Wednesday, January 26, 2011


To this old bird, this sounds like one of those official speeches one hears from a defeated leader. Rah-rah-rah. Only…there’s nothing to rah about.

Obama has at least found a way to defend infrastructure spending. We seem to have come full circle: much of the expansion of the Federal government in the 1950s and 1960s was justified by nationalism. The Interstate Highway System started as a “defense” project, and much of the expansion in education and research similarly. So now we have Obama defending these things as appropriate for “competitiveness.” At the same time, though, he plans to cap a great deal of spending. The states are cash-strapped, and Obama has committed to a course where the Federal government will not help them. So just where is the funding for all this education and research going to come from?

SOTU croaks I approve of:

But I think it sounded oddly discordant, as if the economic crisis is a best forgotten nightmare even though we still have 9.5% official unemployment and a housing sector in deep distress. It's not as if GDP is growing at some jaw dropping pace. So, to my ears it was oddly out of touch. “Winning the future” would be a lot more inspiring if we were all sure we were going to survive the present.
Overall, however, I have no idea what the vision here was. We care about the future! But we don’t want to spend!
 Mark Thoma (Economists View):

[...] How do we help those who need a job right now? Solving the more immediate job problem needs to be first and foremost on our national agenda, but this was not addressed in the speech. [...] it wasn't lack of innovation or lack of competitiveness that got us into this mess, it was an out of control financial sector. [...] We need to get our deficit under control, but not before the economy is ready for it. [...] there needed to be more emphasis on the fact that eliminating tax cuts for the wealthy and spending cuts will not solve our budget problem by themselves. [...] a spending freeze while population is growing amounts to a cut in per capita spending. While this sounds courageous, it's actually the easy way out since it avoids tough choices on which programs to cut and which programs to preserve.

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