Obama Reframes Economic Debate For This Year, and 2012

It's also a pretty good summary of what the president himself was up to as he spoke to the nation on Tuesday night.

The speech came at a critical juncture in his presidency. He has begun to recover from the depths of voter dissatisfaction he hit last fall, but he faces a newly empowered GOP determined to stop many of his initiatives as the 2012 campaign gets underway.

With both sides jockeying for leverage ahead of what promises to be brutal battle over the budget and government spending, the president had one over-arching goal as he took the podium: to convince a still-skeptical public that he has a strong plan to spur job growth and the economy, all while seeking to reframe the debate away from one narrowly focused on reducing the deficit and towards the need to invest in the future and maintain America's competitive strength.

"It's a hard speech," says James Thurber, a presidential historian at the American University.

Of course, the president touched on other areas in the nearly hour-long speech before a crowd that included Daniel Hernandez, the intern who helped save the life of Rep. Gabrielle Giffords, and the family of Christina Taylor Green, the 9-year-old who was killed in the Tucson shootings. Obama pledged to begin removing U.S. troops from Afghanistan by July, and to finish the job of bringing them home from Iraq. He promised a plan to consolidate and reorganize the federal government to make it more efficient.

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He also delivered another brief tribute to the victims and heroes of the rampage. As he did in Tucson, he turned that tragic experience into a jumping off point for a broader meditation on the need for a return to dialogue and a sense of common purpose in American politics. And he pointedly noted that Republicans, having been handed a greater role in governing by the American people in last November's election, now share the responsibility for resolving the country's problems.

"New laws will only pass with support from Democrats and Republicans," he said. "We will move forward together, or not at all — for the challenges we face are bigger than party, and bigger than politics."

But whatever else earned brief mention, jobs and the economy were at the core of the evening. Perhaps more than any other speech in his presidency, it also marked the return of the impassioned, visionary Obama of the campaign trail — the one who has rarely been seen since. In it, he set the terms of debate not just for the battle to come in the next several months over the 2011 budget, but for the debate that will lie at the heart of 2012 presidential campaign.

The important question is not just how much the government spends, the president told the nation, but what do we want the government to do. Yes, we must cut government spending. But contrary to the arguments laid out by Rep. Paul Ryan and Rep Michelle Bachmann in the GOP rebuttals that followed, he argued that spending cuts alone will never lead to prosperity. Instead, he made an insistent plea that America must continue to invest in the future, through education, infrastructure and research, if it is to sustain the American dream.

"At stake is whether new jobs and industries take root in this country, or somewhere else," the president said. And if there were any doubts about the centrality of those goals to the vision he laid out to retain American prosperity, he added later: "This is our generation's Sputnik moment."

Did it work? Certainly many of his allies were happy with the president's approach and the vigor with which he pushed back against congressional pressure to simply whack spending.

"He helped give people a sense that the world is very different," says Andy Stern, the former head of the Service Employees International Union, who has been a close advisor to the president. But he also worries that there is still little effort to more immediately address unemployment. "He laid out a cogent vision for the future, but the country is still lacking a national plan to get people back to work quickly."

Others saw a different problem with the agenda the president laid out. Whatever the merits of the investment ideas, they are an expense the country cannot afford at this point argues Brian Darling, the head of government relations for the conservative Heritage Foundation. "His proposals are very expensive; he's rolling out a laundry list of new spending items at a time when people want cuts," Darling says. "That will be a big pressure point."

No doubt, but the president also sought to reclaim the high ground on the deficit. He and his party have been pummeled over the past year by the perception that they have been spendthrifts who let Uncle Sam run amok with red ink. Jim Kessler, the vice president for policy at the Third Way, a centrist think tank, points out that that view was particularly strong among independent voters Obama had won over in 2008 but who abandoned the Democrats in 2010. To win them back, the president needs to begin making the case that he is serious about restoring fiscal discipline now that the worst of the recession is over.

To do so, he pledged to freeze domestic spending over the next five years, and made clear that the defense budget cannot be exempt from the painful pruning ahead. He also acknowledged the need to rein in the costs of entitlements programs like Medicare, Medicaid and Social Security, though without any specifics. "He put a strong marker in ground that reducing deficit is critical to growth," says Kessler.

But will that be enough? Others aren't convinced that he's gone far enough. "Republicans aren't looking for a freeze, they want out-and-out cuts," says Greg Valliere, an analyst for the Potomac Research Group. "That's not going to fly." And he points out that simply acknowledging the need to address Social Security, without suggesting how, will cause many deficit hawks to question whether the president is really serious.

Perhaps the biggest question of the night, however, is whether the speech will add to the president's newfound political momentum. Following his ability to find compromise with Republicans on taxes and other issues in December, and his eloquent eulogy in Tucson, the president's approval ratings are above 50 percent for the first time since late spring. Even opponents agree that this speech is likely to give him a further boost.

"This will help the president today; he's come out with a strong message," says Darling. "But it's like a sugar high. The problem will be come several months down the road when people realize he can't accomplish all that he's promised."

Ultimately, however, it is just a speech. However good it may have been, and whatever bump it gives him, it will only do so much. It's the underlying performance of the economy that will matter come 2012.

"An awful lot now will depend on the economy. If it continues to improve, we could see growth of 3.5 percent or maybe even 4 percent return," says Valliere. "If that comes true, Obama's standing will rise further — but only if unemployment really starts to come down as well."