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Posted at 11:52 AM ET, 01/26/2011

Can we win the future if we lose the present?

By Ezra Klein

Mike Konczal says that "in a non-crisis time, [Obama's State of the Union] would have been a great vision of the role of government in the economy." But this isn't a non-crisis time. Unemployment is stuck above 9 percent, we've not yet hit our peak rate of foreclosures, recent job growth hasn't even been enough to keep up with population increases, there's still a chance of further financial crises in Europe, and the United States government has basically walked off the field. We just had an election in which both parties proclaimed jobs the central issue, but the State of the Union had few answers for those who're out of work.

I sat in on a briefing yesterday where various "senior administration officials" explained the theory behind the State of the Union. When they were asked about shifting their focus to the future when the economy was so bad in the present, they explained that they got pretty much everything they thought they could get -- and, in fact, more than they thought they could get -- in the tax-cut deal, and it was time to let that work. Left unsaid is that they can't get anything more out of a Republican House, and so there's little point in begging.

This is, essentially, a bet: The economy isn't currently growing fast enough to bring down the unemployment rate. But the administration expects that it will be growing that fast very soon. The early numbers are looking good, the forecasts are optimistic, and Americans are more confident than they've been at any time in the past three years. But if that doesn't happen, it's not at all clear that they have a workable policy or political theory for what to do about it. And so far as the future goes, it doesn't matter how many tax credits you offer for college students: If 8 percent unemployment becomes the new normal, we've lost.

By Ezra Klein  | January 26, 2011; 11:52 AM ET
Categories:  Economy  
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Comments

The most relevant statistic to all this is that unemployment among those with a four-year college degree is below 5%. This is America's future - and America's present. No one has the stones for a CCC or WPA type project, so we're left with trade deals, unemployment insurance, and investments in education.

Posted by: willows1 | January 26, 2011 12:32 PM | Report abuse

Would it have been smarter to promise the American people the moon and the stars, watch it surely die in the Republican House of Representatives, and look impotent and lost? Policymaking is driven by political context. The context has changed and everything Obama talked about going forward were things that at least in theory should be areas for bipartisan action.

Posted by: vvf2 | January 26, 2011 1:19 PM | Report abuse

The speech was a calculated attempt to send a message, to wit that the Republic, while not quite flourishing as it ought, is far enough removed from the precipice for ceremonial boilerplate to be the appropriate rhetorical stance.

It appears to have succeeded.

Posted by: davis_x_machina | January 26, 2011 1:33 PM | Report abuse

Amen to much of this, except unemployment. It has become a systemic problem, not an episodic one, as you will soon see. Otherwise, the economy is functioning well.

Posted by: johnmarshall5446 | January 26, 2011 2:21 PM | Report abuse

This is the problem with the Whitehouse, if they ask for something and republicans refuse to support it and the economy tanks the narrative changes. But if they say to themselves, we got more than we thought we could, not enough, but more than we thought, and they don't ask for more and argue it to the people, when the economy tanks, the people think it is because Dem ideas are flawed, not that Repubos didn't support a good idea. So by not asking they are conceding the narrative to Repubos. No wonder it's been 30 years of the country steadily moving right.

Posted by: comma1 | January 26, 2011 2:33 PM | Report abuse

BTW, look at the Fed statement today, and forget your ideology. Batten down the hatches for inflation.

I have been preaching for many months to go long commodities, (not gold) and short on Treasuries. Double down on that bet on any significant dips!

To quote former Senator Fred Thompson in his cameo role in "The Hunt for Red October:

"This business will get out of control. It will get out of control and we'll be lucky to live through it."

But don't take financial advice from me. I'm just a homeless guy on a public library computer! See for yourself.


Posted by: johnmarshall5446 | January 26, 2011 3:02 PM | Report abuse

What if we developed a low cost of living area where we could compete with other countries on labor cost? Speeding up no fault foreclosures would help getting our inflated housing costs down. We can lower unemployment, we just have to be willing to make the adjustments that it will take to get there.

On John Marshall's point, I have an agricultural ETF (DBA) that's been doing pretty well.
http://goo.gl/NNArD

Posted by: staticvars | January 27, 2011 12:46 AM | Report abuse

If Obama were smart, he'd give a speech a week saying that he wants more job-creating initiatives, but the Republicans are blocking them. That way, if things don't turn around the blame falls on them, not him.

If.

Posted by: B405 | January 27, 2011 1:58 PM | Report abuse

Sounds like the same kind of gamble that the administration made in early 2009 with the stimulus package. Plan for the best, hope for the best. In the process lose the messaging battle by over-promising when things inevitably don't turn out in line with the best case scenario.

If this is what "12-dimensional chess" is all about, then it sounds a lot less sophisticated than the standard game of chess. Maybe more like checkers. Doesn't cut it.

Posted by: JPRS | January 28, 2011 6:54 PM | Report abuse

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