The Audacity of Hope: Thoughts on Reclaiming the American Dream

by Barack Obama

A nation that can’t control its energy sources can’t control its future.

EDUCATION. SCIENCE AND technology. Energy. Investments in these three key areas would go a long way in making America more competitive.

the Central American Free Trade Agreement, or CAFTA. Viewed in isolation, the agreement posed little threat to American workers—the combined economies of the Central American countries involved were roughly the same as that of New Haven, Connecticut.

stronger labor protections in countries that trade with the United States, including rights to unionize and bans on child labor; improved environmental standards in these same countries; an end to unfair government subsidies to foreign exporters and nontariff barriers on U.S. exports; stronger protections for U.S. intellectual property;

But they won’t eliminate the enormous gap in hourly wages between U.S. workers and workers in Honduras, Indonesia, Mozambique, or Bangladesh, countries where work in a dirty factory or overheated sweatshop is often considered a step up on the economic ladder.

But when all is said and done, China will still have more surplus labor in its countryside than half the entire population of the United States—which means Wal-Mart will be keeping suppliers there busy for a very, very long time.

it seems to take more economic growth each year to produce the same number of jobs, a consequence of ever-increasing automation and higher productivity.

over the past five years, statistics consistently show that the wages of American jobs being lost are higher than the wages of American jobs being created.

a better education alone won’t necessarily protect them from growing competition. Even if the United States produced twice as many computer programmers per capita as China, India, or any Eastern European country, the sheer number of new entrants into the global marketplace means a lot more programmers overseas than there are in the United States—all of them available at one-fifth the salary to any business with a broadband link.

In other words, free trade may well grow the worldwide economic pie—but there’s no law that says workers in the United States will continue to get a bigger and bigger slice.

With the pace of technological change, the size of the countries we’re competing against, and the cost differentials with those countries, we may see a different dynamic emerge.

Any efforts at protectionism will be counterproductive—and it will make their children worse off in the bargain.”

A tariff on imported steel may give temporary relief to U.S. steel producers, but it will make every U.S. manufacturer that uses steel in its products less competitive on the world market.

FDR understood that decent wages and benefits for workers could create the middle-class base of consumers that would stabilize the U.S. economy and drive its expansion. And FDR recognized that we would all be more likely to take risks in our lives—to change jobs or start new businesses or welcome competition from other countries—if we knew that we would have some measure of protection should we fail. That’s what Social Security, the centerpiece of New Deal legislation, has provided—a form of social insurance that protects us from risk.

because as self-reliant as we may be, we recognize that things don’t always work out as planned—a child gets sick, the company we work for shuts its doors, a parent contracts Alzheimer’s, the stock market portfolio turns south.

Sometimes an unexpected tragedy strikes and it turns out we didn’t have enough insurance. For all these reasons, we ask the government to step in and create an insurance pool for us—a pool that includes all of the American people.

employers are automating, downsizing, and offshoring, all of which makes workers more vulnerable to job loss and gives them less leverage to demand increased pay or benefits.

Since 1988, the average family’s health insurance costs have quadrupled. Personal savings rates have never been lower. And levels of personal debt have never been higher.

If the guiding philosophy behind the traditional system of social insurance could be described as “We’re all in it together,” the philosophy behind the Ownership Society seems to be “You’re on your own.”

But individual investment decisions will always produce winners and losers—those who bought Microsoft early and those who bought Enron late.

That doesn’t mean we shouldn’t encourage individuals to pursue higher-risk, higher-return investment strategies. They should. It just means that they should do so with savings other than those put into Social Security.

so that someone working full-time today in a minimum-wage job doesn’t earn enough to rise out of poverty,

We could extend such assistance to service industries, create flexible education accounts that workers could use to retrain, or provide retraining assistance for workers in sectors of the economy vulnerable to dislocation before they lose their jobs. And in an economy where the job you lose often paid more than the new job you gain, we could also try the concept of wage insurance, which provides 50 percent of the difference between a worker’s old wage and his new wage for anywhere from one to two years.

Each year, more than twenty thousand workers are fired or lose wages simply for trying to organize and join unions.

federal mediation should be available to help an employer and a new union reach agreement on a contract within a reasonable amount of time.

Former Clinton economic adviser Gene Sperling has suggested the creation of a universal 401(k), in which the government would match contributions made into a new retirement account by low-and moderate-income families. Other experts have suggested the simple (and cost-free) step of having employers automatically enroll their employees in their 401(k) plans at the maximum allowable level;

perhaps our most pressing task is to fix our broken health-care system.

The addition of a hugely expensive prescription drug benefit that provides limited coverage and does nothing to control the cost of drugs has only made the problem worse.

Given the amount of money we spend on health care (more per capita than any other nation), we should be able to provide basic coverage to every single American. But we can’t sustain current rates of health-care inflation every year; we have to contain costs for the entire system, including Medicare and Medicaid.

health insurance can’t just run through employers anymore. It needs to be portable.

We could start by having a nonpartisan group like the National Academy of Science’s Institute of Medicine (IOM) determine what a basic, high-quality health-care plan should look like and how much it should cost.

Overall, 20 percent of all patients account for 80 percent of the care, and if we can prevent diseases from occurring or manage their effects through simple interventions like making sure patients control their diets or take their medicines regularly, we can dramatically improve patient outcomes and save the system a great deal of money.

have electronic claims, electronic records, and up-to-date patient error reporting systems—all of which would dramatically cut down on administrative costs, and the number of medical errors and adverse events (which in turn would reduce costly medical malpractice lawsuits).

we would provide a subsidy to low-income families who wanted to purchase the model plan through their state pool, and immediately mandate coverage for all uninsured children.

How do we pay for it? At the end of Bill Clinton’s presidency, we had an answer. For the first time in almost thirty years, we enjoyed big budget surpluses and a rapidly declining national debt.

Instead, the bulk of the debt is a direct result of the President’s tax cuts, 47.4 percent of which went to the top 5 percent of the income bracket, 36.7 percent of which went to the top 1 percent, and 15 percent of which went to the top one-tenth of 1 percent, typically people making $1.6 million a year or more.

We can rein in spending on health-care costs. We can eliminate tax credits that have outlived their usefulness and close loopholes that let corporations get away without paying taxes. And we can restore a law that was in place during the Clinton presidency—called Paygo—that prohibits money from leaving the federal treasury, either in the form of new spending or tax cuts, without some way of compensating for the lost revenue.

“IF THERE’S CLASS warfare going on in America, then my class is winning.” I was sitting in the office of Warren Buffett, chairman of Berkshire Hathaway and the second richest man in the world.

Buffett had invited me to Omaha to discuss tax policy. More specifically, he wanted to know why Washington continued to cut taxes for people in his income bracket when the country was broke.

Buffett’s low rates were a consequence of the fact that, like most wealthy Americans, almost all his income came from dividends and capital gains, investment income that since 2003 has been taxed at only 15 percent.

“The free market’s the best mechanism ever devised to put resources to their most efficient and productive use,” he told me. “The government isn’t particularly good at that. But the market isn’t so good at making sure that the wealth that’s produced is being distributed fairly or wisely. Some of that wealth has to be plowed back into education, so that the next generation has a fair chance, and to maintain our infrastructure, and provide some sort of safety net for those who lose out in a market economy. And it just makes sense that those of us who’ve benefited most from the market should pay a bigger share.”

“When you get rid of the estate tax,” he said, “you’re basically handing over command of the country’s resources to people who didn’t earn it. It’s like choosing the 2020 Olympic team by picking the children of all the winners at the 2000 Games.”

“They have this idea that it’s ‘their money’ and they deserve to keep every penny of it. What they don’t factor in is all the public investment that lets us live the way we do.

“But I was lucky enough to be born in a time and place where society values my talent, and gave me a good education to develop that talent, and set up the laws and the financial system to let me do what I love doing—and make a lot of money doing it. The least I can do is help pay for all that.”

conservative commentators have been able to successfully conflate in the mind of voters the very real tax burdens of the middle class and the very manageable tax burdens of the wealthy.

Nowhere has this confusion been more evident than in the debate surrounding the proposed repeal of the estate tax. As currently structured, a husband and wife can pass on $4 million without paying any estate tax; in 2009, under current law, that figure goes up to $7 million. For this reason, the tax currently affects only the wealthiest one-half of 1 percent of the population, and will affect only one-third of 1 percent in 2009. And since completely repealing the estate tax would cost the U.S. Treasury around $1 trillion, it would be hard to find a tax cut that was less responsive to the needs of ordinary Americans or the long-term interests of the country.

So let’s be clear. The rich in America have little to complain about. Between 1971 and 2001, while the median wage and salary income of the average worker showed literally no gain, the income of the top hundredth of a percent went up almost 500 percent. The distribution of wealth is even more skewed, and levels of inequality are now higher than at any time since the Gilded Age.

I admire many Americans of great wealth and don’t begrudge their success in the least. I know that many if not most have earned it through hard work, building businesses and creating jobs and providing value to their customers. I simply believe that those of us who have benefited most from this new economy can best afford to shoulder the obligation of ensuring every American child has a chance for that same success.

once your drapes cost more than the average American’s yearly salary, then you can afford to pay a bit more in taxes.

I explained my belief that few women made the decision to terminate a pregnancy casually; that any pregnant woman felt the full force of the moral issues involved and wrestled with her conscience when making that heart-wrenching decision; that I feared a ban on abortion would force women to seek unsafe abortions, as they had once done in this country and as they continued to do in countries that prosecute abortion doctors and the women who seek their services. I suggested that perhaps we could agree on ways to reduce the number of women who felt the need to have abortions in the first place.