Feb. 12 (Bloomberg) -- In his second inaugural address, U.S. President Barack Obama offered a vague but appealing vision. Now it’s time for the more distinct and contentious translation.
In his State of the Union address, scheduled for Feb. 12, the president is widely expected to talk about ways to improve the condition of the middle class and increase job growth. The question, given the slow-growing economy and intransigent congressional opposition, is what exactly he can say and do to advance those goals.
From our standpoint, Obama -- and the nation -- would be best served by focusing on challenges such as immigration, inequality and climate change. (We’re referring to the domestic part of the speech; here’s our take on foreign policy.) The political payoff may not be as great as it is with, say, gun control. But the economic consequences will be far greater.
One issue that does make for both good politics for the president and good economics for the nation is immigration reform. In addition to making it easier for highly skilled workers to join U.S. companies or start businesses of their own, the federal government should legalize the roughly 11 million undocumented immigrants already living in the U.S. Enabling their ambitions, education and contributions would provide a boost to the economy.
Any economy that continues to offer disproportionate rewards to those at the top, however, isn’t sustainable. As part of a larger deal with Republicans that includes long-term spending cuts, Obama should push to limit the sizable deductions, credits and exemptions that benefit wealthy taxpayers. (Senator John McCain, a Republican, just said he might be open to such revenue.) Obama could also seek to expand the earned-income tax credit to help two-parent families and low-income adults without children.
A more fruitful approach is to expand opportunity and increase the size of the economic pie. Two priorities are paramount: increasing early-childhood education, to give low-income children a running start; and expanding the number of Americans who graduate from college, to bolster workplace skills and wages. Education savings accounts, which work like 401(k) retirement plans but can be used only to pay for sanctioned education expenses, would help.
The other context in which “sustainable” is the operative adjective is, of course, the environment. Here, Obama’s task is delicate: He must pursue reductions in greenhouse gases while simultaneously developing the U.S.’s resurgent energy sector.
He could present a plan for cutting emissions without asking Congress for a new law, as he did last year with his executive action to raise automobile fuel-economy standards. The obvious next step is to limit greenhouse-gas emissions from new power plants, a move fully within the president’s power. Obama could also explain that there is no better time to invest in future productivity gains in transportation, green technology and public works than when interest rates are at rock bottom.
The challenge for the president isn’t just to balance long-term needs with short-term results. It’s to explain to Americans the codependent nature of the relationship.
Every part of the president’s agenda is dependent to some degree on a growing economy, which is why Obama’s chief domestic task remains recovery. In this State of the Union speech, the president must offer a clear route toward a future of innovation, growth and broad prosperity, one in which the benefits of globalization are spread more evenly and the ravages of competition cut less deeply.
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