What Obama Must Do Before Stimulus II

It's time to tell Americans to solve some of their own problems.

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Imagine President Obama addressing the nation on prime-time television and saying, "The government has done enough to bail out the economy. You're all on your own now."

He very well could. The total federal commitment to fiscal stimulus, corporate rescues, homeowner relief, and various other bailouts is nearly $10 trillion (that's $10,000,000,000,000) over who knows how many years. You'd think that might be enough. But the economy is still lousy, unemployment is soaring, and Vice President Joe Biden now says the Obamanauts "misread how bad the economy was" when planning their recovery package earlier this year.

Biden wasn't just flapping his restless mouth. By issuing a quasi mea culpa on the economy, he was starting an official discussion about another round of stimulus spending, which would actually be the third in this recession. (Remember George Bush's $150 billion worth of tax rebates in 2008?) It's obvious that the economy still needs help, and it's the government's job, more or less, to aid its citizens. But there's one kind of stimulus that Obama and virtually every other politician have completely avoided so far: a plea for greater self-reliance.

[See how to tell when a real recovery begins.]

The government has the power to contain the damage from an economic meltdown. It can help people in need. We've even learned that the government can run entire industries—for a while. But no government can create a vital economy. There have been plenty of deep downturns in America's economic history, and the nation has always rebounded thanks to industrious people working like hell to improve their lives and find better ways to get things done. Bailouts are a relatively new phenomenon, with mixed results at best. Personal determination has a much better track record.

There are plenty of factors that could suppress our economic growth for years. Overcoming them will require relentless innovation, which is an overused and poorly understood word. We tend to think of innovation as massively expensive laboratory projects that lead to new cancer drugs or complex software. But it can also be something as simple as a home-built website, a new community group, or a simple observation that saves your company a couple of steps and a few bucks.

[See why the smarter you are, the more you work.]

People who innovate don't wait for other people to solve problems. They tackle problems themselves. Many Americans are doing this right now: trying to start their own small business after getting laid off, using the Internet to reach people in different ways, staying up late trying to think of ways their company or their family can save money and stay solvent a little longer.

But are there enough? I have my doubts. Stimulus spending may ultimately be helpful, but it has also sent the message that it's the job of government, not citizens, to solve economic problems. A lot of people who live in dying manufacturing towns probably need to move to areas with more jobs, but there's not much sign of that. The prevailing economic question seems to be when Americans will stop this damned saving and start buying multiple cars and TVs again. Obama has dampened expectations of a quick economic recovery, but he hasn't asked Americans to re-examine their overconsumption or accept privations while spending their time or money to better themselves.

[See why you're going to save more, like it or not.]

There are other ways to promote smart economics. "The general message should be 'You need to redouble your efforts to be more competitive,' " says Mauro Guillen of the University of Pennsylvania's Wharton School. "People need to invest more in their own future. Instead of buying stuff at the mall, spend the money on evening classes. Learn a language or skills you don't have. Join debates in your town on the right way to spend education money."

Those kinds of steps are necessary not just to reboot the American economy but to take on other nations like India and China where many people work harder, score higher on tests, and expect less for their efforts than we do. We feel entitled to a high standard of living, but we're not. And we'll lose it if Americans get in the habit of waiting for somebody else to solve their problems. We're already losing it, in fact, thanks to a thrashing recession that's leveling out our lifestyles.

Obama probably knows this, but he doesn't want to become the national nag and end up a one-termer like Jimmy Carter, the last president who tried to pester Americans about personal responsibility. It's easier to spend more money than challenge people to change their behavior. Maybe it will even work. Oh ... how ... stimulating.