TOPICS > Politics

Denver Offers Testing Ground for ‘Obama-nomics’

August 26, 2008 at 6:30 PM EDT
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Apart from hosting the Democratic National Convention, Denver residents are also assessing the possible impacts of Sen. Barack Obama's economic policies, including middle class tax cuts and investments in education and alternative energy. Paul Solman examines Obama's plan.

PAUL SOLMAN, NewsHour Economics Correspondent: Green Valley Ranch in Denver, Colorado, a new neighborhood for middle-class families able at last to afford, they thought, homes like these.

Yet as an aerial map makes clear, foreclosures are spreading like sores all over Green Valley Ranch. This eviction isn’t even on the map yet.

But Laura Tyson, a chief economist under President Clinton, now advising Senator Obama, came to Denver to tout what’s being called “Obama-nomics,” and how, in connecting to a happier time, it would address situations like this.

LAURA TYSON, Obama Economic Adviser: I think we’ve had wonderful, natural experiment. We had the 1990s under President Clinton, the longest and strongest economic expansion in American history.

PAUL SOLMAN: By contrast, she claims, a near decade of regulatory neglect and tax cuts for the well-heeled have done real damage.

LAURA TYSON: The median family has actually seen a decline in their real purchasing power, where the single, most important asset for most American families is the value of their house. And we’ve already seen losses, the equivalent to about $2 trillion to $3 trillion of household wealth loss.

PAUL SOLMAN: An Obama administration would continue to bail out the housing sector, as in the bill that recently passed Congress.

LAURA TYSON: Senator Obama has also come out in favor of a second stimulus. The second stimulus would include a fund to go to the states to help them counsel people facing foreclosure.

PAUL SOLMAN: This is actually furniture from a family that’s been foreclosed. They tried to rent.

LAURA TYSON: They tried to rent first, right.

PAUL SOLMAN: Presumably that didn’t work.

LAURA TYSON: Most Americans faced with foreclosure really try very hard to stay in their homes.

A middle class tax cut

PAUL SOLMAN: Just around the corner, Darren and Melinda Connor, with two incomes, two kids, and a house they bought for $230,000, now worth $190,000. And prices around here down 8 percent in the past three months alone.

They exemplify a key Obama theme, the middle-class squeeze.

MELINDA CONNOR: Everything has gone up, and our income has not gone up.

PAUL SOLMAN: Between them, the Connors make nearly $100,000 a year, the high end of middle class.

But you're living very well. It's a lovely house. You have lovely things. Your kids go to private school. You're a prosperous family by almost any historical world standards, no?

MELINDA CONNOR: Yes, but we're scared for the future. We are living paycheck to paycheck.

PAUL SOLMAN: OK, but what can a president do about it?

LAURA TYSON: I would say, in the short run, we can do a tax rebate based on energy expenditures to help people deal with their unexpectedly high energy bills. And Senator Obama is proposing a middle-class tax cut that would help a family like this about a thousand dollars a year.

PAUL SOLMAN: A thousand dollars is, what, $20 bucks a week. I mean, $20 bucks a week would make an actual difference in your life?

MELINDA CONNOR: I think every little bit would help, because everything else keeps going up $20 a week or, you know, $100 a month.

DARREN CONNOR: A thousand bucks, that would make a huge difference, because we're stretched thin as it is.

Assisting community colleges

PAUL SOLMAN: In addition to the energy rebate and tax cut, Obama proposes a long list of measures to take pressure off the middle class, including: a national health plan to cover most of the uninsured; a national retirement plan to create automatic workplace pensions; spending $10 billion to, for now, expand unemployment insurance; spending $60 billion over 10 years to fund transportation infrastructure projects; a new $4,000 college tax credit, making community college free for most Americans.

Obama's plan includes aid for those colleges, as well, the victims of dwindling state funding.

Colorado Community College's president, Nancy McCallin.

NANCY MCCALLIN, President, Colorado Community Colleges: When the economy is slumping, when gas prices are high, it's a time when there are layoffs that are occurring, and many more people come through our doors. So at the same time, when state revenues are going down and we're having problems getting state funding, we have a surge in our enrollment.

PAUL SOLMAN: But community college is a high-return investment.

NANCY MCCALLIN: For the amount of investment the state is making in community college students, based on the taxes that they will pay over their lifetime, they're giving back to the community seven times what the cost of the program was.

PAUL SOLMAN: Colorado's community colleges train students for a variety of jobs, from drilling for natural gas to responding to medical emergencies.

NANCY MCCALLIN: In Colorado, we train 90 percent of the first responders, 90 percent of the paramedics. What we do is we have simulated environments.

PAUL SOLMAN: Simulated car crashes, for example, with kids from the school's film and theater departments. The Obama plan is to grant federal money, says Tyson...

LAURA TYSON: To partner with outstanding institutions like this one that have very unique programs that can actually be a model for other community colleges to spread them through the system.

Federal investment in education

TEACHER: And how many frogs do you have?


TEACHER: Let's see. Let's count them again.

PAUL SOLMAN: James Mejia is the head of a new preschool program, funded by a one-eighth-of-a-percent sales tax approved by Denver voters. A longtime member of Denver's Board of Ed, Mejia says the earlier you invest in education, the better.

JAMES MEJIA, Denver Preschool Program: In high school, we'd always say, "I wish we had been able to work with these kids in junior high to get them ready for high school." And we'd go to junior high and we'd say, "I wish we had the ability to work with these kids in first grade through sixth grade to get them ready for junior high."

And, frankly, in kindergarten, now we're hearing 1 out of 3 children who enters kindergarten in Denver isn't prepared for kindergarten.

PAUL SOLMAN: Thus, the preschool program. Parents getting tuition credits for the school of their choice based on school ratings. Pre-K is an Obama focus, says Tyson.

LAURA TYSON: He's proposing in the 0-through-5 education age group to spend $10 billion a year of federal money, whether it's to quadruple early Head Start, to give people more tax credits for child care so they can use those credits to basically send their children to preschool, to a substantial effort to partner with state and local governments to help scale programs like this.

PAUL SOLMAN: Scale meaning to make -- to replicate...

LAURA TYSON: Build more of them. Make them more available to more and more students and more and more of the children in a community.

PAUL SOLMAN: If the Obama campaign had a preschool anthem for the last piece of its economic program, it might indeed be "Sunny Days." Jamie Resor sells solar energy systems.

JAMIE RESOR, Chief Financial Officer, groSolar: The largest single component is the cost of these P.V. panels that you see.

Obama's approach to the economy

PAUL SOLMAN: A rooftop in Denver, which gets 300 days of free photons from the sun every year. The local utility gives rebates to put in solar panels like these. Obama wants a federal investment in alternative energy of $150 billion over a decade.

LAURA TYSON: If the government provides an incentive to get people to move faster, you know, they'll drive the cost of these things down, actually, not up, down. So you want to encourage investment in a new technology which is going to reduce dependence on foreign oil, reduce carbon emissions, create jobs, and you want to do it faster.

JAMIE RESOR: So not only is there helping get the economies of scale going and getting -- building an industry, but particularly now, with the timing of the economy in its difficult situation, it's an amazing stimulus for jobs. And these are good jobs that will remain in the U.S.

PAUL SOLMAN: But wait a second. Add the energy program to all the others Obama is proposing, and you're talking...

Billions. Tens of billions.

LAURA TYSON: Hundreds of billions.

PAUL SOLMAN: Hundreds of billions. Hundreds of billions of dollars. Well, we're already in deficit in this country. We're worried about the liabilities we've taken on for Social Security, Medicare, and so forth. Where is all this money going to come from?

LAURA TYSON: Well, we can certainly get some money from the cap-and-trade system, which we are going to have to introduce to price carbon appropriately. We are spending hundreds of billions of dollars every year on Iraq. Some estimates run now into the trillions of dollars in total. We are going to be scaling that down.

PAUL SOLMAN: And last but not least, says Tyson, ending the Bush tax cuts for the wealthy.

LAURA TYSON: That's $300 billion, most of which goes to the top 10 percent, the top 1 percent, and to -- a large amount of which goes to corporations.

PAUL SOLMAN: Having finished our tour, we were sitting in the showroom of the party planning firm, powered in part by those solar panels up on the roof. Now, we'd heard about what skeptics might call Democrat party favors -- middle-class tax cuts, education, infrastructure investments...

LAURA TYSON: By reducing the deficit.

PAUL SOLMAN: ... ever since Tyson began taking us to the Democrat's convention city back in 1996.

The things you've talked to me about in '96, in 2000, in 2004 hasn't happened. Why should I think that they're going to happen now? Why should any of our audience think that?

LAURA TYSON: First of all, some of the problems are now recognized in a way they weren't recognized then. It's one thing to talk about infrastructure investment before you have the New Orleans catastrophe or the summer of the catastrophe along the rivers in the Midwest or bridges falling down in Minnesota.

Second of all, I think we're going to have a Democratic Congress and a Democratic president. We are going to have support for this approach to dealing with the economy.

PAUL SOLMAN: If that turns out to be true, we may get to test the Democrats' economic policy in full.

JIM LEHRER: Paul's companion report on McCain's economic plan will air during the Republican National Convention next week.