on leading a popular movement to change the whole political dynamic. If he's doing that, however, he needs to start by taking your recommendations on what to do with the big banks. He needs to break the power of the FIRE Sector and he needs to make real work like teaching and engineering gainful employment again.But he won't do that. This President is a creature of the financial oligarchy.

  3. There may well be more work for truck drivers than engineers. What doesn't make for a good slogan however, is rarely mentioned.

  4. I like your explanation regarding the necessity of counter-cyclical fiscal policy. It doesn't take a rocket-scientist to understand the argument. As your piece shows, its pretty easy to explain in a concise and straightforward manner. Given that, I am surprised to hear no Democrats defending the level of Federal spending and the size of the deficit. At best we are told the short-run/long-run story (i.e. temporary stimulus but balance the budget in the long run), but politically this argument is confusing and cedes the point to the Right that Federal spending and budget deficits are fundamentally unsound.Your explanation is much better — it explains in a very understandable manner that government deficits can be beneficial and are a necessary result of the government's duty to promote a productive economy.Why the Administration decided against this defense I do not know. Whether it was out of short-term political expedience or ideological difference, it was nonetheless their biggest mistake. And in regards to the commenter above I agree completely. If the business community — which Obama echoes — so desperately needs all these engineers and scientists, then why do so many MIT grads go to Wall Street?

  5. The previous commentator is correct. Science and engineering have been dying for thirty years. If it were not for the defense sector, the majority of our R&D would already be overseas. The approval rate for biomedical research grants is around 10% for first time applicants. In the 1970's the rate was something like 50%. 50% of engineering and science PhDs are foreigners. America has been used to hiring the best and the brightest from around the world for over fifty years. That brain drain is starting to reverse as India's and China's economies grow. R&D will be cheaper in China and India and an American researcher or engineer can not compete against such low wages.

  6. That pro-cyclical pattern seriously reduces the anti-cyclical nature of the federal government’s expenditures. The result is that recessions last longer and are more severe.First by inflation, then by deflation, the banks will rob us of everything we have.

  7. Mr. Obama is a stooge of the criminal banking cartel, "debt is prosperity".

  8. I agree with anonymous. Obama wants to encourage the private sector to handle education so that those wages/benefits can be driven to the ground. Then when all the jobs are in the private sector, they can be sent overseas for even cheaper labor. Obama says that the private sector can do it better. What that means is he uses federal funds to subsidize private grants (most likely to large companies like GE) instead of using the funds to directly inject into the schools. Those private schools then are able to grow, while public school shrinks under budget stress. In the public's mind, they think "charter schools are so much better than public, lets get rid of public". So more money goes to private.

  9. This is the line that I mistrust:Virtually all economists support automatic stabilizers at the federal level…

  10. Science and technology education as the solution is another illusion. I graduated almost 2 years ago with a degree in computer science and mathematics and haven't found any relevant employment. There are too many unemployed people in these fields with lots of experience chasing too few jobs. All the entry level work has been off-shored meaning people like me can't get their foot on the ladder.

  11. "First, I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the Moon and returning him safely to the Earth".You know, the Apollo project would have been a lot cheaper if President Kennedy had dropped that "returning him safely" nonsense. :o)

  12. But the lifetime return on attending private college is already negative: scholarships moves that problem from the student to the taxpayer, but the overall return is still negative. Something needs to be done about cost. Not price. Cost.

  13. Easy to Talk the Talk, but can you walk the Talk. We don't want invest for the long term,but we talk long term. We are based on the latest short term fad or idea. Politics trumps science. Trust but don't verify planning.

  14. Lest we forget a couple of important points. The teachers we are losing now are the lazy, incompetent unionized drones that singlehandedly put education into the ditch we now find ourselves. Experienced teachers are the dead-wood that must be pruned to make way for the cheaper, better and more efficient models. Obama's magical new teachers will be young ones with hot new skills, full of passion and ideals. We will not have to worry about salary competition, as they will be working in new charter schools; those magnets of excellence funded in concert with private sector partnerships. You know, the "race to the top" ones that can attract rock-star principals and afford high-priced consultants to draft glitzy funding proposals and garner media buzz.Alas, for the schools that don't make it to that vaunted peak (by definition, the vast majority) finding good teachers may be a bit of a problem. Who in their right mind would counsel a son or daughter to go into a field that treats employees as teachers are now treated?Has the President's speech writer heard of cognitive dissonance?

  15. Those fields may be highly sought after, but unemployment in the engineering and scientific fields is also quite severe, and often well hidden. But just look at the probability of getting such a job for recent college grads – which is atrociously low. There are several applicants for a given job. Then factor in the millions of scientists and engineers who have been laid off, downsized, "RIF'd" and prematurely "retired". When manufacturing plants got off shored, so did a lot of jobs for engineers and other technically savvy people.But, such facts are unpleasant for our rulers, who seem only too willing to obliterate manufacturing, and often union, jobs and facilities. But we live in an interconnected country, and it is not only the worker-be's that were made redundant. Eventually, even the R&D jobs will go away, as they can't usually exist without a manufacturing base to make the things developed and/or improved and also the profits needed to pay. Off the R&D efforts.As for more teachers in these times -that is a very sick joke, and seems more aimed at flooding the teacher labor market, and thus a way to severely depress wages down to minimum wage levels. But given state and local budget prospects, even paying minimum wages for teachers will not be possible. So, congratulations, Republicans, you have succeeded in drowning Government in that proverbial bathtub. You homicidal fantasy has been or is soon to be realized. Oh, by the way, so has our country's prospects, or at least the prospects of the vast majority of our population. And if you think that gated communities and private security/mercenary forces can protect and isolate you, you are suffering form delusions brought on by your proverbial syphilitic brain rot.Obama has to wake up and quit being "Republican-lite". Time to get a 21st century version of FDR, and if he can't muster up the courage to do this, it sure would be nice if he would get out of the way and stop being a hinderance to the betterment of the human race. Mediocre doesn't cut it these days.

  16. I agree with anonymous. But it doesn't take away from Black's point, which is the private sector mathematician or engineer tends to be better compensated than the corresponding public sector one. Still, your point is well taken: the employing class constantly rails about how education is failing to provide for their needs, but the facts on the ground suggests that there are plenty of highly educated workers in the US who are perfectly employable in a scientific or technical field but find themselves either unemployed or only able to find employment in finance. After all, it's only the physics and engineering majors who have enough math background to deal with the sophistry required to make financial "innovations" not appear fraudulent.

  17. "School districts suffer the worst when home prices (and property tax revenues) fall after the collapse of the largest bubble in history."The boom years were windfall years for local governments that, instead of recognizing that fact, expanded to levels that are not now sustainable.

  18. I am not convinced that something is true because someone says so. I would like to know how many students that want science, technology, engineering, and math instruction in K-12 are denied (or will be denied after the coming teacher retirement) such instruction. Then, I would like the same information about post K-12 instruction. And lastly, I would like to know how many students at any or all levels have the actual 'brainpower' to master science, technology, engineering, and math instruction. I see a great deal of waste in US education, no doubt due to its 'sacred cow' status.

  19. Public sector and teachers are the last two major unions left standing in the room.They are being pummeled right now by Repubs and will continue to be so until they're broken, as the other unions have been broken.Pity the Democrats are either assisting in the pummeling or offering nothing other than pretty words in their defense.