SOTU disconnect

Posted in Around The Nation, Commentary at 11:50 am by wcnews

In his State of the Union (SOTU) speech yesterday President Barack Obama put forth some much needed investments that we must make as a country. Such as science, energy, universal Pre-K, and infrastructure spending just to name a few.

There was much more of interest in the State of the Union, of course. Minimum wage increases, higher education affordability, immigration reform and much more were discussed in what was a mostly progressive tour de force.

But in a speech that began with the usual invocation of the deficit and praise for Simpson-Bowles, the number of proposals guaranteed to increase discretionary spending were somewhat extraordinary. That’s a good thing: the government must do much more with its money than simply protect the poor and the elderly while maintaining a massive standing army. It must continually invest in our future.

The Republicans will stonewall the President’s agenda, of course. But it was still worth making the case, so that voters can decide in 2014 whether they want a path of investment and prosperity, or a path of misery and austerity.

While all of that is true, their is still a disconnect between what he says and what really needs to be done. The deficit is not our problem, jobs and slow growth are the problems. To the degree that we have a deficit problem it is in the long-term. And most of the deficit can be made up with a growing economy, spurred by hiring via government spending. It’s just good ‘ol Keynesian economics. This excerpt from the speech shows the disconnect:

Now, most of us agree that a plan to reduce the deficit must be part of our agenda. But let’s be clear, deficit reduction alone is not an economic plan. A growing economy that creates good, middle-class jobs — that must be the North Star that guides our efforts. Every day, we should ask ourselves three questions as a nation: How do we attract more jobs to our shores? How do we equip our people with the skills they need to get those jobs? And how do we make sure that hard work leads to a decent living?

A year and a half ago, I put forward an American Jobs Act that independent economists said would create more than 1 million new jobs. And I thank the last Congress for passing some of that agenda. I urge this Congress to pass the rest. But tonight, I’ll lay out additional proposals that are fully paid for and fully consistent with the budget framework both parties agreed to just 18 months ago. Let me repeat — nothing I’m proposing tonight should increase our deficit by a single dime. It is not a bigger government we need, but a smarter government that sets priorities and invests in broad-based growth. That’s what we should be looking for.

Now is the time, with interest rates as low as they’ll ever be, to deficit spend. And once we get back to near full employment, the deficit will begin to shrink. In other words we can grow our way out of this depression, just like we did the last one.

Sen. Marco Rubio (R-Florida) had the GOP response, Marco Rubio Has Learned Nothing.

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