Obama's State of the Union speech was not great or heroic but nor was it insignificant. We’ll be even more determined to hear the next one because Barack Obama obviously makes up his own mind about what to do.
Democrats ready to address the federal government’s looming financial crisis did not get a call to arms or a message to ease their burden with fellow Democrats. Obama didn’t walk away from comprehensive fiscal reform or shrink the agenda set out by his own bi-partisan commission. He presented a few specifics and then acknowledged that what he presented was not enough. He did three things, however, that keep alive the prospect of great things to come.
First, instead of another squishy call for bi-partisanship he offered to help fashion a political deal to save careers on both sides of congress—“a principled compromise” that will rein in the deficit and, thereby, allow room for new investments in education, innovation and infrastructure.
Second, he said nothing that would let Republicans walk away and he said enough to increase pressure on Republicans to get specific on spending cuts.
Third, the speech’s tone and energy will likely solidify the public’s growing confidence in his presidency. The public will not march on Washington to write the budget. But in settling down with the Obama presidency they’ll make a “principled compromise” possible.
It would have been historic and dramatic if Obama had committed to bring forward a budget with actual tax increases along with tax reform. However, the capital markets, for now, may be happy enough that the public mood is up and that the president and the congress dealing with a real problem together.
They may find the right balance of fear and courage necessary to make hard decisions. Actual economic circumstances will have a say as well. However, a popular president won’t hurt.