Obama's goal is 'smart government'

State-of-the-union address warns Americans their country 'cannot cut its way to prosperity'

PUBLISHED : Thursday, 14 February, 2013, 12:00am
UPDATED : Wednesday, 20 February, 2013, 12:57pm

Thirty-two years after US President Ronald Reagan proclaimed that "government is the problem", and 17 years after President Bill Clinton stated that the "era of big government is over," Barack Obama has made a case for closing out the politics of austerity.

In a state-of-the-union address largely focused on economic issues, Obama asserted that "we can't just cut our way to prosperity". He suggested it was time for a more balanced approach, including accepting government has a vital role to play in assuring economic growth and a secure middle class.

"Most of us agree that a plan to reduce the deficit must be part of our agenda," Obama said. "But let's be clear - deficit reduction alone is not an economic plan."

In setting out how government could reach what he considers an acceptable level of fiscal stability through Medicare cuts and tax increases, Obama was doing more than trying to set the terms for the next rounds in his fiscal fight with congressional Republicans.

He was also building a broader argument that the nation needs to shift away from the focus on shrinking the government that has dominated politics for the past several years and towards an agenda aimed at tackling persistent inequality and the dislocating forces of a globalised, technology-driven economy.

At the same time, Obama explicitly recognised the political and policy limitations of his stance after four years of budget deficits in excess of US$1 trillion and broad public unease about saddling future generations with a crippling debt burden. There was no new stimulus plan, no mission to Mars, no ambitious plan to address the hangover from the housing market crash.

"Let me repeat, nothing I'm proposing tonight should increase our deficit by a single dime. It's not a bigger government we need, but a smarter government that sets priorities and invests in broad-based growth."

In the Republican response, Senator Marco Rubio of Florida referred to "the president's plan to grow our government".

He said the "free enterprise economy" will create jobs and, not as Obama has suggested, the collection and spending of new revenue. "The idea more taxes and more government spending is the best way to help hardworking middle-class taxpayers -that's an old idea that's failed every time it's been tried," he said. "More government isn't going to help you get ahead. It's going to hold you back. More government isn't going to create more opportunities. It's going to limit them."

By filling in the details of the framework he set out last month in his second inaugural address, Obama made clear that after his re-election in November, he did not intend to allow a Republican drive for spending cuts to define his second term.

And in laying out his agenda, he continued trying to define a 21st century version of liberalism that could outlast his time in office and do for Democrats what Reagan did for Republicans.


Taxes: The American people deserve a tax code that helps small businesses spend less time filling out complicated forms, and more time expanding and hiring; a tax code that ensures billionaires with high-powered accountants can't pay a lower rate than their hard-working secretaries; a tax code that lowers incentives to move jobs overseas, and lowers tax rates for businesses and manufacturers that create jobs right here in America.

Climate change: If Congress won't act soon to protect future generations ... I will direct my cabinet to come up with executive actions we can take, now and in the future.

Minimum wage: Tonight, let's declare that in the wealthiest nation on Earth, no one who works full-time should have to live in poverty, and raise the federal minimum wage to US$9 an hour.

Gun control: I know this is not the first time this country has debated how to reduce gun violence. But this time is different. Overwhelming majorities of Americans - Americans who believe in the second amendment - have come together around common sense reform, like background checks that will make it harder for criminals to get their hands on a gun ... Each of these proposals deserves a vote in Congress.