SOTU Should Focus on Three Things: Economy, Economy, Economy

Jan 25, 2011Bo Cutter

Shaping the future with today’s choices.

If I were to speak with President Obama before Tuesday night, I would give the following advice. Each point is important to the country, but also politically valuable for him.

Make your speech a continuation in tone of your Tucson speech

The Tucson speech was magnificent in large part because it appealed to the best of Americans. It spoke to how Americans should deal with each other. The State of the Union speech should continue that message to the next obvious point. President Obama should underline that the American people want Washington to find doable solutions to pragmatic day-to-day issues. He should get way out in front of the Congressional Republicans in terms of offering real discussions.

Give a short speech focused almost entirely on economics

The president should convey that: (1) he will focus significantly on the economy; (2) he has an achievable plan; (3) he is thinking about the long and short run; and (4) he will work with the whole Congress.

This will be the most important of President Obama's first-term State of the Unions. It must be the speech that positions him for the remainder of this term. While the economy cannot be the only topic -- the speech, for example, cannot ignore Afghanistan -- it has to be the main topic.

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Underline four specifics you want to accomplish with Congress

First, keep the recovery going. This probably means a further payroll tax reduction, and it certainly means linking real budget restraint to increases in employment.

Second, come to an overall agreement the American people can understand on reducing deficits and debt. This means restraining everything, not simply those items each party dislikes. This has to include defense spending and entitlements.

Third, reform our tax system and create a new source of revenue. This has to mean maintaining a progressive rate structure, lowering marginal rates for everyone, ending or limiting loopholes, and a new tax. I think the arguments for a progressive VAT are the strongest.

Fourth, increase investment in both the private and public sectors. I believe the president should propose -- and could get -- a major multi-year public infrastructure investment initiative.

Conclude by establishing a new positive tone about what our economic future can be

The president should emphasize that the crisis is over -- and that we succeeded, at major cost, in avoiding collapse. But the hard work of building the next American economy has just begin.

President Obama clearly began a much-needed reset as soon as he absorbed the lessons and implications of November's elections. And he has improved his political position far more than I thought would be possible. At the same time, the Republicans have a very difficult coalition management task in front of them. With this speech, the president can go a long way toward defining and owning the agenda of the next two years. That should be his objective on Tuesday night.

Roosevelt Institute Senior Fellow Bo Cutter is formerly a managing partner of Warburg Pincus, a major global private equity firm. Recently, he served as the leader of President Obama’s Office of Management and Budget (OMB) transition team.

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