PBS Annotated State of the Union, Excerpted
Barack Obama:
The Annotated State of the Union | Online NewsHour | PBS: Madame Speaker, Vice President Biden, Members of Congress, distinguished guests, and fellow Americans....
But when I ran for President, I promised I wouldn't just do what was popular - I would do what was necessary. And if we had allowed the meltdown of the financial system, unemployment might be double what it is today....
BRAD DELONG: I wonder where this unemployment number came from? I haven't seen anything suggesting another 10 percent of unemployment -- 4 percent maybe...
BARACK OBAMA: Because of the steps we took, there are about two million Americans working right now who would otherwise be unemployed. 200,000 work in construction and clean energy. 300,000 are teachers and other education workers. Tens of thousands are cops, firefighters, correctional officers, and first responders. And we are on track to add another one and a half million jobs to this total by the end of the year. The plan that has made all of this possible, from the tax cuts to the jobs, is the Recovery Act. That's right - the Recovery Act, also known as the Stimulus Bill. Economists on the left and the right say that this bill has helped saved jobs and avert disaster...
BRAD DELONG: Which raises the question of why Obama isn't extending and enlarging it. If the stimulus bill was causing interest rates to go up and that was retarding investment, then there is a case for not enlarging and extending the ARRA. But interest rates aren't rising. And yet Obama isn't extending and enlarging the ARRA. Big mistake...
BARACK OBAMA: So tonight, I'm proposing that we take $30 billion of the money Wall Street banks have repaid and use it to help community banks give small businesses the credit they need to stay afloat. I am also proposing a new small business tax credit - one that will go to over one million small businesses who hire new workers or raise wages. While we're at it, let's also eliminate all capital gains taxes on small business investment; and provide a tax incentive for all businesses, large and small, to invest in new plants and equipment...
BRAD DELONG: Haven't seen any paper suggesting that these measures would be effective yet -- and the Carter-era new hires tax credit was a disappointment. The restriction of the new hires tax credit to small businesses cannot be a good move. I'm predisposed to like an equipment investment tax credit as relatively effective at boosting investment and employment -- but again, I haven't seen any paper on this yet, and I should have.
BARACK OBAMA: You see, Washington has been telling us to wait for decades, even as the problems have grown worse. Meanwhile, China's not waiting to revamp its economy...
BRAD DELONG: China isn't proposing a domestic spending 'freeze' either...
BARACK OBAMA: Starting in 2011, we are prepared to freeze government spending for three years. Spending related to our national security, Medicare, Medicaid, and Social Security will not be affected. But all other discretionary government programs will. Like any cash-strapped family, we will work within a budget to invest in what we need and sacrifice what we don't. And if I have to enforce this discipline by veto, I will...
BRAD DELONG: Oh boy. If the stimulus package was good policy, this is political posturing. If this veto threat is good policy, the stimulus package was political posturing. Very bad sign...
BARACK OBAMA: I know that some in my own party will argue that we cannot address the deficit or freeze government spending when so many are still hurting. I agree, which is why this freeze will not take effect until next year, when the economy is stronger. But understand - if we do not take meaningful steps to rein in our debt, it could damage our markets, increase the cost of borrowing, and jeopardize our recovery - all of which could have an even worse effect on our job growth and family incomes...
BRAD DELONG: Now somebody--perhaps me--is confused. Fiscal 2011 begins in October -- this year, when the unemployment rate is still projected to be near 10 percent. But Peter Orszag says the 'freeze' applies to fiscal 2011 -- and is not delayed until fiscal 2012, which starts in October 2011. The economy is not going to be meaningfully stronger when fiscal 2011 starts than it is now. Either there are some wires crossed, or a lot of people in the White House don't know when fiscal years begin...
BARACK OBAMA: No wonder there's so much cynicism out there...
BRAD DELONG: Add me to the cynical: To defend deficit spending in the ARRA and then call for a spending freeze ten minutes later does not pass the coherence test...
