Obama Gets His Groove Back

WASHINGTON, DC - JANUARY 20:  U.S. President Barack Obama waves before giving the State of the Union speech before members of
WASHINGTON, DC - JANUARY 20: U.S. President Barack Obama waves before giving the State of the Union speech before members of Congress in the House chamber of the U.S. CapitolJanuary 20, 2015 in Washington, DC. Obama was expected to lay out a broad agenda to address income inequality, making it easier for Americans to afford college education, and child care. (Photo by Mark Wilson/Getty Images)

The swagger was back. Ignoring the electoral rebuke of 2014, President Barack Obama claimed the growing economy as a mandate for his progressive agenda, delivering a State of the Union address bristling with veto threats and challenging Congress to stand with working families.

The speech roused Obama's popular majority coalition that elected him twice against the Republican congressional majority, which captured far fewer votes. While ending with a long, soaring peroration about "one America" in Obama's signature voice, the speech itself threw down the gauntlet before Republicans, inviting a debate about direction that will frame the 2016 election. It presented a president willing to compromise but ready to fight.

To that end, Obama focused the speech on values and direction, not on programs. This made the choices clear -- and neatly closeted the reality that many of the programs are gestures, not near the scope needed to deal with the problems they aim to address

"The era of big government is over" is over. President Obama defended activist government on the side of working people. In contrast to Bill Clinton, there was no rhetorical tacking to the conservative winds. Obama wants his administration to mark the end of the conservative era that began with Reagan and the beginning of a new era of reform.

His reforms are grounded in the center-left establishment consensus, now dubbed "middle-class economics." The rhetoric echoes Clinton: "the idea that this country does best when everyone gets their fair shot, everyone does their fair share, everyone plays by the same set of rules." If she runs, Hillary will have no problem carrying this argument.

But the real question is that posed by Elizabeth Warren: What happens when the rules are rigged to benefit the few? We may all play by the same set of rules but find that the deck has been stacked. Changing the rules requires taking on big money and entrenched interests -- and here the president largely took a pass.

The Wage Initiative

The most popular part of the speech will surely be what the Economic Policy Institute dubs the president's wage initiative. He called for raising the minimum wage, pay equity, paid sick days, revival of overtime protections, and tax credits for more affordable child care. These are vital reforms for low-wage workers; all enjoy the support of two thirds or more of the American people. If the Republican Congress blocks them, as seems likely, they can be driven forward in blue states and big cities, and by procurement reform at the national level. Lifting the floor under workers and extending the social contract are long-overdue reforms that are worth fighting for.

Yet for wages to rise across the board, we need a full-employment economy that makes workers, not jobs, scarce. We need to empower workers to organize unions and bargain collectively. And we need to reform perverse executive compensation policies that give corporate CEOs multimillion-dollar personal incentives to cook the books, ship jobs abroad, suppress wages, and plunder their own companies for short-term returns. The president heroically assumes the full employment is on its way. And while he mentioned the need for unions, he did so wistfully: "We still need laws that strengthen, rather than weaken, unions and give American workers a voice." And the notion that more employers might "see beyond the next quarter's returns" is but a forlorn hope.

Invest and Tax

The speech also made a muscular case for public investment -- in 21st-century infrastructure, in research and development, in new energy, in education and training to create a skilled workforce. (The need for an informed democratic citizenry goes unmentioned.) The president called for making two years of community college free, and for lowering debt burdens for college students.

To pay for this, the president issued his most populist -- and most popular -- challenge:

[F]or far too long, lobbyists have rigged the tax code with loopholes that let some corporations pay nothing while others pay full freight. They've riddled it with giveaways the super-rich don't need, denying a break to middle-class families who do. ... Let's close loopholes so we stop rewarding companies that keep profits abroad, and reward those that invest in America. Let's use those savings to rebuild our infrastructure and make it more attractive for companies to bring jobs home. ... And let's close the loopholes that lead to inequality by allowing the top 1 percent to avoid paying taxes on their accumulated wealth. We can use that money to help more families pay for child care and send their kids to college.

This argument -- on the need for public investment paid for by progressive tax reforms -- is vital to our country's future. And it is politically potent -- putting Republicans in the position of starving vital investments to protect tax breaks for the powerful. The president's bold position should be applauded, even if the actual spending he calls for doesn't come close to closing the growing investment needs.

The Missing New Foundation

President Obama claimed a new foundation for the economy based upon a revival of manufacturing, rising exports, energy independence, higher test scores and graduation rates, and a reformed Wall Street.

But the claim is mocked by the reality. The president's reforms that address the rigged rules and distorted structure of our economy are largely already in place. Yet trade deficits are back, with the deficit with China unprecedented in the annals of history. We haven't regained the manufacturing jobs lost in the crash, much less those lost the decade before. The big banks are bigger and more concentrated than ever -- still too big to fail, too big to jail and too big to manage. CEO pay continues to soar, while workers wages stagnate.

And in his call for renewing fast-track trade authority -- to grease the skids for passing potential trade treaties with Asian and European countries -- the president doubled down on the failed policies of the past. Ironically, this is the one area where he will gain bipartisan support, with the leaders of both parties arrayed with multinational banks and corporations in support.

The president's case for fast track was particularly disingenuous, a recycling of the false promises of the past accords. "[N]inety-five percent of the world's customers live outside our borders," he said. No, 95 percent of the world's population does; customers are people with money and are far more concentrated. "China wants to write the rules for [Asia]," he said. No, while Asian countries are imitating China's model of trampling trade rules, they are threatened, not entranced, by their increasingly assertive giant neighbor. An agreement designed to make Vietnam an alternative source of low-cost labor for American corporations while protecting investors with their own private legal system is hardly a deal to "protect American workers." The claim that this administration has cracked down on currency and trade violations is risible.

Also absent from the speech was any discussion of limiting the role of big money in politics or cleaning up the corruption of Washington and Congress. For a president once willing to challenge the Supreme Court to their face over Citizens United, the omission was striking. It is particularly odd given that taking on Wall Street and big money is becoming something of a litmus test for cynical voters, who generally think Washington is corrupted.

The Foreign Policy Thicket

President Obama has been the leading advocate for ending the war on terror, removing U.S. troops from Iraq and Afghanistan, reasserting our values and protecting our constitution in an age of terror. He makes a strong case for smart diplomacy rather than bluster and military adventure. His opening to Cuba, his insistence on negotiations with Iran, and his call once more to close Guantanamo in the face of congressional cowardice are admirable.

Yet at the same time, troops are returning to Iraq in the fight against ISIS. We remain engaged in Afghanistan. Drones and hit squads hunt terrorists in nations across the globe. The president has asserted unprecedented prerogatives to surveil, arrest, detain, even kill people -- including U.S. citizens -- on his own authority. His administration has protected intelligence officers who lie to Congress, while hunting whistleblowers who expose the truth to Americans. Perhaps he can use the last two years to continue to bring his practice in line with his sensible vision.

Progressives should applaud the president's combative populist message. We should challenge the Republican Congress that stands in the way. We should be pushing various parts of the wage initiative and the public investment agenda at the state and local level. President Obama will end his years in office as the most liberal president since Nixon. But while the president frames the argument well, making this economy work for working people once more will take far bolder reforms. His years may mark the beginning of a new era of progressive reform, but only if people in motion force the argument.