Reaching for the stars

Obama: Barack Obama’s “Sputnik moment” may not leave as lasting a mark as George W Bush’s “axis of evil” or Bill Clinton’s “the era of big government is over". But as the State of the Union catchphrases go, it is not too bad. More important was what the president didn’t say. He failed to explicitly endorse any of his own debt panel’s major budget-cutting recommendations. Apparently, the era of big government deficits is not over.

Obama didn’t ignore the debt issue completely. Deficit reduction was included as one of his five economic “pillars", along with innovation, education, infrastructure and government reform. He did call for a temporary freeze in some spending categories. But his narrow formulation exempts sixth-sevenths of federal outlays, saving less than $400 billion over 10 years. This compares with perhaps $9 or 10 trillion in total new debt. Last week, a group of influential Republicans called for $2.5 trillion in cuts over a decade.

There had been hope Obama would at least suggest trimming social security, as his bipartisan debt commission suggested last December. But the idea was dropped after much howling from liberal interest groups. Strangely, Obama said it was necessary to “find a bipartisan solution to strengthen social security for future generations." He should check his inbox because it’s been sitting in there for more than a month.

The White House has clearly decided that a “pro-growth” message will serve Obama well in his 2012 re-election bid, with the space race reference meant to evoke the can-do 1960s.To hammer home the point, Obama emphasized the need to keep investing in the “Apollo projects” of today. In other words, let the GOP be the Party of Austerity and root-canal economics.

The speech isn’t necessarily Obama’s final take on the matter, of course. Progress can be made outside the media spotlight. In 1997, secret talks between the Clinton White House and congressional Republicans almost led a bold deal to fix the social security issue.

Obama might want to try a similar tactic and quietly meet the guy who gave the Republican TV response, Paul Ryan. The rising GOP star and debt panel member has created a plan with a former Clinton economist to sharply cut future health costs, the primary driver of America’s long-term debt woes. Otherwise, US debt may just keep rocketing higher — to the rising dismay of bond investors.