“President Obama resisted the immense pressure from the financial industry and other opponents of Social Security and Medicare by refusing to call for large cuts in these programs in his State of the Union Address. Given the power of these groups, this would have been the easiest path for him to take. However, he instead insisted on the need to protect Social Security and to ensure that future generations of workers can also depend on it.
“In reference to Medicare and Medicaid, President Obama stuck to the facts and pointed out that the problem is the broken U.S. health care system, not inefficiencies in these programs. He noted the progress made in controlling health care costs in the Affordable Care Act, but acknowledged the need to go much further in containing costs.
“President Obama laid out an ambitious investment agenda, although it is not clear whether Congress will be prepared to fund it. He noted the extent to which the United States is falling behind other countries in areas like clean energy and high-speed rail and also in educational attainment. It is difficult to envision major progress in these areas without very substantial spending. While there are always opportunities to eliminate waste and improve funding priorities, it is not plausible that major new initiatives can be financed through these routes.
“The discussion of trade was also somewhat disconcerting. As a result of a seriously over-valued dollar, the United States has run a bloated trade deficit since the late 90s. President Obama promised more trade agreements like the ones that provided the framework for this deficit. The trade deficit is the largest imbalance in the economy today. As a matter of logic, if the country has a large trade deficit then it must have either a large budget deficit or low private savings, or some combination of these two. It does not seem that President Obama is prepared to address the fundamental issue of the over-valuation of the dollar.
“The most disappointing aspect of the speech is that it largely skipped over the current economic crisis. This may reflect a view that there is little that Congress will agree to do to at this point. But it still is unconscionable to accept the idea that 25 million workers will go unemployed or under-employed, with millions more losing their home, because of the economic mismanagement by the country’s leaders.
“The first stimulus was signed into law by President Bush at a time when the unemployment rate was just 4.8 percent. It is difficult to believe that a Democratic president will sit back and do nothing when the unemployment rate is 9.4 percent. The unemployed should have been featured prominently in the State of the Union address. They are suffering enormously for the greed and incompetence of others.”