The Lookout

What to expect from Obama tonight on the economy

Zachary Roth
The Lookout

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As you'd expect with growth still slow and unemployment at 9.4 percent, President Obama's State of the Union address tonight will focus on the economy. But what's the president likely to say, and what might tonight's speech suggest for government policy in 2011?

Details have been relatively sparse, but White House officials have signaled that Obama will focus on both the country's short- and long-term economic challenges. And he'll offer what the New York Times calls "a blueprint for  economic recovery and American competitiveness," consisting of five "pillars": innovation, education, infrastructure, deficit reduction and reforming government.

Specifically, Obama will likely call for spending on infrastructure to spur immediate job growth.  He also will urge investments in education and innovation, in order for America to keep pace with global competitors over the longer term.

In what could be a difficult balancing act, Obama also will stress the need for deficit reduction -- but he isn't likely to offer many specifics. The White House has said that he won't endorse a proposal by his commission on debt reduction to raise the retirement age or make other cuts to Social Security. A plan released last year by Wisconsin GOP Rep. Paul Ryan, who will give the Republican response to Obama's speech, would make major cuts to Social Security.

In addition, Obama will advocate overhauling the corporate tax code -- though he's unlikely to offer details - and encouraging exports. And he'll offer a vigorous defense of his health-care law, which the GOP has lately challenged both in Congress and the courts. That defense will include stories about specific Americans who the law has already helped.

So what might all this mean for the year ahead? Education could provide a rare platform for the president and the GOP to work together -- and everyone agrees that fixing America's school system is key to staying competitive in the long run. But it's hard to see congressional Republicans agreeing to significant infrastructure spending, since they've made major spending cuts the centerpiece of their agenda, and have criticized the 2009 stimulus as ineffective. Such a policy stalemate could leave the White House with few options as it looks for ways to jolt the economy, and might mean another year of halting growth.

As for deficit reduction, the president's apparent unwillingness to consider cuts to Social Security, and the GOP's ongoing refusal to countenance significant tax hikes, suggest that 2011 isn't likely to see much more progress than 2010 had in closing the budget gap. But with most economists saying it's more important to get the economy humming again, perhaps that's not the end of the world.

(AP Photo/Seth Wenig,File)

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