Issa and Obama: Strange Bedfellows Indeed
Given that he famously criticized President Obama’s administration as “one of the most corrupt,” it might have come as a surprise to some to see how Darrell Issa, Chairman of the House Committee on Government Oversight and Reform, used Obama in his March 22 letter to SEC Chairman Mary Schapiro. In the context of making his case for the importance of strong (read: largely unfettered) capital markets, Issa quotes from a February speech by the President, as follows:
[E]ven as we have to live within our means, we can’t sacrifice investments in our future. If we want the next technological breakthrough that leads to the next Intel to happen here in the United States — not in China or not in Germany, but here in the United States — then we have to invest in America’s research and technology; in the work of our scientists and our engineers.
The Congressman then follows this quotation by turning to Facebook’s recent decision to forego a planned private offering in the U.S. in favor of an offering to non-U.S. investors. The implication is clear: Issa is suggesting that when a hugely successful company like Facebook is forced into this this kind of about-face, it exemplifies the system’s failure to foster domestic investment — “to invest in America’s research and technology,” as Obama has it. Indeed, it becomes something closer to Obama’s hypothetical “technological breakthrough” in China or Germany.
Issa thus tacitly claims the President as an ally in his quest to ease up regulatory burdens on capital markets. But how fair is this maneuver? One way of answering this question is simply to look more closely at the speech Issa quotes from, delivered on February 18 to workers at an Intel plant in Hillsboro, Oregon.
In that speech, the President does indeed mention the need to ensure that “America is the best place on Earth to do business,” adding that “eliminating unnecessary regulations” is a part of accomplishing that goal. But his comments about “investments in our future” are not made in that context. On the contrary, here is what Obama says immediately following the passage Issa quotes:
If we want companies like yours to be able to move goods and information quickly and cheaply, we’ve got to invest in communication and transportation networks, like new roads and bridges, high-speed rail, high-speed internet. If we want to make sure Intel doesn’t have to look overseas for skilled, trained workers, then we’ve got to invest in our people — in our schools, in our colleges, in our children. Basically, if we want to win the future, America has to out-build, and out-innovate, and out-educate and out-hustle the rest of the world.
So here the President’s meaning is plain. In contrast to what Issa implies in his letter, Obama is referring to investment (primarily by the government) in infrastructure, technology, and education. Indeed, it is education that emerges at this point in the speech as its true “focus”: “That’s what I want to talk about today,” he continues — and does so at length for the remainder of his time on the podium. The kind of “investment” Obama has in mind has little to do with capital formation, or even with the stock market generally, except in the broadest sense.