Last night in his State of the Union, President Obama presented himself as the champion of the American dream, or in his words, "the 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." And the instrument of recovering that dream was clearly the need for smart, activist government.
Obama described what he considered necessary to revive the promise -- and evoked America's wistful desire for national unity by opening and closing with evocations of the nation's pride in its military. The speech set up the coming presidential campaign, drawing clear contrasts with Republicans. Surprisingly, it lacked passion or lift -- with even congressional Democrats finding ovations difficult. Here's a brief summary of what was a semi-tough speech.
1. The Populist Moment Embraced
"Fair play, fair shot, fair share" -- the themes, if not the language, of Occupy Wall Street suffused the speech. Excessive inequality, Wall Street's wilding, and regulatory lassitude brought down our economy. "Banks had made huge bets and bonuses with other people's money. Regulators had looked the other way... It was wrong. It was irresponsible."
The news in the speech was the announcement of an augmented Justice Department task force to investigate and, presumably, prosecute "abusive lending and packaging of risky mortgages." (And it was separately reported that New York's intrepid AG Eric Schneiderman would be one of the co-chairs, as evidence of its seriousness). The president also promised to set up a Financial Crimes Unit "to crack down on large-scale fraud and protect people's investments."
And this was just the beginning. The president would tax the big banks to pay for allowing "responsible homeowners" to refinance their mortgages. He'd tax multinationals to reward companies that bring jobs home. He invoked the "Buffet rule" and called for a minimum tax on millionaires.
Obama also evoked the populist movement's anger at Washington corruption, signaled by a call for legislation to ban insider trading by Members of congress, and prohibit lobbying of Congress by those "who bundle campaign contributions."
The president essentially invited cries of "class warfare," by making himself the instrument of the middle class decrying the special privileges of the rich, the big banks, and the Washington insiders. In an upcoming election campaign against a "vulture capitalist" or an "inside the beltway influence peddler" (to borrow accurate Republican descriptions of Mitt and Newt), it is a mantle that will wear well.
2. Manufacturing Revival Emphasized
On the economy, the speech led with more discussion of manufacturing than any SOTU in memory. The president wanted and deserved credit for saving Detroit -- a key to his campaign in the Midwest -- and wanted to highlight the uptick in manufacturing jobs and "insourcing," the movement of some jobs back to the US.
Again, his agenda focused on mostly symbolic measures of populist appeal. In addition to the tax on multinationals and tax breaks for domestic manufacturing, he promised a new trade enforcement effort to challenge China and others who trample global trade rules. With Romney promising to cite China for currency violation on day one if elected, the administration seems likely to finally challenge China, at least symbolically.
3. Public Investment Defended
Central to rebuilding the American dream is public investment in areas vital to our future. The president recycled his calls for investing in training and education, in rebuilding America's infrastructure (calling for using some of the money saved from ending the wars to rebuild the country at home), and in science and technology.
This is the centerpiece of the president's agenda to rebuild an economy on a new foundation, but was greatly subdued in scope -- clearly constrained by the need to pay for it. The president surprisingly omitted calling for an infrastructure bank that could leverage public investment many times in a major effort to rebuild our infrastructure. The energy and education sections -- the latter celebrating teachers, calling for making college affordable -- were among the most popular in the Democracy Corps simultaneous dial testing of swing voters.
With Republicans damning him as a tax and spend liberal, the president stepped up to that fight. He'll defend investing in people and paying for it with fair taxes on millionaires, banks, big oil and multinationals. We're headed for a populist campaign.
4. More Small Bore than Scale
But in these areas -- taking on banks, taxing the rich, investing in our future, reviving manufacturing, the president was putting out markers rather than calling for initiatives at the scale of our challenges. The big banks remain too big to fail. There is no call for a manufacturing strategy or a new trade strategy for the US. No pledge to balance our trade and put companies on notice they have to invest here; no call even for Buy America. The Democratic Made in America agenda went largely unmentioned. Similarly, investment is defended, but constrained. The flood of money in politics, Citizens United, the suppression of the vote, the war on labor were deferred, perhaps for another day.
There was no forceful summons to capture the lead in the green industrial revolution and meet the challenge of global warming. Central to the manufacturing argument was literal embrace of an "all of the above energy policy," designed clearly to muffle differences with Republicans. Global warming received no mention. Continued support for clean energy was justified by refusing to give away the future to the Chinese and the Germans -- and gives the president a popular frame for his continued commitment to clean energy.
5. Recovery Assumed
The biggest choice -- and risk -- of the speech was the decision to assume the recovery -- boasting on the jobs that had been created -- rather than to emphasize the challenges still faced.
There was no call for urgent action on jobs, or even on the president's job plan. Late in the speech, the president called for extending the payroll tax cut and a new Veterans' Jobs Corps, a popular way to seek money for direct hiring of some of the unemployed. But he turned quickly back to a renewed focus on deficit reduction, and reiterated his politically toxic willingness to trade Social Security and Medicare cuts ("reform") for broader deficit reduction.
Clearly, the administration is making the same bet it made in 2010: that economic growth will be good enough to sell as progress, allowing the move to a broader argument on a new foundation for the economy, on fairness, and on deficit reduction.
This is likely once more to be a mistake. Voters sensibly want to know about jobs and rising incomes. As one Washington expert noted, if your kid is home from college and sitting on your couch, the unemployment rate in your house is 100%. By not stressing the urgency of action now on jobs, the president reinforces voter impression that he just doesn't get it. The White House wants to sell progress. It would be smarter to sell urgency, a president who is fighting everyday to put people back to work, against an obstructionist, partisan Republican Congress.
The president has taken up the Republican challenge. He'll defend sensible rules, investment in people, fair share taxation. He has set up good fights in the Congress (as reflected House Speaker John Boehner's increasingly gloomy visage as the speech went on -- or perhaps that was just a reflection that the Speaker's liquid fortification was losing effect). He's reached out to the populist temper of the times.
But the president's "fair shot, fair play, fair share" agenda must be connected with the urgent battle to put people to work, not tied solely to a more distant promise of reviving the dream.
And, one thing is clear. If America is to avoid a second and a third lost decade, the movement that began in Madison, Wisconsin and spread from Wall Street across the country will need to continue to build. We're still a far remove from the agenda needed to in fact revive the American dream.