The State of the Union: What to Watch for

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Tonight may well be the most important speech of President Obama’s political life. His signature issue, health care reform, is on the ropes. His unfavorable ratings are rising and the Democrats have suffered some embarrassing losses in special elections, capped with the loss of the Senate seat held for a generation by Edward Kennedy. A year ago the democrats were riding high on a wave of popular support; today that wave has crashed to the ground and the party appears to be in disarray. What will the President do tonight to pick up the pieces?

– Health Care. This is Obama’s signature issue and aides have already said he’ll be talking about it tonight. In his last address to Congress he laid out a compelling case of the need to take action but was light on specifics, preferring to leave it up to Congress to shape the bill. The result is a mish mash of pork laden policy that adds 45 million people to a dysfunctional health care system and is viewed by the public as massive overspending at a time when we need fiscal discipline. The current bill is supported by only 30% of Americans but a majority still believe that health care reform is necessary. Look for Obama to return to specifics and call on Congress to pass a bill with genuine reform of the system that embraces some Republican cost cutting ideas.

– The economy. There is a perception that Obama has focused too much on wall street and not enough on restoring jobs for the middle class. The irony is that his policies have largely worked to reinvigorate the economy and get credit flowing again. The free flow of credit is critical to rebuilding the economy but it’s difficult to sell the notion that it’s working when the job market hasn’t rebounded yet. Look for Obama to propose some populist symbolic gestures tonight, like curtailing discretionary spending. Without tackling entitlements such as social security and medicaid, or cutting defense spending, the cuts will have only minimal impact but will have broad symbolic appeal.

  

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– Jobs. A hefty section of the speech will have to be about jobs. The President will propose spending $8 billion on developing high speed rail networks and will tout it as a job creating measure. High speed rail is good for the country and will create some jobs, but because America has no experience with high speed rail much of the equipment will need to be purchased from European companies. In the end this may be a symbolic gesture as well. Look for him to mention specific locations for high speed rail such as Florida, where a tight senate race is developing.

– Appeal to the base. Liberal democrats are unhappy with the President after one year in office, believing that he’s abandoned them. Although much of that is based on projection – Obama ran as a moderate, not a radical – he will need to regain their support without alienating independents. Rumor has it he’s going to call on Congress to repeal Don’t Ask Don’t Tell tonight.