President Obama did not propose a massive stimulus package on Tuesday night. He didn’t grip the third rail of a social issue. He defended health care reform—but agreed that it could be improved. He said he was open to negotiating with Republicans on a corporate tax cut. He spoke favorably about clean-coal technology and nuclear energy. He noted that his budget would freeze spending. If Obama’s message to the country was about competitiveness and the future, the speech he gave to Congress contained very little that would, or could, repulse a rock-ribbed Republican. It’s a sign of the speech’s measured ambitions that the biggest complaint from the opposite party was that Obama didn’t go far enough.
Call it the State of "What-House-Republicans-Would-Conceivably-Pass" Union address.
White House officials told reporters Tuesday that the speech would not be a laundry list of new proposals. They were right. Obama offered little in the way of new anything. What he did propose amounts to a modest increase in spending that will be more than paid for in his budget, which will cut a lot more. These little bits of pasta won’t add too many calories to a country on a diet. If he can keep the debate focused on this future of which he speaks, he’s going to be in good shape. If he lets Republicans turn the debate into a contest over who can cut more, he’s going to lose. In fact, he’s already conceded that.
Unemployment remains higher than 9 percent, and there’s an election in less than two years. This was a speech yoked to those two realities. Rarely has a president’s political fate been so tightly bound to the need for the private sector to create jobs and sell products overseas.
And though spending increases of any sort could get stuck in the sinkhole of a Republican-led House of Representatives that is ferociously dedicated to domestic spending restraint, the right tone—and the right type of outreach—could conceivably convince the business lobby to pressure the GOP’s governing wing to respond favorably.
Complicating matters for Obama is the dismal jobs picture: Regardless of whether he gets credit for cutting spending, his reelection is in serious jeopardy unless the unemployment rate starts to decline and business starts to disgorge the cash it’s hoarding. It’s not in Obama’s interest to jockey with Republicans over a budget that contains everything he wants to get accomplished during the year.
He can make a good case that his frenetic lame-duck session provided the demand-side stimulus, provided some certainty about tax rates, and boosted economic forecasts; now he needs to get businesses to supply the jobs.
Among the measures with the best chance of passage are the ones dealing with nuclear energy, natural gas, and clean-coal technology. A top Republican leadership aide said that there is a “majority and consensus” in both chambers about the usefulness of the additional $2 billion Obama wants to spend on new clean-energy technology. ($2 billion seems a pittance—but it increases by one third what’s already been budgeted.) House Speaker John Boehner, R-Ohio, could simply put the increase up for a vote. Republicans could even work toward Obama’s goal of 80 percent of energy consumption by 2045 will come from clean technology.
On education, too, Obama and Republicans, including Boehner, are fairly close to agreement on what they see as the flaws of No Child Left Behind. So long as the bill is considered discretely, there’s no particular reason—outside of a knee-jerk effort to block anything proposed by the White House—why Obama and House Republicans can’t meet in the middle here.
The same goes for Obama’s national wireless initiative. The administration will make it much easier for the telecommunications industry to extend broadband infrastructure to almost the entire country. Net neutrality battles will complicate any wireless legislation, but government incentives to get 4G into rural America are relatively uncontroversial.
Who’d object to spending hundreds of millions to hire and retain 100,000 science and math teachers?
Obama will run into problems on trade agreements, like one with South Korea that he sent to the Senate, but not with Republicans. The opposition will come mostly from Democrats.
Infrastructure spending is harder. Obama wants to spend $50 billion over six years, what the administration calls an “up-front investment.” He wanted the same thing last year, but it couldn’t pass with Democrats controlling both houses of Congress. Republicans are skeptical of increases for high-speed rail and mass transit, the type of programs that strike them as wasteful and that disproportionately benefit Democratic constituents. They like highways better. It will be politically untenable for them to pass a bill that increases the deficit. Republicans in charge of the House Transportation and Infrastructure Committee do want a bill that deals with long-term issues, as does virtually every sector of industry. But there is no way that Republicans will agree to a gas-tax increase, which is how Obama's deficit commission proposed to pay for more road projects. To get to $50 billion, Obama is going to have to spell out where the money comes from.
Within the budget process, Obama said Tuesday night he’s willing to work with Republicans on reducing corporate tax rates. This seems to be a large concession from the president of a party traditionally concerned with making sure that everyone pays their fair share. There are so many exemptions built in to the current law that each beneficiary will fight to preserve their own while endorsing the overall concept of closing loopholes. But it’s doable. “There’s room for compromise on that,” the Republican aide said.
The American people remain skeptical of government spending. It’s the job of Obama to persuade them that the economic interventions of the past two years were necessary—but that they will be quite different than those which are yet to come. Increasing spending on clean-energy technology by a third is not a bank bailout. Spending money to train and retain 100,000 science and math teachers does not play as badly as assuming the debts of an American auto company.
As envisioned by the White House, “Winning the Future” is more than gift-wrapping two years worth of "Obamanomics." At once patriotic (we want to be the best!) and anodyne (who doesn’t want to be the best?), this political frame could be the president’s best hope to win a second term.