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Obama's State of the Union Challenge: Set the Course

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Will the president's state of the union address next Tuesday be another transcendent Obama moment?

As we've witnessed repeatedly, from the moment he burst on the national scene at the 2004 Democratic Convention in Boston to last week in Tucson, President Obama can touch Americans like no other political leader. He does so most often by providing the poetry that reminds us that we are all Americans, that "there is not a liberal America and a conservative America -- there is the United States of America." He invokes our common values, our common concerns. Can the president use his State of the Union address next week to call Americans to a common cause in a bitterly polarized politics?

The forbidding backdrop should rouse the president to his best. Forget about where legislators sit; the question is where they stand. The president faces an unremittingly hostile Republican majority in the Congress that benefited from obstructing everything he sought to do in his first two years, and that cowers in fear of its aroused right-wing base. He has a weak and divided Democratic majority in the Senate, compromised by its need for campaign cash, and divided by its conservative corporate wing. He faces a Beltway establishment, congealed in no small part by billionaire Pete Peterson's patrimony, fixated on deficit reduction.

At the same time, the actual state of the union, to use a technical economic term, sucks. In his first two years, Obama rescued the economy from freefall, saved the banks and auto industry from bankruptcy, and pushed for reform in areas vital to our future -- heath care, new energy, financial reform, education, Iraq and more, generating the greatest surge of progressive reform since the 1960s.

But outside the Beltway, the devastation continues. More than 20 million people are in need of full-time work; one in four homes with mortgages is underwater; foreclosures continue at record levels. 50 million people go without health insurance and costs continue to soar for those who have it. China has captured the lead in new energy, and gas prices are rising. The top six banks are more concentrated and bigger than they were before the collapse. The wealthiest 1 percent of Americans continues to capture about 25 percent of the nation's income, while controlling more wealth than 90 percent of Americans combined. Iraq may be winding down, but casualties and costs are rising in Afghanistan. The trade deficit is rising, back over $1 billion a day. Corporations, now exemplified by General Electric, pay for access to the Chinese market by handing over our most advanced technology. Tuition hikes are outstripping increases in aid programs. Classrooms grow more crowded as teachers are cut. Our decrepit infrastructure is increasingly dangerous to our health. It is ugly out here.

So what's a president to do? In 1994, after the election of the Gingrich congress, Bill Clinton gave an exhaustive, unfocused, unending and brilliant State of the Union address that called for a New Covenant, a middle class Bill of Rights, reinventing government, political reform, welfare reform, a balanced budget, START II, and everything else but the kitchen sink. Amid the sea of words, he struggled to establish the ground on which to stand against the right, promising to defend "education, veterans, Social Security and Medicare," and laying out investments vital to make the economy "work for all of our people." Obama will surely be more economical and disciplined, but his task is essentially the same.

(Warning to those who venture here: This goes on longer than normal -- I wanted to lay out several points.)

What are Americans looking for in the president's State of the Union?

1. Does he get it?

This president, like all presidents, wants credit for his accomplishments over the last two years. Like Clinton, he'll undoubtedly want to detail all that has been done.

But most Americans want to know whether the president understands how bad things are, how worried they are. It is vital that the president lay out his understanding that even if the recovery has come to the Beltway, Wall Street and the stock market, for most Americans the recession continues.

Unlike Obama, Clinton could boast about "peace and prosperity," but he wisely let Americans know that wasn't enough:

... the rising tide is not lifting all boats. While our nation is enjoying peace and prosperity, too many of our people are still working harder and harder, for less and less. While our businesses are restructuring and growing more productive and competitive, too many of our people still can't be sure of having a job next year or even next month. And far more than our material riches are threatened; things far more precious too us -- our children, our families, our values.

Our civil life is suffering in America today. Citizens are working together less and shouting at each other more. The common bonds of community which have been the great strength of our country from its very beginning are badly frayed. What are we to do about it?

Since Clinton, those divides have gotten worse, not better. President Obama must show he understands how Americans are struggling.

2. Can he tell us how we got into this mess?

Americans need a clear and compelling statement of how we got into the hole we are in. This is the story that Obama, a master of narrative, has been reluctant to tell, not wanting "to litigate the past." But this need not and should not be partisan, for the misguided policies have been embraced by both parties.

For 30 years, we embraced a radical experiment. We denigrated government in the faith that markets would regulate themselves. We cut taxes on the wealthiest Americans in the belief the rewards would trickle down on all. We starved investments vital to our economy and our society in the belief that the market would provide them or that families could pay for them on their own. We championed free trade while emerging rivals like China embraced a hard-headed, dare we say Yankee, mercantilism, designed to capture markets and technology. We relied on debt and bubbles instead of building a solid foundation for growth. We've allowed entrenched lobbies and interests to corrupt our politics and distort our priorities. We've ended with an economy where the wealthiest 1 percent is capturing most of the rewards of growth, where companies are profiting by shipping jobs, not goods abroad. And where most American families are working harder and longer with less security and diminishing hope.

Now, in the new contested terrain in Washington, that story must be told clearly and repeatedly. The State of the Union would be a good place to begin.

3. Can he remind us of the values we share?

This is the president's sweet spot: Summoning up the values that we share as Americans. On the economy, few have done it better than Richard Trumka, the president of the AFL-CIO, who decried polices that were undermining "the very idea of the American middle class -- the idea that in America economic security -- health care, a real pension, a wage that can pay for college -- is not something for a privileged few, but rather what all of us can earn in exchange for a hard day's work."

We are ready for vision, Trumka continued: "A vision for a national future founded on the profound truth that social justice and material prosperity are not competing values -- they are necessary to each other."

4. Does he have a clear plan to revive America?

Americans, despite their enduring optimism, understand this isn't a normal recession. They see -- and experience -- an economy in long-term decline. The flight of manufacturing jobs, the disappearance of a family wage, and the decline in benefits are all measures of that. They are worried about where their kids will find work. They are looking not for a short-term stimulus or jolt to the economy or a cheap fix, but for a new course, a bold direction for reviving a prosperous America with a broad middle class.

Obama laid out some of the elements of a new course in his economic Sermon on the Mount delivered at Georgetown University in 2009. There he argued that we can't go back to the old economy, that we need a new foundation for growth and prosperity -- including new rules for Wall street, investments in education, R&D (later he added in a 21st-century infrastructure), renewable energy, and budget savings to bring down future debt.

A core element of a new course must also be, as the president has said elsewhere, to once more make things in America, ending the crippling trade deficits that had us borrowing more than $2 billion a day largely from Chinese and Saudi bankers. At Pittsburgh, the president called on the leading economies of the world, the G-20, to move to end the unsustainable trade balances that contributed to the collapse. That meant that export surplus countries like China and Germany had to generate greater internal demand; that deficit nations like the US had to make more and export more.

Now, with the Chinese unwilling or unable to adjust their policies, the president should use the State of the Union to state clearly that, as a matter of national security, we will not continue down the old path, that we will now move unilaterally if necessary to balance our trade. We will start by demanding a true level playing field, treating Chinese exports to the US exactly as they treat US exports to China. He could call on every state and locality to pass "buy American" provisions to insure that taxpayers' money goes to support American workers whenever possible. He could announce that he's directing the Pentagon to move towards solar and wind energy, sourcing the panels and windmills from American suppliers, arguing that we will not trade dependence on foreign sources of oil for dependence on foreign sources of renewable energy technology.

The president should emphasize that a modern global economy, where people change jobs regularly, is a stronger social contract, not a weaker one. That is why guaranteeing affordable, high-quality health care for all is so important, so that workers don't get frozen into one job because they can't afford to lose their health care. That families aren't bankrupted and lose their homes simply because someone gets sick.

And, he'd be sensible to make the case for empowering workers to gain a fair share of the productivity that they help to generate. We've seen CEO pay soar to 400 times what a worker makes. In the last recovery, working families actually lost ground for the first time on record. Corporations enjoy record profits, while wages stagnate and jobs are shipped abroad. As unions grow weaker, and the minimum wage doesn't keep up with inflation, working families have a harder time. The president should challenge the Congress to stand with workers and announce that he'll ensure that the laws we have that defend the rights of workers to organize without retribution will be enforced.

5. Does he have a sensible plan for getting our books in order?

On deficit reduction, the president should stand firmly on reality, not on the fables now dominating the debate. Deficit reduction and growth are not in opposition -- they are vital to one another. Every plan for deficit reduction assumes and depends on growth. With growth, workers go back to work and pay taxes, expenditures on unemployment, food stamps and other benefits decline. Once growth begins, getting our accounts in sensible balance is important to sustain prosperity and avoid debilitating inflation.

So the first part of deficit reduction is insuring that the recovery continues. That requires revisiting Nixon's old plan for revenue sharing, insuring that states and localities don't have to cut vital services and lay off workers, and creating urban and green corps to put young people to work on work that needs to be done.

Once the economy is moving and people are going back to work, we should focus first on the sole source of our frightening long-term debt projections: our broken health-care system. That is one of the reasons health-care reform was so important, and must be defended. The president should challenge Congress to stop posturing about repeal and instead join with him in mapping the next steps to get our health-care costs under control. The way to start isn't by cutting Medicare or Medicaid and putting more costs on seniors, the disabled or the working poor. Instead focus on the powerful corporate complexes and the bad policies that drive up costs to private employers, small business, families as well as the government. A first step should be to end the ridiculous ban on Medicare from negotiating bulk discounts for drug prices.

Second, the president should insist that those who had the party help pay for the party. Deficits grew under Bush from two unfunded wars, an exploding defense budget now higher than it was at the height of the Cold War, and tax cuts that were skewed to the most affluent Americans. Entrenched interests squandered billions in subsidies and wasteful contracts. Then the financial casino inflated the housing bubble that exploded and brought the economy down and deficits up. So the president should call for starting with where the money went: cutting subsidies to Big Oil and Big Pharma, cutting wasteful spending in the Pentagon, passing a tax to limit hyper speculation, and insuring that the wealthiest Americans pay at least the same rates as their secretaries.

Third, the president should make it clear that there are limits to deficit reduction. It is simply impossible to pass tax cuts for the wealthy, launch an unpopular war without paying for it in Iraq, bail out the banks, and then tell Americans, who have just lost trillions in savings and the values of their homes, that the core of their retirement security -- Social Security and Medicare -- must be cut to pay the bill. He should present himself as the defender of Social Security, Medicare and Medicaid, and education -- draw a line and warn Congress not to cross it.

6. Is the president prepared to cooperate?

Americans want the two parties to work together, and the president will no doubt detail areas where cooperation should be possible, not simply on values, but on initiatives. Obama has already done much of that pre-emotively (and not wisely) -- with the three-year freeze on domestic discretionary spending, the freeze on federal employee salaries, the pledge to review and announced review of regulation. Republicans may remain committed to the obstruction that served them so well over the last two years. But the Chamber of Commerce supports the need for investment in infrastructure. The Business Roundtable champions investment in education and R&D. Polls show majority Tea Party support for a more aggressive manufacturing and trade policy. Invoke them as allies and invite the Republicans to join.

Where Americans are

If it addresses these questions, the president's speech will fly in the face of the Republican Congress and of much of the convention punditry. But it would appeal to a broad majority of Americans. As a January poll by the Campaign for America's Future (which I help direct) and the Democracy Corps shows, Americans are most concerned about jobs and the economy. They favor investment over deficit reduction. They want Social Security and Medicare protected.

Most Americans are still looking for the president to lead. In an election night poll by CAF and DCorps, the voters that elected the Republican Congress supported by two to one a statement by the president that promised cooperation but aggressively laid out a bold agenda:

Voters across the country have sent a clear message and I've heard it. The economy isn't creating enough jobs but we can't go back to rising debt and dangerous bubbles. My commitment is to build a new foundation for jobs and growth that begins with making things in America again. Yes, we have to reduce our deficits, but it is not enough. We have to make investments in education, in research and innovation, in a competitive 21st century infrastructure. We have to lead in the new energy, Green industrial revolution sweeping the world. This has to be affordable, but my priority is working together to rebuild a successful America with a rising middle class.

Next Tuesday will be a defining moment for the Obama presidency. It is his opportunity to define the debate with the right, but more importantly, to lay out clearly the course for the country. This is far more important than placating the right, or catering to the corporate lobby. Americans are looking for him for leadership and direction. He set the tone in Tucson. Now it is time for him to set the course. No matter where the legislators sit, we need to know where the president stands.