So if We Win the Future, Who Loses?

The trouble with the State of the Union address is that it is a good 20-minute speech that drags on for about an hour.  Whatever is useful about it is drowned out by the rest, which is typically a poor combination for cheerleading and inconsistent policy suggestions.  What did I like about the speech?

1. I would rather spend money on green energy than oil.  But green to me does not include clean coal (which doesn’t really exist), biofuels (which are presently a terrible waste of fertile soil), natural gas (hello?), or nuclear (until we dispose of all the waste).  Let’s harness the sun, water, and wind.
2. I would rather have the federal government involved in education through a Race to the Top than No Child Left Behind.
3. I have been a consistent voice for more and more intentional infrastructure spending, regarding it as one of the few things worth funding through debt.  There was some of this in the speech, but it is still too little.
4. I think ROTC should be welcomed on college campuses, particularly now that the ostensible reason for its exclusion (Don’t Ask, Don’t Tell) has been eliminated.

But these are not the big ticket items.  The budget is the big ticket item — we have both a short- and a long-term budget problem.  The short-term budget problem is that our population and capital are underemployed, generating a large budget deficit.  The long-term budget problem is that we will spend enormous sums on Social Security, Medicare, and Medicaid in addition to defense/security.  Freezing everything else doesn’t come close to addressing the problem.  The proposed reductions in the defense budget are a useful start, but only a start.  At some point, the leadership in Washington is going to have to propose some serious changes to the Big 3 or be honest about the need to raise taxes beyond just having the highest tax rate reductions eventually expire.

Stepping back from the policy, I couldn’t help but feel that this was an Ugly American speech.  The President repeatedly said that we must do X or Y in order to “win the future.”  When he said it, he framed the challenge as a zero-sum game — if we win, someone else must lose.  He referred to a Sputnik moment.  Are we likening the consequences of China or South Korea coming up with the next big innovation in solar energy to the consequences of allowing the Soviet Union to eclipse us in space technology a half century ago?  I should hope not.  We were engaged in an arms race with the Soviet Union.  We are trading partners and allies with China and South Korea.  We should be almost as happy if they make the innovation as if we make the innovation — either way, a new technology is available to dramatically improve the standard of living around the world.  We get to enjoy its benefits as consumers, even if we don’t reap the profits as producers.  (And it is by no means clear that the producers will earn enough to outweigh the resources that were poured into its development.)  I would have hoped for a more collaborative tone and global outlook from the President.

• Become A Funded Futures Trader