SOTU DOA

This year's State of the Union (SOTU) speech was one of the most substantial and moderate policy statements that President Bush has ever made. However, it also appears to be one of his most ineffectual speechs to date.

His call to balance the budget in 5 years was undercut by the fact that Democrats have already reestablished the PAYGO rules as part of their 100 Hour agenda and that this was done over Republican objections that it would endanger renewal of the Bush tax cuts. Given that Bush inherited a budget surplus and then ignored Greenspan's advice to include put triggers in the tax cuts to prevent lapsing back into deficit, I find Bush's calls for fiscal discipline particularly disengenuous. (I just hear Rene Zellweger in "Cold Mountain" saying "They make the weather and then cry 'It's raining!'")

As if this wasn't bad enough, the speech went on to propose huge tax deductions for individual health care along with more federal funding of state healthcare. While some level of inconsistency is to be expected in politics (people like to hear that they can eat their cake and have it too), this seemed to push the envelope. Most healthcare benefits are already tax exempt, expanding that exemption with a stanadard deduction won't change the coverage of people with exsiting benefits, and giving uninsured people a deduction whether they buy health insurance or not will do nothing to encourage them to get health insurance. As far as I can tell, it's a $100+ billion tax incentive with no incentive.

I could point out that as a lump sum tax cut, the proposal would stimulate consumption more than investment, and that, if it increases the deficit, it will decrease the funds available for investment in the economy. Thus, unlike cuts in the top rate, it will not stimulate supply side growth. But the thunderous silence the proposal has received since the speech suggests that it isn't going anywhere soon.

Then, there was the president's embrace of alternative fuels. Here he is reversing himself to be in line with the rest of Washington. If you are a free market proponent, tax incentives and government investment are problematic and insignificant in comparison to core market incentives (i.e., $70/barrel oil). This area of policy will probably be the most productive but one that will be more closely associated with the Democrats .

So with regard to domestic policy, Bush may have reached out to the Democrats, but he hasn't taken the intiative from them. If the two sides work together to balance the budget, the Democrats will be fulfilling one of their their 100 Hour promises. If Bush pushes his healthcare tax deducation proposal to counter the Democrats ideas, the proposal's price tag and inherent ineffectiveness will be its own undoing (much like his Social Security plan). Advances on alternative fuels are likely to garner opposition from Bush's base in the existing energy idustry and, therefore, will appear to be more the doing of the Democrats. It is probably safe to say that Democrats will do better with voters on the alternative fuel issue and Bush's efforts will simply raise the issue's importance. *

Then, there is Iraq. Again, Bush repeated the same mantra, "Failure will be a disaster, therefore my plan will work". He also continued to cast the varied conflicts in the Middle East into a monolithic movement of evil extremism. It is increasingly hard to characterize his stated worldview as anything other than dangerously divorced from reality. By linking disparate events and actors, whose only thing in common is their opposition to US and Israeli policy, he is obscuring not only the root causes of the conflicts, but the potential solutions to them. Unfortunately, complexity and perspective taking make for difficult politics and don't fit in an "Us vs Them = Good vs Evil" view of the world.

Even so, the next day more Republican senators were coming out in opposition to the president. Republican Chuck Hagel joined the Democrats on the Senate Foreign Relations Committee in voting for a resolution to declare Bush's strategy to be "not in the nation's best interest". More importantly, other Republicans were floating their own ideas for resolutions and Democrats were talking about amending their resolution to garner more Republican support. It may be illusory and fleeting, but this is the closest thing we've seen to bipartisanship on the war since the original authorizing resolution. It is also the most damning condemnation of Bush's policy to date and the best reason to declare the SOTU speech dead on arrival.


* By the Way: It is worth noting that none of the social conservative agenda was included in the speech. Bush will certainly face challenges on stem cell research and Democrats are probably drooling over the prospect of another veto. However, one wonders if both parties will casually ignore the culture wars in order to improve their chances in 2008. Hillary Clionton will certainly be doing everything in her power to act like a moderate. If Guliani and McCain remain the Republican frontrunners, it is unlikely that they will challenge each other to a match of "More Conservative than Thou". It will be even more interesting to see if the activists in each party let them get away with it. There is already a liberal group forming with the express purpose of preventing the parties slide to the right, and we know that Sam Brownback will be fanning the flames of religious conservatives. However, on the Republican side, the prospect of Hillary Clinton as president is likely to focus conservatives more on the electability of Republican primary candidates than on their conservativism.