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A Fragile State of the Union

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The challenge facing America now is arguably greater than that facing the U.S. at the end of WWII. Victory in Europe and the Pacific delivered a much needed sense of achievement and resolution to the attack on Pearl Harbor. This has not been the case in Iraq or Afghanistan. While Bin Laden's death has no doubt provided some catharsis, it comes at the expense of two long, hard wars whose achievements are harder to quantify. Iraq looks on the verge of a collapse into anarchy and it is hard to feel optimistic about the future of an Afghanistan without coalition troops.

More striking still is the contrast between the home front now and at the end of the Second World War. Even if Iraq and Afghanistan had been a huge success the thought of some Marshall plan for either country beggars belief. With the deficit spiralling out of control, harsh cuts to defense spending and an urgent need to re-energize the U.S. economy America itself could use some rebuilding. In his state of the Union, Obama cited the Golden Gate Bridge and Hoover Dam as examples of a time when America rebuilt after economic hardship. However, he could only pledge to "sign an executive order clearing away the red tape that slows down too many construction projects." This was not a commitment to put a man on Mars in the next ten years, or to connect the eastern seaboard by high-speed rail.

President Obama recognized that his grandparents enjoyed "the basic American promise that if you worked hard, you could do well enough to raise a family, own a home, send your kids to college, and put a little away for retirement." In no uncertain terms he stated that "the defining issue of our time is how to keep that promise alive. No challenge is more urgent. No debate is more important." Now he just has to convince the voters that he is the president to address that challenge in the next four years. By Obama's reckoning four million jobs were lost in the six months before he took office, with another four million following before his policies took effect. While businesses created three million jobs in the last 22 months, that still leaves a deficit of 5 million American jobs. Coincidentally the voters who filled those jobs would account for roughly half of Obama's 2008 margin of victory, and would have swung it for George H. W. Bush against Clinton in 1992.

On taxes Obama came out with a reiteration of his populist "let's not tax Joe the plumber" strategy. While this worked in 2008 due to anti-financial institution sentiment I'm not sure it's going to be enough to win over the Occupy movement. His Attorney General appointed task force to crack down on risky lenders may be too little, too late. I also find it hard to believe that taxing American multinationals who rely on cheap overseas labor will help them to drive down prices and enable consumers to buy American. It will also make his goal of increasing U.S. exports harder, as comparative advantage on high-end goods goes down with rising costs to American manufacturers. People pay a premium for quality, as Apple have deftly proven, but how much would people be willing to pay if iPhone components weren't manufactured in China?

Ironically for an election year, the defense portion of the speech felt tacked on, and as if it may have been written in the limo on the way to the Capitol. In truth, the only military aspect of the speech I could get behind was Obama's promise that he would launch a program to provide incentives to U.S. business to hire veterans. The rest of his speech attempted to take partial credit for the Arab Spring (where were you on Tunisia again Mr. President?) and remind Americans that in the fight against terrorism, "we got him." Subtle and statesman-like this was not. His new defense strategy leaves me cold, and will have even centrist Democrats feeling uncertain given unfolding events in Iran and Syria. Hillary Clinton looked pretty uncomfortable as Obama muddled his way through what was tantamount to an acceptance that America needs to take a step back from the world stage for the next four years.

This State of the Union gave Obama the chance to set his stall out for November's election, and I've got to say I came away thinking 2012 might be there for the taking for a Republican candidate promising voters a very different type of change. When Obama said "I bet most Americans are thinking the same thing right about now," I wonder how many were thinking about Mitt Romney taking the oath of office.

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Obama Romney
332 206
Obama leading
Obama won
Romney leading
Romney won
Popular Vote
33 out of 100 seats are up for election. 51 are needed for a majority.
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Holdover
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Democrats* Republicans
Current Senate 53 47
Seats gained or lost +2 -2
New Total 55 45
* Includes two independent senators expected to caucus with the Democrats: Angus King (Maine) and Sen. Bernie Sanders (Vt.).
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