State of the Union Address

I watched the State of the Union yesterday, waiting to see a President who was unsure of himself, and unsure of the direction in which he wanted to take the country. I felt that President Obama hadn't spoken out enough in recent weeks regarding health care reform, Ben Bernanke's reappointment, the awful Supreme Court decision, or the increasing misuse of the filibuster. I expected to see someone who looked tired or broken in some way. I was wrong.

I think the speech he gave was nearly perfect. He addressed almost every issue, and did it well. He even paid tribute to Ronald Reagan by blaming America's current situation on the Carter, cough... Bush administration:

"At the beginning of the last decade, the year 2000, America had a budget surplus of over $200 billion. (Applause.) By the time I took office, we had a one-year deficit of over $1 trillion and projected deficits of $8 trillion over the next decade. Most of this was the result of not paying for two wars, two tax cuts, and an expensive prescription drug program. On top of that, the effects of the recession put a $3 trillion hole in our budget. All this was before I walked in the door."

Believe or not, I think this was an important step. Much of Obama's decline in popularity is likely attributable to people forgetting the above facts. Politically, its important to remind people how we got here, and to not stand by idly as opponents rewrite history such that it better reflects on their own failed policies.

About health care:

"So, as temperatures cool, I want everyone to take another look at the plan we've proposed. There's a reason why many doctors, nurses, and health care experts who know our system best consider this approach a vast improvement over the status quo. But if anyone from either party has a better approach that will bring down premiums, bring down the deficit, cover the uninsured, strengthen Medicare for seniors, and stop insurance company abuses, let me know.

Here's what I ask Congress, though: Don't walk away from reform. Not now. Not when we are so close. Let us find a way to come together and finish the job for the American people. (Applause.)"

About the Supreme Court:

"With all due deference to separation of powers, last week the Supreme Court reversed a century of law that I believe will open the floodgates for special interests -- including foreign corporations -- to spend without limit in our elections. (Applause.) I don't think American elections should be bankrolled by America's most powerful interests, or worse, by foreign entities. (Applause.) They should be decided by the American people. And I'd urge Democrats and Republicans to pass a bill that helps to correct some of these problems."

About the filibuster:

"To Democrats, I would remind you that we still have the largest majority in decades, and the people expect us to solve problems, not run for the hills. (Applause.) And if the Republican leadership is going to insist that 60 votes in the Senate are required to do any business at all in this town -- a supermajority -- then the responsibility to govern is now yours as well. (Applause.) Just saying no to everything may be good short-term politics, but it's not leadership. We were sent here to serve our citizens, not our ambitions. (Applause.) So let's show the American people that we can do it together. (Applause.)"

In general, I thought it was an excellent speech. Though I'm still not necessarily a fan of the "spending freeze." It might be good politics, (this remains unseen), but its certainly not good policy. While the American people might appreciate the Federal government symbolically "tightening its belt," Brad DeLong and others sure don't:

"But in 2011 GDP will be lower by $35 billion--employment lower by 350,000 or so--and in 2012 GDP will be lower by $70 billion--employment lower by 700,000 or so--than it would have been had non-defense discretionary grown at its normal rate."

If you want my reaction to the policy, check this previous blog post.

And one last thing. Is this really feasible...?

"Third, we need to export more of our goods. (Applause.) Because the more products we make and sell to other countries, the more jobs we support right here in America. (Applause.) So tonight, we set a new goal: We will double our exports over the next five years, an increase that will support two million jobs in America. (Applause.) To help meet this goal, we're launching a National Export Initiative that will help farmers and small businesses increase their exports, and reform export controls consistent with national security. (Applause.)"

My first inclination is no, so I checked out the data:

Exports would have to increase by 1.6 trillion over a 5 year period in order to "double." The trend appears to be more exponential than linear, and the last double only took about 8 1/2 years, (2001-2009). The increase in free trade and overall globalization could explain the exponential trend. If that trend continues, doubling exports in a five year time frame might be entirely possible. Maybe this new "export initiative," will have some legs. However, if exports increase at the 01-09 rate, it will take nearly 12 years to double. I'll continue to be a naysayer here. I don't think this is going to happen, but the trend in the data gives me some hope. Still, kind of interesting that Obama is going Mercantilist on us right now. Paul Krugman and others have been pretty disappointed with regards to the spending freeze, but moving toward a positive balance of trade might make them happy.