State of the Union: Mixing politics and policy

President Obama had two purposes in his State of the Union address on Tuesday: to offer a manifesto for the 2012 campaign and to articulate policy choices to Congress that would benefit the economy. In a speech that was argumentative if not aggressive, he was more successful in achieving the first objective than the second. But overall it was an effective speech.

For some time Obama has telegraphed the overarching political themes of the speech — economic fairness and an expansive role for the federal government — and he stuck to that script. “We can either settle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by,” he said, “or we can restore an economy where everyone gets a fair shot, everyone does their fair share, and everyone plays by the same set of rules.” At stake, he said, “are not Democratic values or Republican values, but American values” — a piety that couldn’t conceal the fact that income inequality is a Democratic issue and, Obama hopes, a winning one. His remedy included a familiar (and fair) call for a tax policy that asked more of the wealthy — fortuitously on the day his potential Republican opponent Mitt Romney released his tax returns.

The speech also included a riposte to Republican claims that the government’s most constructive role is to stay out of the way. Invoking the Internet, the interstate highway system and the recovery of the auto industry, he offered a paean to government spending and suggested that more was desirable in the future. For example, the administration wants to use half the savings from the troop drawdowns in Iraq and Afghanistan to finance infrastructure.

This is where good politics may come at the expense of good policy. The deficit received scant attention in the speech, and the president advocated various tax breaks that could complicate deficit reduction in the future even if Democrats and Republicans agreed to changes in entitlement expenditures. The best fiscal policy in our view remains targeted tax relief — such as the continuation of the payroll tax cut — and long-term attention to reining in the national debt and simplifying the tax system.

Although the economy dominated the speech, Obama effectively defended his work on other issues, such as the end of U.S. involvement in Iraq and two accomplishments that mesh with his emphasis on fairness: greater regulation of Wall Street and the creation of the Consumer Financial Protection Bureau. Finally, he urged fractious members of Congress to emulate American troops who “don’t obsess over their differences [and] focus on the mission at hand.” Good advice — and good politics too.