Politics: President Obama's Address to Congress

The transcript.

Without a doubt, he speaks well. His acknowledgement of what the people are going through will continue to win him some good will. Excerpt:

I know that for many Americans watching right now, the state of our economy is a concern that rises above all others. And rightly so. If you haven't been personally affected by this recession, you probably know someone who has -- a friend; a neighbor; a member of your family. You don't need to hear another list of statistics to know that our economy is in crisis, because you live it every day. It's the worry you wake up with and the source of sleepless nights. It's the job you thought you'd retire from but now have lost; the business you built your dreams upon that's now hanging by a thread; the college acceptance letter your child had to put back in the envelope. The impact of this recession is real, and it is everywhere.

So on that front, definitely an A speech.

However, what I'll try to do below is look at the policy aspects.

The President cited only part of the reason for the economic crisis:

Regulations were gutted for the sake of a quick profit at the expense of a healthy market. People bought homes they knew they couldn't afford from banks and lenders who pushed those bad loans anyway.

All true.

Bob Brinker on his radio show this weekend said one of the big errors in deregulation leading to the crisis was the 1999 repeal of important aspects of the Glass-Steagall Act.

Obama left out the responsibility the Federal Government had in causing the crisis. Home buyers and lenders leaped off a cliff with a push from the government. It was national policy to encourage home ownership through Freddie Mac and Fannie Mae which are government sponsored entities. They shoveled bad loans into mortgage backed securities and sold them to everyone. Now, these securities are toxic assets crippling financial institutions around the world.

Good words here:

So, I ask this Congress to join me in doing whatever proves necessary. Because we cannot consign our nation to an open-ended recession. And to ensure that a crisis of this magnitude never happens again, I ask Congress to move quickly on legislation that will finally reform our outdated regulatory system. It is time to put in place tough, new common-sense rules of the road so that our financial market rewards drive and innovation, and punishes shortcuts and abuse.

But of course, details remain to be seen.

UPDATE: Team Obama is estimating it will take about $250 billion more to get the financial industry back on its feet.

The President made the case that the government has had on some occasions a positive role in the economy:

For history tells a different story. History reminds us that at every moment of economic upheaval and transformation, this nation has responded with bold action and big ideas. In the midst of civil war, we laid railroad tracks from one coast to another that spurred commerce and industry. From the turmoil of the Industrial Revolution came a system of public high schools that prepared our citizens for a new age. In the wake of war and depression, the GI Bill sent a generation to college and created the largest middle-class in history. And a twilight struggle for freedom led to a nation of highways, an American on the moon, and an explosion of technology that still shapes our world.

True enough. Government does have a role but one has to beware of over-reach.

As someone in the basic research business, I do benefit from some of the President's spending ideas:

We have also made the largest investment in basic research funding in American history -- an investment that will spur not only new discoveries in energy, but breakthroughs in medicine, science, and technology.

Energy is clearly a big issue for America and Obama got it partially right here:

But to truly transform our economy, protect our security, and save our planet from the ravages of climate change, we need to ultimately make clean, renewable energy the profitable kind of energy. So I ask this Congress to send me legislation that places a market-based cap on carbon pollution and drives the production of more renewable energy in America. And to support that innovation, we will invest $15 billion a year to develop technologies like wind power and solar power; advanced biofuels, clean coal, and more fuel-efficient cars and trucks built right here in America.

"Market-based cap on carbon pollution" is the fancy way to say "carbon tax." The idea is to discourage the usage of energy sources that produce CO2 by making it more costly. Whether that is actually a good idea is a whole separate debate but let us at least be honest about what it means.

Update: The "carbon tax" will be about $645 billion.

More wind, solar and biofuels is perfectly reasonable but its contribution to the US energy picture is limited and is being oversold.

The US has to look at nuclear power. Sweden gets 50% of its power from nuclear. They were thinking of taking the plants offline but are now looking to keep them and add more capacity to existing sites. If they can do it, so can we.

Regarding health care, fine sounding words:

This budget builds on these reforms. It includes an historic commitment to comprehensive health care reform -- a down-payment on the principle that we must have quality, affordable health care for every American. It's a commitment that's paid for in part by efficiencies in our system that are long overdue.
.......
Now, there will be many different opinions and ideas about how to achieve reform, and that is why I'm bringing together businesses and workers, doctors and health care providers, Democrats and Republicans to begin work on this issue next week.

I suffer no illusions that this will be an easy process. It will be hard. But I also know that nearly a century after Teddy Roosevelt first called for reform, the cost of our health care has weighed down our economy and the conscience of our nation long enough. So let there be no doubt: health care reform cannot wait, it must not wait, and it will not wait another year.

Should be done but no details provided here.

Update: $634 billion is the estimated price tag from the Obama Administration.

The debate in health care reform is how do you balance access, quality and cost. Controlling costs means some sacrifice in quality or access. High quality costs lots of money and giving it to everybody will break the bank. Full access means some sacrifice in quality and costs money. We got to balance all three somehow and I'm looking forward to seeing what they come up with.

In terms of education, Obama said this:

But we know that our schools don't just need more resources. They need more reform. That is why this budget creates new incentives for teacher performance; pathways for advancement, and rewards for success. We'll invest in innovative programs that are already helping schools meet high standards and close achievement gaps. And we will expand our commitment to charter schools.

Do I dare say it?

Sounds a lot like what President George W. Bush said!

Speaking of channeling W, Obama said this:

And we must also begin a conversation on how to do the same for Social Security, while creating tax-free universal savings accounts for all Americans.

Bush 43 tried to get something going on Social Security reform in 2005 and was shouted down by the Democrats. Perhaps fixing Social Security will have to be done by Democrats in a "only Nixon could go to China" moment of political will.

The final policy portion of the speech (a mere 10 short paragraphs) was devoted to foreign policy and national defense. His tone was the right one though at times a bit "boilerplate." But partisanship ends at the water's edge and I would imagine sitting at the WH desk getting the daily briefings has been sobering for him.

All in all a wide ranging speech with big issues.

Now, we await the details.

All the best, Mr. President.