January 23rd, 2012 at 8:03 pm

OK, I admit it.  I’m excited about tomorrow’s night State of the Union speech.  Here’s why.  (I mean, “here’s why” besides the fact that I’m a wonky beltway denizen with a twisted utility function.)

We are poised at a unique moment in time, a moment when the structure of our economy and the basic principles and values that underlie that structure are of great concern to large numbers of people.  The rise of issues like excessive income inequality, insufficient economic mobility, fairness in the tax structure, the loss of manufacturing work, the role of globalization—are all much more present in the echo chamber of national debate then they’ve been in my lifetime, and I’m kinda old.

Moreover, it is a moment that poses critical choices: what is the role of government in maintaining or changing that structure, what is the role of regulation, what tax policies should be invoked, what jobs policies…or is it, as the Tea Party and their representatives would argue, that government itself is the problem (putting aside for a second that they tend to exclude Medicare, Social Security, and defense—over half the budget—from that formulation)?

I believe these questions and choices will be at the heart of the President’s speech.

Some conservatives have tried to thwart the conversation.  Gov Romney has argued that issues of income inequality are motivated by the “bitter politics of envy” and should only be discussed in “quiet rooms.”

But the fact is his candidacy itself has raised issues that go directly to the heart of these fundamental questions: to what extent do financial innovation and the activities of private equity firms create real value that helps the broad middle class and not just those at the top of the wealth scale?  Why should we favor financial assets over paychecks in the tax code?  Does achieving a sustainable budget path require that we ask more from those who have far and away done the best?

I don’t know where the President, nor for that matter, the majority of electorate will come down on these existential issues. What I do know is that this conversation will not be relegated to quiet rooms.  It will be in many living rooms tomorrow night, and I suspect and hope that’s just the beginning.

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16 comments in reply to "Pre-SOTU"

  1. marc sobel says:

    Unless he talks about tightening our belts and the DEFICT!!!

    It’s a moment when he can regain his base. What odds that he pisses on them again.

  2. Davis X. Machina says:

    I had a twisted utility function once, but a good chiropractor took care of it tout de suite.

  3. readerOfTeaLeaves says:

    Today Rod Dreher at the American Conservative is asking some quite thoughtful questions about income distribution — which I take as an overdue, and promising, sign that more pragmatic, wiser conversations about our economic (and political) systems are *finally* starting to pick up steam.

    Does the GOP really think we’re going to be surprised to finally see a network of tax havens, accounting shenanigans, and shell companies? Do they not recall Enron? WorldCom? What are these people so terribly afraid of?

    I’m only slightly surprised the DC establishment hasn’t recommended leeches and bleeding to assist the economy; it would be as simplistic as the ‘tax cuts’ mantra they preach robotically as their oneSizeFitsAll solution to every imagined woe.

    To me, it borders on the miraculous that this conversation about our economic system is *finally* taking shape. I almost have to pinch myself to believe this is really happening.

    I hope we are now seeding a conversation that will eventually flourish into a beautiful garden of sustainable economic activity in coming years.

  4. Ransome says:

    Twenty-two thousand dollars an hour for a “retired” Bain Capital Partner is breath-taking. Mitt must have done a lot of good for society. No reforms necessary for a job well done.

  5. Tyler says:

    Here’s the address I would give:

    “My fellow Americans, I have a bold new proposal to get back all the jobs we lost, and then some. My proposal is to abolish the federal income tax. It is a punishing tax that no progressive should ever support. The Tea Party, of course, is against any tax. So I expect full bipartisan support on this proposal. Right now, take-home pay for most Americans is barely enough to pay for food, rent, and gasoline, with not much left over. When government stops taking income out of their pockets, they’ll be able to get back to more normal levels of spending. There is no question that this proposal will bring the increase in sales we need to usher in a new era of prosperity and full employment. Thank you and God bless America.”

  6. perplexed says:

    Our fingers are crossed in anticipation of great speech Dr. Bernstein (lots of company in the twisted utility functions department)!

    I’m having a difficult time finding too many holes, either historically or economically, in the arguments made in this article:

    If you can spare the time, I’d love to hear your thoughts on it (and I believe other OTE readers would as well).

    • Jared Bernstein says:

      I’ll give it a read.

      • perplexed says:

        Thanks, I’m hoping we can tap into some of your recent research for your article on debt and get your perspective on what appears to be a dangerous phenomenon putting nearly all western democracies at risk.

  7. Jean says:

    Would that be a twisted cardinal or ordinal utility function?

  8. Lucy says:

    Where did the time go when people believed that ambition and hard work could make anybody a millionaire? It seems that the American Dream is no longer a reality. What is even more concerning is the fact that it is much harder for the poor in America to become rich than in virtually any other industrialised country. I am from Canada and when I see the area of Rosedale or Lawrence Park, some of Canada´s 10 richest neighbourhoods, I know that no matter how hard I work, I will never be able to buy a property in such locations. Even though I might work longer hours than people living there, I would get paid less. Is this how capitalism is supposed to look like?

    • Roger Larson says:

      FYI not that you need hints, but my odd links reference the State of Ship of State ala Truman’s getting out of the kitchen response blended with current day “give “em Hell” chef,(Gordon Ramsey) as well as what Democracy looks like with a Bismarck twist. Now don’t really expect the President to go all Steven Segal on the Republicans but they will be Under Siege.