Obama's Bipartisan Economic Vision Signals Bitter Clashes Ahead

Analysis

Rarely has a president asked for so much when he can get so little.

President Barack Obama went before assembled House and Senate members tonight knowing he must address two monumental economic problems that threaten the state of the union: the worst epidemic of joblessness in generations and a scourge of budget deficits that could shape the lives of generations to come.

At the same time, his policy prescriptions had to navigate an audience largely composed of a newly strengthened congressional opposition whose economic philosophy is deeply and starkly different from his, and whose avowed legislative priority over the next two years is to drive him from the White House in November 2012.

The result was an exercise in diplomacy, a vision of slashing deficits, streamlining regulation and reforming the tax code that rested on the premise of "a new era of cooperation." It depends, Obama suggested, on a willingness of Republicans and Democrats to recognize that the current grim economic headwinds amount to "our generation's Sputnik moment" -- not only requiring but generating national unity.

"New laws will only pass with support from Democrats and Republicans," Obama said. "We will move forward together, or not at all, for the challenges we face are bigger than party, and bigger than politics."

But even as the intermingled members of both parties applauded Obama's grand ideals, the details of his ambitions hinted at bitter fights ahead.

Obama called for Congress to eliminate billions of dollars of federal subsidies for oil companies in order to fund innovation toward newer, cleaner sources of energy; invest in new high-speed trains, high-speed Internet wireless coverage and other infrastructure; and make public all congressional dealings with lobbyists and other special interests.

But the president was unable to get any of these goals through Congress even when he had Democratic majorities in both houses.

Obama promised to push for a simplification of the tax code for individual Americans and to get rid of loopholes in taxes for businesses so the money saved could be used to reduce corporate taxes for the first time in 25 years without adding to the deficit.

"This will be a tough job, but members of both parties have expressed interest in doing this, and I am prepared to join them," Obama said.

What he didn't add is that neither party likes the tax simplification ideas of the other, or that any tax plan acceptable to the Democrats would exclude a permanent extension of the Bush era tax cuts for the wealthiest 2 percent of Americans -- a deal breaker for Republicans.

The broad tax ideas Obama outlined reach out to corporate America, in line with his recent initiative to re-examine all federal regulations for their cost and efficiency, and recent major personnel decisions that include naming General Electric Chief Executive Jeffrey Immelt to lead a new White House panel on job creation.

And nearly all his proposals were made in the name of bolstering the United States' ability to compete against the rest of the world with an eye toward boosting employment at home.

Similarly, much of his deficit-cutting plans -- by far the biggest, most detailed section of his State of the Union address -- appeared to co-opt Republican ideas, or at least their talking points.

He drew mostly bipartisan applause by expressing a willingness to "look at other ideas to bring down costs, including one that Republicans suggested last year: medical malpractice reform to rein in frivolous lawsuits."

But his most concrete deficit-cutting proposal -- freezing federal spending for the next five years to cut the deficit by $400 billion over a decade -- is far short of what Republican seek and is less than the reductions sought by some Democrats.

In the Republican response, House Budget Committee Chairman Paul Ryan -- granted expanded powers over spending earlier in the day -- made clear his party intends to give Americans "a better choice and a different version."

"Our forthcoming budget is our obligation to you to show you how we intend to do things differently," Ryan said.

Obama acknowledged the differences over budget priorities, saying, "I recognize that some in this chamber have already proposed deeper cuts, and I'm willing to eliminate whatever we can honestly afford to do without." But at the same time, he insisted he wouldn't cut spending "on the backs of our most vulnerable citizens."

And it wasn't clear how the president would square his desire "to prepare 100,000 new teachers in the fields of science, technology, engineering, and math" over the next 10 years with the austerity found elsewhere in his speech and in the rhetoric of Republicans.

Obama did offer some acknowledgment of the political reality.

"Reforming our schools, changing the way we use energy, reducing our deficit -- none of this is easy," the president said. "All of it will take time. And it will be harder because we will argue about everything. The cost. The details. The letter of every law."

And more than any new job creation policy or deficit details in his upcoming budget, Obama's ability to tame or work around such arguments will determine how much the ideas expressed tonight affect the state of the union in the year ahead.