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Reaction From Expert Bloggers

Top Experts In A Variety Of Fields Who Comment On Key Issues For National Journal's Expert Blogs Discuss Obama's Address

Read the full annotated transcript here.

Obama: "We will rebuild, we will recover, and the United States of America will emerge stronger than before."


Fred Smith, President, Competitive Enterprise Institute: "At the Competitive Enterprise Institute, we applaud President Barack Obama's optimism and share his belief that 'we will rebuild, we will recover, and the United States of America will emerge stronger than before.' Unfortunately, many of the policies he proposed last night -- from spending to regulation to trade -- will delay rebuilding and recovery of America. While there were wonderful moments in the President's speech in which he lauded individual initiative and innovation - for instance, he spoke of 'the imaginations of our entrepreneurs and the pride of the hardest-working people on Earth' -- the central planning prescriptions he advocated would have the effect of penalizing individual achievement and the creativity necessary for a more rapid recovery."

Obama: "The flow of credit is the lifeblood of our economy. The ability to get a loan is how you finance the purchase of everything from a home to a car to a college education, how stores stock their shelves, farms buy equipment, and businesses make payroll. But credit has stopped flowing the way it should."


James K. Galbraith, Professor of Economics, University of Texas: "A remarkable speech, full of good sense and pragmatic determination. But the analysis of the banking crisis relies on a defective metaphor – restoring the "flow of credit." Credit is not a flow. Banks are not short of funds. (They never are.) They are not blocked up. Adding funds to banks does not make them more willing to lend.

"Credit is a contract. The collapse of values has left the banks short of good borrowers. There are not enough customers with profitable projects. There are not enough customers with stable incomes. There are not enough customers with adequate collateral. Banks will not lend until there is profit in it. And customers will not borrow, until they see more opportunity than risk, and until they have assets they can borrow against.

"Guaranteeing bad assets will not stabilize the price of housing. It will not stabilize incomes and profit opportunities in the economy. Therefore it will not solve the credit problem.

"Meanwhile the guarantees will support incumbent management and shareholders. They will add vast sums to the public debt – directly or contingently – making achievement of the president's other priorities more difficult. And they will distort the distribution of wealth, by guaranteeing the financial position of an elite group while that of so many others is collapsing.


"Keeping the existing management in place means that we will not arrive at clean and trustworthy audits of the banks. Therefore no one will know to what degree they actually are, or actually are not insolvent. No one will know just how bad the bad assets are, and most will (prudently) suspect the worst. This collapse of trust means that lending to the banks, including by other banks, will continue to be impaired.

"As of tonight, the president and his team are committed to finding an actual solution to the banking crisis. To get to that solution, they need to come to grips with the problem. And for that, they need, first of all, to escape from the prison of a facile metaphor."

Obama: "We have launched a housing plan that will help responsible families facing the threat of foreclosure lower their monthly payments and refinance their mortgages. It's a plan that won't help speculators or that neighbor down the street who bought a house he could never hope to afford, but it will help millions of Americans who are struggling with declining home values."

John Berlau, Director, Center for Entrepreneurship: "Perhaps with the popular reaction to Rick Santelli's 'tea party,' in which the CNBC commentator elicited cheers for saying that the thrifty should not have to subsidize foolish borrowers and banks, President Obama took pains in his State of the Union address to argue that his foreclosure plan will not benefit the spendthrift and irresponsible.

"Whether it will or it won't, we'll see when the full plan is unveiled next week. Regardless, in Obama's foreclosure rescues there are two overlapping groups that would fall into the category of, in the title of Amity Shlaes' great economic tome, the 'forgotten man' -- They are taxpayers and savers who not only will be at risk for more than $275 billion in tax dollars for the plan (in additon to the trillions for the Obama's stimulus and the Bush-Paulson-Obama-Geithner bailouts) but will also be at risk for further losses in their pension and mutual funds from the proposed bankruptcy 'cramdown' by Obama and Democrats that would radically change contract law regarding mortgage securities.

"Because they were rated AAA, mortgage-backed securities sold by the banks were picked up in some degree by nearly all pensions and mutual funds. The losses on loans that politicians were asking, and under Obama's plan paying, banks to take, are most often not even the banks' own losses. It's investors, including middle-class folks with 401(k)s who will take it on the chin.

"Yet the bankruptcy 'cramdown' –- in which bankruptcy judges can reduce payments and modify mortgage contracts in lieu of the foreclosure that both parties agreed to as a remedy for default -— as well as policies encouraging banks to ignore their contracts to the investors who own the mortgages will prevent investors from having their contracts honored. Right now, there is a vicious villification campaign targeted at William Frey, an investor in mortgage-backed securities who is suing Countrywide Financial for modifying mortgages without regard to investor interest.

"If both borrowers and banks are encouraged to disregard the terms of the contracts they signed, the U.S. will face a longer road to recovery. And the trust badly needed for credit markets to function will not be restored, despite President Obama's good motivations and uplifting speeches."

Obama: "We will act with the full force of the federal government to ensure that the major banks that Americans depend on have enough confidence and enough money to lend even in more difficult times. And when we learn that a major bank has serious problems, we will hold accountable those responsible, force the necessary adjustments, provide the support to clean up their balance sheets, and assure the continuity of a strong, viable institution that can serve our people and our economy."

Gary Burtless, Chair in Economic Studies, Brookings Institution: "Though the President did not directly address the crisis in confidence in America’s banks until completing about a third of his speech, the banking crisis represents the most critical issue requiring decisive government action right away. Understandably, the President only sketched out his Administration’s proposed response to the problem. He does not suggest that the government should take immediate control of an imperiled bank, but he does promise that public policy will be directed to assuring “… the continuity of a strong, viable institution.” This doesn’t tell us whether the viable bank will be privately or publicly managed, nor does it give any indication of how the gains from future profitability will be divided between the bank’s current stock and bond holders and federal taxpayers. Economists and financial market analysts have been eagerly awaiting these details. Until the Administration offers a clearer blueprint of its plan, U.S. and global financial markets are likely to remain turbulent and depressed."

Obama: "Our children will compete for jobs in a global economy that too many of our schools do not prepare them for."

Daniel Serwer, Vice President, Center for Post-Conflict Peace and Stability Operations, United States Institute of Peace: "This is a president who believes strength has to be rebuilt from within. Without economic recovery, he suggests, America cannot lead. He is acutely aware of other countries: he mentioned the competition they offer, the performance standards they set, the scientific and technological advances they have made. He believes that America needs to meet those challenges--but an America weak within cannot be strong abroad."

Obama: "In the wake of war and depression, the GI Bill sent a generation to college and created the largest middle class in history. And a twilight struggle for freedom led to a nation of highways, an American on the moon, and an explosion of technology that still shapes our world. In each case, government didn't supplant private enterprise; it catalyzed private enterprise. It created the conditions for thousands of entrepreneurs and new businesses to adapt and to thrive."

Grace-Marie Turner, President, Galen Institute: "President Obama equated his initiatives in health care, as well as energy, and education, to the creation of the railroad system, the interstate highway system, and putting a man on the moon. But these temporary transportation and technology initiatives created a platform for tremendous growth in the private sector. What he is proposing now is much different. He wants to create tens of millions of jobs that would have to be funded in perpetuity by tax dollars –- taxing the very people who we need to create the next generation of economic growth. Forming millions of taxpayer-funded jobs is a very different vision for America than creating a climate that rewards and encourages private sector initiative. This is a very different vision for the direction of our economy, one in which the government plays the central role."

Ed Hamberger, President and CEO, Association of American Railroads: "As President Obama noted last night, it is critical for business and government to work together to build America's future. America’s railroads are already doing just that. Despite drastic reductions in shipments due to the economy, the railroad industry plans to invest $9 billion dollars this year alone to enhance and expand infrastructure. Since 43% of America's inter-city freight moves by rail, today’s investment lays the foundation for a more efficient economy tomorrow.

"Freight rail also addresses President Obama's concerns about energy. Railroads are the most fuel-efficient form of ground transportation; in fact, a freight train can move a ton of freight an average of 436 miles on just one gallon of fuel. At the same time, freight rail contributes to cleaner skies – every ton of freight moved by rail instead of highway reduces greenhouse gas emissions by two-thirds. America's freight railroads look forward to continuing to partner with our nation’s leaders to put America back on track."

Obama: "Now is the time to jumpstart job creation, re-start lending, and invest in areas like energy, health care, and education that will grow our economy."

Robin Chase, CEO, GoLoco, Meadow Networks: "The role of transportation is subsumed under energy and always linked with alternative fuel and energy efficient vehicles. Little mention of demand management and other mobility options (pedestrian, bike, transit, and other ways to expand access without necessitating movement)."

Thomas Gibson, President & CEO, American Iron and Steel Institute: "We’re glad to see that the President recognized clean coal as part of the solution to energy independence. The U.S. will also need to embrace nuclear energy, which we’re surprised he omitted since it’s an essential part of any carbon-free electricity mix, off-shore oil and gas exploration, carbon sequestration technologies, bio-gas technologies, wind and other renewables."

Gary Burtless, Chair in Economic Studies, Brookings Institution: "Some critics of an ambitious agenda worry that it is unwise for a new Administration to address all three of these issues at once, especially at a time when it will be dealing with the problems of the banking sector and the implementation of the stimulus package. I disagree. The country has a deep bench of talent, both in policymaking and in policy analysis. Even if Congress cannot be persuaded to act in all these areas at once, it is reasonable for the Administration to mobilize the nation’s talent to deal with the fundamental problems. The problems are not getting smaller or going away because the banks are in crisis or the economy is shrinking. Franklin Roosevelt faced even bigger problems when he took office in 1933, but this did not prevent him from dealing –- imaginatively –- with the nation’s long-term problems. In addition to addressing the banking crisis and a soaring unemployment rate, his Administration proposed and implemented Social Security, unemployment insurance, fair labor standards, and a federal-state system of social assistance. One reason that the humanitarian problems facing President Obama are so much smaller than the ones that faced Roosevelt is the existence of social safety net programs established in the New Deal."

Jack Gerard, President and CEO, American Petroleum Institute: "President Obama's speech elevated energy as a critical national priority and signaled the importance of developing a comprehensive energy policy. That policy should include all forms of energy, including oil and natural gas. Unfortunately, a pattern seems to be emerging when it comes to developing America's offshore resources—delay. We saw it earlier this month when Secretary Salazar extended by six months the comment period on the upcoming five-year plan for oil and natural gas development, and we're seeing it now from Governor Kaine who is asking for a postponement of an offshore Virginia lease sale, scheduled two years ago after extensive public comment and environmental review.

"We cannot afford to delay. Our nation must deal with its critical energy challenges now and listen to the wisdom of the American people. According to a poll released this week, 61 percent of Americans who voted in the 2008 presidential election say they want offshore oil and natural gas development.

"The American people should not be deprived of this nation's energy resources. Oil and natural gas power manufacturing and transportation and provide essential raw materials. The oil and natural gas industry is ready to safely develop our natural resources, spur economic growth, reduce our dependence on foreign oil, and generate new tax revenues for federal, state and local governments."

Obama: "I ask this Congress to send me legislation that places a market-based cap on carbon pollution and drives the production of more renewable energy in America."

Frances Beinecke, President, Natural Resources Defense Council: "This is the first time in history a sitting U.S. president has called on Congress to pass legislation to limit carbon pollution that will build a sustainable economic recovery by repowering America with clean energy. Investments from a carbon cap can cut our dependence on oil, make us more energy efficient and produce jobs at home. This represents a new era in America's approach to energy that will break our reliance on dirty fossil fuels and push us to develop new technologies. This is the leadership America needs to transform our energy system, protect our planet and meet the challenges of the 21st century."

Robin Chase, CEO, GoLoco, Meadow Networks: "Seems like he is still open to both cap and trade and carbon taxes? Or does market-based MEAN cap and trade?"

Bill Meadows, President, The Wilderness Society: "There was so much that was encouraging about President Obama's speech to Congress and the nation. We're particularly pleased that the President once again voiced his commitment to placing an economy-wide cap on the emissions of carbon pollution. President Obama's willingness to tackle the problem is a welcome change from the inaction of the past eight years. Limiting carbon emissions and making the shift to clean, renewable energy sources is essential to our national security, and to the health of our economy and our environment. We just hope that members of Congress will set aside partisan differences and pass the strong climate bill the president has requested."

Jon A. Anda, Executive-in-Residence Fuqua School of Business, Visiting Fellow Nicholas Institute: "My reaction to the President's request for climate legislation from Congress was this: what about the Dream Team? Think about the toughest issues in climate legislation and who is best to help Congress navigate these waters. Lisa Jackson on what percentage of our 6 billion or so annual tons of co2 emissions are covered, how new sources are handled, and the efficacy and monitoring of offsets. Joe Aldy and Billy Pizer on the issue of cost containment; where the very concept of a market price for carbon (and a hard cap on emissions) is at stake. John Holdren on stringency (both near and long term) where levels such as those proposed in USCAP may, or may not, be sufficient. Steven Chu (and the economists) on the degree to which we have a level playing field for competing clean technologies versus an emphasis on renewable portfolio standards and renewable subsidies. Hillary Clinton and Todd Stern on how our system will fit into international climate negotiations, and in particular, how we interact with China. Larry Summers (with Tim Geitner when he frees up) on how carbon and carbon derivatives are traded, how they are accounted for by emitters, how auctions are funded in the capital markets, and how many years of allowances outstanding is necessary to have a stable financial market. And Carol Browner to take her experience on how to integrate all of these issues into viable environmental policy. Perhaps President Obama's next step would be to have the Dream Team come up with climate policy principals to help Congress on these threshold issues."

Margo Thorning, Chief Economist, American Council for Capital Formation: "The President’s ambitious agenda contains many worthwhile initiatives, in particular for education and health care. However, the President risks undermining the potentially positive impact of the recently passed economic stimulus bill by calling on Congress to send him a bill to reduce carbon emissions through(most likely) a cap and trade system which will increase the price of energy to households and business. The President also wants to double the use of renewable energy in 3 years. The reason renewable energy has not significantly increased its overall share of the U.S energy supply in recent years in spite of large amounts of federal funding and subsidies is it that it costs substantially more than conventional energy. Substituting more expensive renewable energy for cheaper conventional is exactly the wrong medicine for the quite sick U.S. economy."

Thomas Gibson, President & CEO, American Iron and Steel Institute: "For some sectors of the economy cap and trade might be the best alternative, but based on the experience in the European Union it might not be a good fit for other sectors of the economy. In the case of energy intensive manufacturers exposed to international competition, such as steel, international sectoral agreements may achieve greater overall emission reductions than cap and trade, while keeping the global playing field level. This approach is finding agreed upon targets to lower CO2 emissions in the steel sector in each steel producing country, which can solve the comparability problem and have commitments to verifiable CO2 reduction targets. All that needs to be resolved are offsets for the additional cost of energy in each country, as each country’s energy policy may differ. Such a 'composite policy' (sectoral approach for globally traded goods and a cap or tax on regional parts of the economy such as energy) also ensures much greater CO2 emissions reductions globally, by virtue of its worldwide commitments."

Eileen Claussen, President, Pew Center on Global Climate Change: "President Obama understands that our economic recovery and our energy future are inextricably linked. By calling upon Congress to send him market-based global warming legislation, the President has clearly signaled that he understands the risks we face from unmitigated climate change. His talent for explaining tough problems and motivating us to work together to solve them is reason to feel incredibly positive about our ability to succeed in these critically important areas, despite the tough economic challenges we face."

Fred Smith, President, Competitive Enterprise Institute: "President Obama's proposal for a cap-and-trade system for energy could best be described as an anti-stimulus. It's a hidden tax that Obama's budget calculates would cost American consumers more than $300 billion a year in higher energy prices. And as Myron Ebell, CEI's director of Energy and Global Warming Policy, puts it on our blog site, 'Cap-and-trade is another name for energy rationing. It is a tax that will benefit some big business special interests by raising people's electricity, gasoline, and heating bills through the roof.' And the hidden nature of the tax will violate Obama's commitment to transparency.

"Iain Murray, CEI's Senior Fellow in Energy, Science and Technology, points out that Obama's ethanol policy both the economy and the environment: 'If the President means that he will double the use of biofuels, this is likely to mean a significant increase in corn ethanol production, resulting in greater diversion of the corn supply into fuel production. This will likely increase already-inflated food costs (the recent price drop would have been significantly greater were it not for ethanol manufacture) and thereby increase food insecurity in a recession.'"

Obama: "We will invest $15 billion a year to develop technologies like wind power and solar power, advanced biofuels, clean coal, and more efficient cars and trucks built right here in America."

Hillary Mann Leverett, CEO, Stratega: "Obama’s proposal to spend $15 billion developing alternative fuels and energy technologies is a waste of money, but it is also worse than that. $15 billion is a drop in the bucket that will do nothing to obviate the fact that, even when oil was over $100 per barrel, it was still the cheapest liquid on the planet by volume. We will be using oil-based liquid fuels and other hydro-carbons for various energy needs for decades to come. President Obama (and other politicians in both parties) should stop selling the snake oil that the United States can, and should, become 'energy independent' and, instead, focus on engaging key energy producing states to ensure long term stability in international oil and gas markets. We should be investing in technologies that would enable us to use hydro-carbons in a more environmentally-friendly manner, and not waste time and money in the quixotic quest for non-hydro-carbon-based energy sources."

Obama: "The nation that invented the automobile cannot walk away from it."

Robin Chase, CEO, GoLoco, Meadow Networks: "But we do need to look beyond it. Americans of the future will not be well served by continuance of the status quo car dependence over every other mode. More and more Americans will seek alternatives to the car that consumes 18 percent of their incomes. And they will live in urban settings, and be older -- demographics that are also ill-suited to car dependence."

Jeffrey Frankel, Professor of Capital Formation and Growth, Harvard University: "When President Obama referred to 'the country that invented the automobile,' my reaction was "Germany?!"

Obama: "We must also address the crushing cost of health care. This is a cost that now causes a bankruptcy in America every 30 seconds. By the end of the year, it could cause 1.5 million Americans to lose their homes. In the last eight years, premiums have grown four times faster than wages. And in each of these years, 1 million more Americans have lost their health insurance. It is one of the major reasons why small businesses close their doors and corporations ship jobs overseas. And it's one of the largest and fastest-growing parts of our budget."

Gary Burtless, Chair in Economic Studies, Brookings Institution: "The first couple of sentences express succinctly why the problems of the health care system create such deep humanitarian distress. The last sentence tells us why the problems represent a critical budgetary concern. While many commentators focus on a general 'entitlement crisis,' the simple fact is that an overwhelming percentage of future federal deficits is traceable to outsized growth in public spending on health care and insurance. If the growth of health spending were curtailed, most of federal government’s long-term budget problem would disappear. Assuming that health spending growth cannot be controlled, the nation must identify a new way to pay for the spending, publicly or privately. This is not a debate that can be postponed because we face a banking crisis or recession. In fact, a shrinking economy or slower growing economy will only make the problem worse. The President is right to call for debate, and the public is right to expect the Congress will act … whether or not our economy starts growing again."

Mary R. Grealy, President, Healthcare Leadership Council: "It's important to address the issue of costs without undermining innovation. That can be done through expanded use of HIT, payment reform to shift dollars to use of evidence-based medicine and best practices, and emphasizing prevention and chronic disease management."

Karen Davis, President, The Commonwealth Fund: "The President correctly noted that the rise in health care costs this decade has coincided with an erosion in health insurance coverage and with rising economic insecurity for American families caused by the shifting of a greater share of financial responsibility for coverage and health care directly to families. The number of Americans who face difficulty paying medical bills and have accumulated medical debt is staggering, with middle-income families earning less than $60,000 a year particularly squeezed. In a recent Commonwealth Fund survey, 72 million adults under age 65 reported difficulties paying medical bills or accumulated medical debt. Of those experiencing medical bill problems, about 60 percent were insured at the time they incurred their expenses, 30 percent took on credit card debt, and 10 percent took out a mortgage against their home or took on a loan."

Obama: "Already, we've done more to advance the cause of health care reform in the last 30 days than we've done in the last decade. When it was days old, this Congress passed a law to provide and protect health insurance for 11 million American children whose parents work full-time."

Marian Wright Edelman, President, Children's Defense Fund: "I was very pleased that President Obama noted the passage of the Child Health Insurance Program (CHIP) expansion bill that completed the unfinished business of the last Congress. This legislation makes an important initial investment in strengthening the quality of children's health care and improving health outcomes. But the CHIP legislation designed for passage during the Bush administration is not comprehensive child health reform and we must now move forward with real health care reform for all children - and for everyone in America - in 2009. CHIP's strengths and weaknesses can become guideposts for how to create a sound child health system within overall health care reform that guarantees comprehensive, affordable health coverage to all, reform, as the President said, 'cannot wait, must not wait, and will not wait another year.'"

Obama: "Our recovery plan will invest in electronic health records and new technology that will reduce errors, bring down costs, ensure privacy, and save lives."

Mary R. Grealy, President, Healthcare Leadership Council: "The President clearly realizes the importance of making investments in health care, such as electronic health records and prevention, that will yield long term returns in a safer, higher quality, more efficient health care system and a healthier population."

Obama: "There will be many different opinions and ideas about how to achieve reform, and that's why I'm bringing together businesses and workers, doctors and health care providers, Democrats and Republicans to begin work on this issue next week."

Mary R. Grealy, President, Healthcare Leadership Council: "The HLC applauds the President for his inclusive and bipartisan approach to health care reform. This issue requires the knowledge of those that are on the front lines of the health care delivery system, those that pay for the care and the consumers of health care. He will need broad support for the significant changes we must make to improve that system."

Obama: "So let there be no doubt: Health care reform cannot wait, it must not wait, and it will not wait another year."

Len Nichols, Director of the Health Policy Program, New America Foundation: "As we face mounting economic challenges, the link between health care and our economy has never been more apparent. We cannot restore our economic health if we ignore our health care system. With the help of leadership that extends from the President to Congress to Americans across the country, we will tackle our health care crisis this year and in doing so will lay the groundwork for a more sustainable Medicare program. We must take responsibility for the health of our nation, its economy, and the quality of care that is delivered in the U.S. The message is unambiguous."

Richard Kirsch, National Campaign Director, Health Care for America Now: "President Obama made it clear that 2009 is the year we pass health care reform. We call on Congress to join with President Obama to pass a guarantee of quality, affordable health care for all this year.

"Over the past seven months, 188 Members of Congress have signed on with Health Care for America Now in a commitment to achieving a national solution to the health care crisis in 2009. They have signed on in support of a guarantee of quality, affordable health care we all can count on with benefits that meet our needs and the choice of keeping our private insurance or joining a new public health insurance plan.

"Now we challenge the rest of Congress to join with the President, to stand up to the powerful special interests that profit handsomely off our broken system, to reject phony arguments and bogus excuses, and to support reform that puts our families' health and the health of our nation's economy before insurance and drug company profits."

Scott P. Serota, President and CEO, Blue Cross and Blue Shield Association: "President Obama tonight correctly diagnosed many of the problems facing the U.S. healthcare system and our economy. We appreciate the president’s efforts to find common ground and pledge to work cooperatively to enact comprehensive healthcare reform.

"Effective healthcare reform will mean access to better care for more Americans while at the same time reining in costs for families and businesses struggling to pay their bills.

"Building upon the employer-based system, which covers more than 160 million Americans, we can reduce the number of uninsured. We must encourage research on what works and get that information into the hands of doctors and patients, change incentives to promote better care instead of paying for more services, and encourage prevention and wellness. These are critical steps that the 39 independent Blue Cross and Blue Shield companies are already taking in their local communities.

"We look forward to collaborating with the administration and Congress to pursue meaningful reforms that will improve access to quality, affordable coverage."

Nancy H. Nielsen, President, American Medical Association: "America's patients and physicians want meaningful progress on health system reform this year, and the American Medical Association applauds President Obama's commitment to achieving that goal. In these tough economic times, the need for health system reform that provides coverage and high quality, affordable health care for all Americans has never been more clear. We must strengthen the public-private mix of health insurance, and achieve greater value from the nation’s health care spending. President Obama’s call for greater investments in research, preventive care and electronic health records will help physicians keep patients healthy. We pledge to work with President Obama and Congress to improve the health care system for all Americans."

Henry J. Aaron, Bruce and Virginia MacLaury Senior Fellow, The Brookings Institution: "In his speech to Congress on Tuesday night, president Obama made clear three vital points about health reform. First, during just the first month of his still-young administration a great deal has already been accomplished. Second, he is committed to broader vision of systemic reform to improve the quality and coverage and to slow the growth of spending. Third, this year's objective is to make a credible down payment on that vision. This way of framing the issue reflects legitimate pride in what has already been accomplished, a firm commitment to far reaching change, and a realistic appreciation of what is possible in the near term."

Karen Davis, President, The Commonwealth Fund: "The President's call to act this year to reign in our nation's unsustainable spending on health and provide affordable coverage for all Americans is particularly poignant given the troubling fiscal forecast and the millions of families struggling under a mountain of medical debt. A recent report by the Commonwealth Fund Commission on a High Performance Health System shows that if we embark on comprehensive health reform this year, it is possible to simultaneously expand coverage and financial protection to all Americans, improve the quality and efficiency of health care, and reduce national health spending by $3 trillion over 11 years. We must make these investments now in order to reap significant dividends by the end of the next decade."

Obama: "To preserve our long-term fiscal health, we must also address the growing costs in Medicare and Social Security. Comprehensive health care reform is the best way to strengthen Medicare for years to come. And we must also begin a conversation on how to do the same for Social Security, while creating tax-free universal savings accounts for all Americans."

John C. Goodman, President and CEO, National Center for Policy Analysis: "This is disappointing. Especially considering how huge the problem is. Two things are missing here: 1) An acknowledgement of how truly threatening the problem is -– to taxpayers, to the elderly and to the federal budget, and 2) an acknowledgement that we must replace pay-as-you-go (chain letter) finance with a system under which each generation pays its own way."

Obama: "We'll eliminate the no-bid contracts that have wasted billions in Iraq."

James Jay Carafano, The Heritage Foundation: "When the president recycles campaign rhetoric for a historic address to the nation you know there is trouble ahead. To address the challenges of defense spending in the years ahead his answer is: "We'll eliminate the no-bid contracts that have wasted billions in Iraq, and reform our defense budget so that we're not paying for Cold War-era weapons systems we don't use." That no bid-contract are at the root of government contracting challenges is a myth dispelled many times over by every serious government audit of contracting in Iraq, including the many reports of the Special Inspector General for Iraq. Also, since we used almost all our Cold War systems in Iraq and Afghanistan from tanks to cruise missiles, they obviously still have utility...and they are already paid for. New systems like missile defense and the F-22 were not fielded until after the Cold War and justified on post-Cold War needs so cutting them makes no sense either. If all the president can do is recycle campaign rhetoric then this suggests his administration has no real clue how to address future defense challenges--other than just cut something."

Obama: "Finally, because we're also suffering from a deficit of trust, I am committed to restoring a sense of honesty and accountability to our budget. That is why this budget looks ahead 10 years and accounts for spending that was left out under the old rules -- and for the first time, that includes the full cost of fighting in Iraq and Afghanistan. For seven years, we have been a nation at war. No longer will we hide its price."

Gordon Adams, Professor of International Relations, School of International Service, American University: "This is an important decision, as the costs of the war were concealed until the last minute for the past eight years. At the same time, the projected costs are likely to be misleading, as policy for Iraq withdrawal is still being shaped and the escalation in Afghanistan is still being designed. No cost estimates in the budget document this Friday will be accurate, as a result. More important, budget discipline in the Pentagon requires very tight constraints on requests for supplemental funding, which the President does not discuss. If war funding is to be included in the basic Pentagon budget, it needs to be traded off against other defense expenditures, not merely added to the bill."

Daniel Serwer, Vice President, Center for Post-Conflict Peace and Stability Operations, United States Institute of Peace: "What little he had to say specifically about foreign policy was important, if not surprising: he presaged a shift in priority from Iraq to Afghanistan, narrowing of objectives in Afghanistan and Pakistan to focus on terrorist safe havens, reduction of waste in military procurement, and a reassertion of American moral commitment and diplomatic engagement. This is not an expansive 'grand strategy,' but the hints of where we are heading are clear enough."

Obama: "I'm now carefully reviewing our policies in both wars, and I will soon announce a way forward in Iraq that leaves Iraq to its people and responsibly ends this war. And with our friends and allies, we will forge a new and comprehensive strategy for Afghanistan and Pakistan to defeat al Qaeda and combat extremism. Because I will not allow terrorists to plot against the American people from safe havens halfway around the world. We will not allow it."

Gordon Adams, Professor of International Relations, School of International Service, American University: "This is a fundamental strategic, planning, and budgetary mistake. With withdrawal from Iraq, the stress on U.S. forces will disappear. Unless the administration plans to grow the Afghanistan deployment to 160,000 (more than 100,000 above any current planning), that stress will not return. No strategic justification has been offered to explain this ground force growth. Unless the administration plans a future deployment elsewhere of the size of Iraq, there is no justification for this increase. Finally, in budget terms, the size of the force drives the rest of the defense budget. These additional forces will drive up budgets for pay, benefits, retirement, operations, and equipment acquisition, setting a base that will continue the unprecedented increase in defense spending, which has already more than doubled since 2000."

Col. Douglas Macgregor, (U.S. Army, ret.), Lead Partner, Potomac League, LLC: "The President must harvest savings from defense spending to off-set domestic spending making withdrawal from Iraq a vital national interest. Unfortunately, as soon as American forces leave -- whether in 19 months, 23 months, or five more years -- the facade of stability will collapse and the fight for power inside Iraq will devolve into a zero-sum civil war where only one side can win. Continuing the U.S. withdrawal and staying out of this fight will be President Obama's challenge."

Obama: "To overcome extremism, we must also be vigilant in upholding the values our troops defend -- because there is no force in the world more powerful than the example of America. And that is why I have ordered the closing of the detention center at Guantanamo Bay, and will seek swift and certain justice for captured terrorists."

Rachel Kleinfeld, Executive Director, Truman National Security Project: "Guantanamo has been one of the terrorists' best recruiting tools. Closing it is like closing terrorist recruitment centers worldwide. It's time we make this case very strongly. It is a real risk that a few people released might return to terror. But given that fewer than 100 prisoners are deemed a serious risk, those possible numbers are a tiny fraction of the numbers of people turning to violence because we are keeping Guantanamo open."

Obama: "Living our values doesn't make us weaker, it makes us safer and it makes us stronger. And that is why I can stand here tonight and say without exception or equivocation that the United States of America does not torture."

Hillary Mann Leverett, CEO, Stratega: "It was chilling to hear President Obama repeat his predecessor's solemn but false declaration that the United States does not torture – particularly when his administration has embraced the major tenets of President Bush's policies regarding detention without due process and extraordinary renditions. Of course, President Obama has directed that plans be drawn up to close the detention facility at Guantanamo Bay; if actually implemented, that would be a good thing. However, the Obama administration has affirmed, in federal court, the Bush Administration’s position that individuals detained by the U.S. military in Afghanistan have no right to due process. Presumably, this is the Obama administration’s position on detainees in Iraq as well. So, we'll close Guantanamo (maybe) but still detain people in indefinite detention in Afghanistan and Iraq. This is not exactly change we should believe in. Similarly, President Obama's choice for CIA director, Leon Panetta, defends the policy and practice of extraordinary renditions, even though it is well documented that renditions have led to individuals being subjected to torture -- including some, like the Syrian-Canadian Maher Arar, who had no documented involvement with terrorist activity. And, to top it off, President Obama is reserving the prerogative to authorize 'enhanced interrogation' techniques that are not endorsed by the Army Field Manual."

Obama: "In words and deeds, we are showing the world that a new era of engagement has begun."

Gordon Adams, Professor of International Relations, School of International Service, American University: "We need to rebalance the toolkit of American statecraft to accomplish these aims. We should not be asking the military to take on and expand their missions as a 'one-stop shopping' center for U.S. global engagement. Authorities created at DOD need to be transferred to State; capabilities need to be developed at State and USAID to take on the new missions. We need to avoid what JCS Chairman Mike Mullen described as the 'militarization of U.S. foreign policy.' The new budget will suggest whether the administration has set the nation on this course."

Obama: "I'm proud that we passed a recovery plan free of earmarks. and I want to pass a budget next year that ensures that each dollar we spend reflects only our most important national priorities."

Brian Riedl, Senior Policy Analyst, The Heritage Foundation: "The budget deficit has already tripled to $1.4 trillion this year. So President Obama's pledge to halve the budget deficit by 2013 is hardly ambitious. The end of the recession, phase-out of stimulus spending, and wind down of Iraq spending will halve the budget deficit on its own. Even though President's budget assumes peace and prosperity by 2013, the $533 billion target budget deficit would still exceed those under President Bush (and that was while fully funding a war in Iraq.)

"Furthermore, early indications suggest that tax increases would trump spending restraint in reducing the deficit. Spending would remain above 22 percent of GDP - a level that has been reached only 8 times in the past 62 years. Yet tax rates reportedly would rise for individuals and businesses in order to finance items such as a down payment on national health care. And the President is reportedly considering a statutory Pay-As-You-Go law, despite 20 years of Congress and Presidents ignoring PAYGO rules."

Obama: "If your family earns less than $250,000 a year -- a quarter million dollars a year -- you will not see your taxes increased a single dime."

Brian Riedl, Senior Policy Analyst, The Heritage Foundation: "Yet he has already signed into law a 62-cent increase in the federal tobacco tax. On the positive side, President Obama pledged to fundamentally reform Social Security and Medicare - the greatest budgetary challenge of our era. He promised to eliminate wasteful education programs and excessive subsidies for corporate agribusiness, and to 'go line by line through the federal budget in order to eliminate wasteful and ineffective programs.' And while the President's vague boast that he has 'already identified two trillion dollars in savings over the next decade,' invites some skepticism, it is certainly a step in the right direction. Overall, President Obama pledged modest spending restraint and deficit reduction. His forthcoming budget proposal will show whether he can truly deliver."

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