U.S. President Seeks to Renew Momentum with State of the Union, Focuses on Jobs

Carefully Weighed Message

The year 2010 has not been kind to President Barack Obama so far. His signature healthcare reforms came tantalisingly close to final approval in Congress, only for the loss of a supposedly safe Senate seat to end the Democrats' unilateral control over that chamber. Although there were some local factors at play, the Massachusetts defeat has been interpreted as a popular backlash against Obama's ambitious agenda and the implications it has for the role of government and future public finances. Getting any significant new legislation through Congress will be much harder now as the administration is forced to make overtures to an extremely hostile Republican Party. Democrats are on the back foot, and extremely anxious about what will happen when a third of the Senate and the whole of the House of Representatives come up for re-election in November. One expects incumbents to struggle mid-term, but the plight of the Democrats is unusually fraught at this stage. The Republicans are meanwhile energised and successfully capitalising on the momentum generated by the populist right-wing "Tea Party" movement.

Yesterday's State of the Union address came at an opportune moment, giving Obama an opportunity to rally the faithful, reassure doubters, and hit back at critics. The overall message was nuanced; he vowed not to give up on his agenda, but at the same time acknowledged some strategic mistakes. He conceded that some political setbacks "were deserved", but he did not acknowledge that any of his policies needed rethinking. He railed against Republican partisanship and called upon the leadership to play a constructive part in government: "if the Republican leadership is going to insist that 60 votes in the Senate are required to do any business at all in this town — a supermajority — then the responsibility to govern is now yours as well. Just saying no to everything may be good short-term politics, but it's not leadership." He called on his supporters not to lose faith and confidence: "To Democrats, I would remind you that we still have the largest majority in decades, and the people expect us to solve some problems, not run for the hills."

Looking at the reworked 2010 agenda, these were some of the highlights of Obama's speech.

• Obama shifted job creation to the top of his domestic priorities list. This is a key preoccupation after the huge rise in unemployment during the economic crisis and the way the labour market is lagging behind the wider economic recovery. The speech did not see the announcement of major new initiatives, but Obama pushed Congress again to pass a jobs bill that would among other things invest in "green jobs" and clean energy. He also said he would focus on boosting job-creating exports. Obama did propose some new tax breaks and better access to bank loans for small businesses. These kinds of policies are popular and difficult for the Republicans to oppose.
• To answer charges of fiscal recklessness, Obama indicated that he is ready to take tough decisions to rein in the fiscal deficit. A freeze is proposed on a portion of the domestic budget.
• Obama did not shy away from some more controversial liberal objectives, however. He said he would work with Congress this year to repeal the contentious "don't ask, don't tell" policy in the military regarding gay men and lesbians in the ranks.
• The president called for the reauthorisation of his predecessor's signature No Child Left Behind education policy. The targets-based approach has generated controversy, but Obama has decided against unpicking it.
• Obama returned to his promise to change the political culture and further rein in powerful lobbyists. New rules would require each contact made by lobbyists with lawmakers and officials to be disclosed. He showed his displeasure with the recent contentious Supreme Court ruling that removes significant restrictions on campaign finance, warning that it will "open the floodgates for special interests".
• The major existing priorities have not been abandoned, even if job creation is the banner priority. He will still push to see through healthcare reforms, and work is continuing to finalise ambitious reforms to financial sector regulation and energy/environment policy.
• Foreign policy received relatively scant mention despite the United States' deep engagement in many key initiatives and conflicts. This was arguably in recognition that Americans are more concerned about the economy back home and that they are wary of Obama expending too much of his energies on foreign affairs. There is also little political mileage to be made from the difficult decision to boost troop numbers in Afghanistan.

Outlook and Implications