You Didn't Build That: Obama's Public Sector Gap

The contrived controversy over President Obama's "you didn't build that" line raises a more profound question about his leadership that has been overlooked. That is the case for the public sector -- and if you're wondering, what case for the public sector? -- that is precisely what I'm addressing.

The "you didn't build that" imbroglio is a classic out-of-context sound bite for the Romney campaign. Obama was making a simple point: no one succeeds in modern society on their own. They got help from others, including public services like schools, infrastructure, government loans and regulations, and so on. He said it somewhat clumsily, and should have known it would be distorted as an attack on small business and entrepreneurs.

But the Obama sound bite suffers in part because it is a sound bite, not a full-blown speech or philosophical agenda for how and why the public sector is so crucial to the United States, both the health of the economy and the functioning of society. At some point in the last four years, I would have liked to see the president articulate a rationale for why the public sector is important, how it makes the private sector more vibrant, and, yes, why it should grow.

During the tough battles in Wisconsin and Ohio last year, among other places, where GOP governors were slashing budgets for public employees -- teachers, firefighters, etc. -- Obama was rather subdued. He made statements of support for the protestors, but they were pretty anodyne. ""I think it's very important for us to understand that public employees, they're our neighbors, they're our friends," he told a Wisconsin reporter. He has occasionally proposed legislation to help the individual states' capacity to retain public employees, but, again, without forcefully voicing a broad set of ideas to convince Americans that this is right and necessary.

The issue is crucial for two reasons. First is the obvious political meaning. The right wing depicts Obama as interested only in creating "new bureaucrats" while he disses the private job creators. The second is actually more important, because there is a fascinating debate brewing about the worrisome future of the middle class.

That is that 1-2 million jobs or so lost in the 2007-09 recession are simply not coming back. The Bush crash of 2008 led employers to lay off millions, but these corporations have been reluctant to rehire them. The long-feared ravages of automation finally seem to be taking their toll. Businesses find that they can get along without as many red-blooded workers. ATMs replace bank tellers; self-checkout replaces cashiers in supermarkets; automated responders on telephone services replace operators; and of course Internet commerce is supplanting in-person consumerism. This has been a process long to unfold (computer assisted manufacturing has been growing for 30 years), but the advent of the Internet's viability as a principal venue for transactions is probably the topper. Most of the jobs lost in this process came with solid middle class salaries. The disappearance of these jobs is causing severe economic hardship in the middle and lower-income brackets, where real income has declined for a decade.

It's not at all clear that these jobs will ever return to where they were in the 1990s, the last good period of job and income growth. More tax cuts and rhetoric about entrepreneurs won't do the trick. So what will fill this gap? The public sector.

Since the 1980s, federal employment has declined, and in recent years the states have shed hundreds of thousands of jobs. In an earlier gaffe, President Obama alluded to this, saying the private sector is doing "just fine" while the public sector is not. He probably should have stayed with the statistics: since it hit bottom right after his inauguration, the private economy has added four million jobs, and the public sector at all levels has lost 500,000 jobs. Federal employment under Obama has risen slightly, but 90 percent of those jobs are in defense, border security, and the like.

The state and municipal layoffs, which continue at a steady and troubling pace , have a multiplier effect throughout the country. If these laid-off workers are not spending on the ordinary things of life, local merchants feel the pinch. And anxiety about job losses leads the still-employed to tighten their belts.

Reversing this trend is no easy matter, of course. Thirty years of Reaganism have convinced most Americans that enlarging government is always a bad thing. But when asked if they want to improve schools, fix infrastructure, protect the environment, build mass transit, subsidize student loans, and other specific, sensible things, Americans tend to approve if they think it's affordable.

We see student performance in middle and high school declining, and one answer is lower teacher-to-student ratios. We recognize the need for more health care workers in an aging population. We hear incessantly of the need for infrastructure repairs. We know we need to do much more to prevent climate change. The needs are clearly, inarguably evident, and many of the solutions would optimally employ several millions in government service.

The task, of course, is to convince the American people of this dovetailing of need and opportunity. But, so far, the Democratic Party and the Democratic president in particular have not stepped up. Theodore Roosevelt used to say the presidency was above all the "bully pulpit" -- by which he meant the president was uniquely provided with a platform to convey ideas and shape public opinion. And this qualifies as a Big Idea: a permanent expansion of the public sector at all levels to creatively and efficiently tackle the daunting problems we've allowed to fester, while, at the same time, filling the middle class job gap. Obama has given some great speeches on race, on America and the Arab world, at the Nobel awards, and elsewhere. It's time to apply his speechifying and his political skills to a manifesto for the public sector.