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Tuesday
Feb122013

US Politics Analysis: Predicting Obama's "Aggressive" State of the Union Speech

Tonight President Obama delivers the annual State of the Union speech. Together with last month’s Inaugural Address, the statements are Obama’s opportunity to define the policies he wants to implement in his second term. The State of the Union will also be a sales pitch for the mid-term elections of 2014, with two aims: 1) to generate enthusiasm among the majority of Americans who elected Obama for a liberal social and economic agenda, and 2) to differentiate his vision of America’s future from that of Republican obstructionists in Congress.

Currently --- and Democrats are only too aware of the reality --- the President’s ideas on immigration reform, gun control, climate change, and a pro-growth economic plan will struggle to get any meaningful action in this Congress. Republicans, especially in the House, are disinclined to compromise while they believe that their message of a Federal Government that spends too much is supported by a majority of Americans.

Obama will challenge Republicans on that basic premise. He will emphasise that austerity is not the answer to America’s economic woes, and instead make the case for increased investment in infrastructure and education. He knows that there is little chance of that happening in the present political climate, but he will begin the groundwork of persuading Americans to repudiate the GOP's obsession with spending cuts.

For his policies to pass, Obama requires a Republican Party that fears it will be swept away in the 2014 mid-term elections if it does not compromise. So he will present an aggressive platrform, with the image of a popular President struggling to effect needed reform. That approach runs the risk of alienating moderate voters, but there is a growing movement, at least in Washington, for a government that concentrates on job creation.

The latest high profile addition to the pro-growth lobby is Janet L. Yellen, Vice Chair of the Federal Reserve. At a conference co-hosted by the AFL-CIO, she defended the monetary policies of the Fed since the beginning of the recession in 2008, and set out a short-term plan for policies to promote maximum employment.

After detailing the “devastating” personal costs of unemployment, Yellen argued that the cause of the historically high and stagnant jobless rate is a lack of aggregate demand in the economy. She explicitly disagreed with the idea that the unemployment rate is a structural problem, where workers lack the skills to fill available positions, but said it is a cyclical dilemma where there is no demand for those skills:

For the Federal Reserve, the answer to this question has important implications for monetary policy. If the current, elevated rate of unemployment is largely cyclical, then the straightforward solution is to take action to raise aggregate demand. If unemployment is instead substantially structural, some worry that attempts to raise aggregate demand will have little effect on unemployment and serve only to stoke inflation.

Unfortunately, what you do not find in this increased interest in a “pro-growth” agenda is a politician, or an economist, who is prepared to put on record how much he or she would invest in policies that will get Americans back to work. That is unlikely to change in tonight’s speech. Obama must first build some momentum against the Republican cuts agenda before he can generate support for another stimulus, and it would be the surprise of the night if he is bold enough to ask Congress to pass legislation with a specific price tag attached.

Other issues will be secondary to President Obama’s desire for campaign to discredit the Republican Party. Immigration reform, gun control, and green energy initiatives may be important to him, but Obama needs a GOP in disarray and fearful for their 2014 prospects before he can transform wishes into action. For now, with the election still in recent memory, the President’s strongest card for trumping Republican intransigence is the populist message of his successful campaign against Mitt Romney.

For those hoping for a foreign policy statement of intent this SOTU may disappoint. The White House’s website has announced “throughout the week, Administration officials will take questions on key issue areas addressed in the President's speech during an 'Open for Questions' marathon". That marathon features education, the economy, energy and the environment, reduction of "gun violence", and immigration reform --- but has no space for a topic beyond American borders.

Tonight Obama has the platform, and the one-time political capital he garnered by winning his re-election campaign, for setting the priorities of the national conversation. The President has disappointed his liberal allies before --- and it would be no great surprise if that happened once again --- but, if he does want to be remembered as a “great” President, then tonight marks the moment when he must begin to swing the nation behind the Democratic Party he leads.

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