The Anti-Economist — February 13, 2013, 5:11 pm

The Economic Understatement of the Union

If the president wants the public???s support, he should be making a forceful case for spending

President Obama has for some time now been building a Procrustean bed on the issue of deficit cutting. We have no room to increase spending, his fixed position goes, because we must cut the deficit now — and never mind that serious deficits will not afflict the economy until the late 2020s, if then. Obama began moving in this direction with his appointment of two conservatives, Erskine Bowles and Alan Simpson, to head his budget-balancing commission, and he has reinforced the argument time and again since.

For all that, the president’s State of the Union address last night offered an admirable if weak laundry list of proposals. They included a commission on protecting voting rights (largely overlooked in post-speech analysis), and a much-needed minimum-wage rise, to $9 an hour. Neither of these would require additional government spending. But does anyone believe that voting commission will be aggressive enough? Does anyone believe this Congress will pass a $9 minimum wage?

Obama also offered general proposals on the hot-button issues of immigration reform, emissions constraints, and gun control. Only on the last of these did his speech become emotional, as he demanded that Republicans allow a vote on the issue. The strategy seems to be to force them to vote against reform, then send them home to constituents who will wonder why they refused to back sensible controls.

Less controversially, Obama proposed a high-quality system of pre-kindergarten education in partnership with the states. He also talked about infrastructure spending (though only of enacting a previous proposal), and mentioned in passing that cutting spending during sequestration could hurt the economy. His tone was so quiet on the latter issue that I doubt the public understood its importance. It ought to have been his focus.

The economy could be making progress right now, but the president’s opponents are holding it back with unreasonable demands for cuts in social spending and threats to vote against the next debt-ceiling increase. If the economy grows slowly this year, Obama might have said, we know whose fault this will be. But, sadly, he didn’t go to battle, instead falling into his Procrustean bed. None of his new proposals, he made sure to say, would add to the deficit.

Herein lies the problem. With no way to finance his pre?K program, for example, why should anyone take it seriously? Nor did he offer a strong defense of social programs in the face of proposed cuts. To the contrary, he said he’d reform Medicare along the lines suggested by the Bowles–Simpson commission, which was conspicuously free of specifics.

The economy needs more government spending — or at least a hold on spending cuts — in order to grow and to reduce unemployment. It needs bolder investment programs.  Perhaps Obama thinks speaking quietly is the path to credibility on the economy. With unemployment still hovering around 8 percent, he appears not to want to risk adopting forceful policies, yet his modest, compromised actions to date have failed to get the recovery on track. He and his team failed to implement bold mortgage relief, to back a strong public option in Obamacare, and to advertise how well their stimulus program had worked, which made it difficult to come back for a second one.

The groundwork is there, however. Obama came up with an effective jobs program at the end of 2011. His infrastructure proposal can be built upon, as can Obamacare. In the State of the Union, he made a good case for government. But even so, he was careful to state, “It’s not a bigger government we need, but a smarter government.” He might instead have established a set of priorities, proposing two or three programs to which he devote all of his — and the government’s — energy. And he might have adopted a tone appropriate to today’s jobs emergency.

We have an intelligent president who is moving in the right direction. But he is moving too slowly, hobbled by his obeisance to the deficit hawks.

Single Page
writes the Anti-Economist column for Harper’s Magazine.

More from Jeff Madrick:

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  • gentsugen

    So all of the sudden Progressives care that “the economy could be making progress right now…”? Every policy Progressives support hurts the economy. Raise taxes. Increase regulation. Stop the pipeline, stop fracking,stop drilling, stop stop stop. You folks crack me up….

  • william reichert

    I loved the comment ” deficits wont be a problem till the late 2020′s IF THEN ”
    I assume this is sarcasm. I cetainly hope so.



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