President Obama’s State of the Union speech tonight will touch on a number of issues from terrorism to immigration reform, but the US economy will be at the beating heart of the speech. There are at least four distinct economic issues that he’s expected to focus on: the three-year spending freeze, the middle class relief bill (or jobs bill), health care reform, and financial reform.
Here’s what I think Obama will say about each of these four topics. Then, to have a little fun, I’ve amended my pretend-speech-writing to tell you what Obama won’t tell America.
Three Year Spending Freeze
Will Say: “The budget
oversight of the last ten years, followed by the Great Recession,
followed by federal government’s swift and successful efforts to end
the recession, have put America’s finances in a terrible hole. Our
current deficit is necessary. But it is also gaping and unsustainable.
There are many things we need to do to fix our national balance sheet,
but the first step is to tie a belt around federal spending. That’s why I’m
proposing a three-year freeze on all discretionary spending
not directly related to our national security. It is not sufficient to solve our deficit crisis. But it is a necessary and important start. “
Won’t Say: Obama knows that everybody is worried about the deficit — moderates, Republicans,
bondholders. We can’t do anything non-gimmicky and substantive because Republicans won’t
raise taxes and Democrats won’t cut services. So here’s something
gimmicky and mostly without substance. We’re freezing less than 25% of
the budget, which should save $15 billion in a year where the deficit
is expected to pass $1.3 trillion.
Middle Class Relief/Jobs Bill
Will
Say: “America, I know you are hurting. Unemployment is over 10 percent. If you’re a parent, you’re struggling to pay your mortgages and save for your children’s
college. If you’re a recent university graduate, you’re worried about
student loans, and whether this economy will be strong enough in the
next few years to help you pay them down. If your career is behind you,
and you’re thinking about retirement, you’ve seen this recession wreak
havoc on your savings. This administration has worked hard — and I have
worked hard — to get this economy back on track. Today GDP is
growing. But that’s not enough. I get it.
“America, I want you to
know that I have thinking about your jobs all along. Last year, in my
first month in office, Congress passed an $800 billion stimulus
package. Almost half of this stimulus is tax cuts. The rest is going to
keep teachers in our classrooms, to put construction workers on our
bridges, and to keep entrepreneurs in their small businesses. This year
I’m going to do more. I’m going to propose a new stimulus that is all families and jobs: tax cuts for small businesses, middle class family tax credits,
special help for families with children and families caring for both
children and eldery adults. I’m also going to create an infrastructure and green technology fund to channels tens of billions of dollars to create jobs that help America run again — on high speed rail, and brand new bridges, and wind farms…”
Won’t Say: Unemployment crossed ten percent last autumn and what was Congress doing at the time? Debating health care for the 157th (or something) consecutive day. So Americans think Congress forgot about their job hunting. Obama needs to demonstrate that he’s been working on jobs all along, not just since the Massachusetts election. But that’s hard to do because, well, Congress has only gotten serious about the jobs bill since the Massachusetts election! A lot of leftish economists have been saying for months that Obama needed to move on jobs, and the fact that he’s only doing so as an apparent concession looks weak, even if it’s good policy.
Health Care Reform
Will Say: “Our health care system is too inefficient, too uncompetitive, and too expensive. More than thirty million Americans lack access to care and millions more face dropped coverage if they get sick. We can change that. The health care bill in the Senate forces insurance companies to play by the rules. It extends health care to thirty million Americans. It punishes lavish plans to encourage your employers to pay you more money in income. It does all this — and it saves money, up to $70 billion in the next ten years.
“I know there are concerns about the health care bill. There are serious, and they deserve our attention. But doing nothing does not make us better off. Doing nothing threatens millions of families with bankruptcy if somebody gets sick. Doing nothing means throwing up our hands at high costs rather than experimenting with innovative reforms included in this bill. Doing nothing hurts the poorest American without insurance, the average American with tenuous yet expensive care, and the richest American who faces incredible tax increases if we don’t get medical spending in order in the next decade. Health care reform is economic reform, at every level.”
Won’t Say: Obama would do anything to convince Americans that health care reform was economic reform and deficit reform, but at this point the polls don’t indicate that anybody is buying the message. Health care reform might be alive, but Massachusetts seems to have killed whatever political points it had to confer on its YEA votes. To many voters, health care reform must appear like a mom forcing Robitussin down her child’s throat: I know you hate this but I promise it will make you feel better! The optics are just terrible.
Financial Reform
Will Say: “One year ago, our financial system was on the brink of destruction. We had no choice but to use every last instrument of government to save Wall Street. And we did. Today Wall Street is not only growing, it is thriving, and handing out enormous bonuses that make a mockery of the daily suffering of ordinary Americans who have been tragically affected by the banks’ bad bets. Today we have a responsibility to make sure that nothing like this ever happens again.
“My plan is three-fold: First we will make big banks smaller and smarter by taxing their liabilities, separating their risky bets from their customers’ money, and encouraging them to diversify their investments. Second we will install a new regulatory regime, with one agency in charge of regulating the nation’s largest banks and another in charge of protecting consumers. Third we will handle banks that do fail by setting up a system that winds down their assets in an orderly manner that doesn’t require the implosion of the financial sector and the general economy. These reforms will make Wall Street more solvent and Main Street more secure.”
Won’t Say: “Why didn’t I tackle this thing six months ago?!” Financial reform is the antidote to populist rage against government. Years from now, I think that delaying on this golden chance to pick up good will among moderate and populist voters will be seen as one of the administration’s biggest mistakes.
