Obama’s fiscal weak tea
The good news about the State of the Union Address is the same as the bad news: there was really nothing substantive there when it comes to fiscal policy.
In a 6,849-word speech, Barack Obama started talking about fiscal policy 4,049 words in — and then spent 668 words on the subject. That’s less than 10% of the total speech, buried deep into what a magazine editor might call the “back of the book”.
There were a lot of expectations, in the run-up to this SOTU, that Obama would present some really substantive proposals on the fiscal front. But it was not to be. There was a very vague hand-wave on the tax front — both corporate and individual taxes should be “simplified”, he said, without giving any details on the kind of loopholes that he wanted to eradicate. (Mortgage interest tax deduction? We can but hope.)
There were no proposals for tax hikes at all, despite the fact that any good-faith attempt to tackle the budget deficit will simply have to raise the tax base. And the spending-cut proposals were pretty weak tea too: the only ones with numbers attached were a spending freeze designed to save $40 billion a year over the next ten years and “tens of billions of dollars” in defense spending. Given America’s trillion-dollar deficits, this kind of thing barely makes a dent.
Obama did address the big elephant of spending — entitlements — but in a very vague way, including this cryptic passage:
To put us on solid ground, we should also find a bipartisan solution to strengthen Social Security for future generations. And we must do it without putting at risk current retirees, the most vulnerable, or people with disabilities; without slashing benefits for future generations; and without subjecting Americans’ guaranteed retirement income to the whims of the stock market.
The only way of doing this, I think, is to raise the Social Security tax somehow, perhaps by raising or abolishing the cap on income it’s applied to. But if that’s what Obama meant, the fact that he couldn’t bring himself to say it is dispiriting, and suggests to me that nothing is going to happen in reality.
All that said, however, I do feel that the relatively minor place that fiscal policy had in SOTU is entirely appropriate. I would have liked to see more concrete proposals, but I don’t think that fiscal policy is or should be the top priority for the administration right now. I’m a financial journalist, so it’s something I naturally focus on. But the president has a much bigger job. And with the financial-reform bill now passed, along with two big stimulus bills, it’s time for him to concentrate on other priorities too. Fiscal policy is important, but reducing unemployment is much more so.