State of the Union Gets the Big Picture Right

“No challenge is more urgent,” President Obama said last night in his State of the Union Address, than keeping alive “the basic American promise that if you worked hard, you could do well enough to raise a family, own a home, send your kids to college, and put a little away for retirement.” That promise is the basis of the nation’s middle class, and the President was right to recognize the threat to it as “the defining issue of our time.”

As Demos has documented, the nation’s middle class is in trouble. Median income is no higher than it was a decade ago and only workers with at least a bachelor's degree earn more than their counterparts a generation ago. We face staggering inequality, a critical problem, not because Americans are envious of those who are successful, but because it offers a stark choice between continuing to devolve into “a country where a shrinking number of people do really well, while a growing number of Americans barely get by. Or… an economy where everyone gets a fair shot, everyone does their fair share, and everyone plays by the same set of rules,” as the President said.

President Obama defined the nation’s fundamental challenge correctly and he laid out the broad themes of a solution. As we’ve argued, 

"America's strong and vibrant middle class didn't just happen. It was built brick by brick in the decades after World War II-by the hard work of our parents and grandparents.”

Last night the President told that story in the context of his own family history, and offered a powerful case for how it was done -- and how America can do it again -- if both citizens and businesses play a constructive role, and government acts through sensible regulation:

Rules to prevent financial fraud, or toxic dumping, or faulty medical devices don't destroy the free market. They make the free market work better

forward-looking public investment:

[D]o some nation-building right here at home… support the same kind of research and innovation that led to the computer chip and the Internet; to new American jobs and new American industries.

and fair taxation:

Asking a billionaire to pay at least as much as his secretary in taxes? Most Americans would call that common sense.

It was a fitting riposte to the tired calls to slash spending that supports the fundamentals of the American competitiveness, junk the regulations keeping us safe, and promote more tax cuts for the wealthiest Americans, other priorities be damned.

It’s one thing to recognize the precarious state of the nation’s middle class and identify the basic mechanisms for restoring broad-based prosperity -- it’s another to propose (and harder still, enact) policies that genuinely address the scope of the challenge. Here the President’s policy proposals, while generally meritorious, fall short of addressing the full scope of unemployment, underinvestment, and inequity of opportunity that the nation confronts. There was no large scale public jobs program to put Americans to work; no plan to break up the nation’s too-big-to-fail banks; and no effort to improve jobs for low-wage workers who -- even if the most ambitious plans for education and skill-building are achieved -- will still be working in warehouses, restaurants, retail counters and at the bed-sides of the frail and sick.   

To some extent, the modesty of the President’s concrete policies is a reflection on the stagnation of our political system. “Washington is broken,” as the President said, undermined by the corrosive influence of money in politics.  As he acknowledged, critical policies that the nation has needed for years -- from comprehensive immigration reform to a new energy policy to combat climate change -- are going nowhere in Congress. In this context, a broad vision of the nation’s basic challenge and the types of regulation, public investment, and tax reforms needed to overcome it may be what we need most.