State of the Union Thoughts: Better Than Expected
Everyone is writing about it, so I’ll throw in my two cents. I was pretty happy with the SOTU speech, especially since I went into it quite worried. Here is the text of the speech. Highlights for me:
1) Saying that the stimulus worked, and explaining in concrete numbers how much unemployment has been stopped and how much worse it would have been otherwise. The right has been running wild on this narrative, and it’s good to see him take ownership and responsibility for it.
2) Telling the story about the surplus Clinton left in 2000, and how there was a multi-trillion dollar deficit awaiting him when he arrived, and referring to the 2000s as a lost decade. As we’ve discussed before, household income (both average and median) peaks in 1999, and increases in consumer debt simply coasted us through to the crisis. Also mentioning that the health care reform is one of our strongest weapons in taking care of this structural deficit program.
3) Jobs bill. Pushing to get unemployment down in 2010.
4) Emphasis on investments in education and infrastructure, another thing that has gotten lost in the recent shuffles. “In the 21st century, the best anti-poverty program around is a world-class education” is a great line. As Stiglitz points out, you only need a rate of return of about 6% for investments in our people and infrastructure to lower the national debt – if anything, we need to be pushing this more.
And this (my bracketed numbers):
 To make college more affordable, this bill will finally end the unwarranted taxpayer subsidies that go to banks for student loans….And let’s tell another 1 million students that when they graduate, they will be required to pay only 10 percent of their income on student loans, and all of their debt will be forgiven after 20 years -  and forgiven after 10 years if they choose a career in public service, because in the United States of America, no one should go broke because they chose to go to college.
 And by the way, it’s time for colleges and universities to get serious about cutting their own costs - because they, too, have a responsibility to help solve this problem.
Amen to ! As I’ve written before, the private student loan industry is a nasty little crony industry – protected from bankruptcy even! – that makes little sense on the financial numbers, and is probably the single most dangerous financial instrument out there. And we let our kids near them. Taking ownership for breaking this is a good step.
Re:  Right now we have a deadly situation for our professional class where the debt required to achieve a post-college education steers people into jobs, post-graduation, that enforce the status quo. This is most obvious with lawyers, where after six figures of debt pile up the ability to work a job that challenges large firms is constrained – the large firms are the only people capable of paying you a living wage at that level of debt (and they know it).
For all the talk about Obamanomics, it’s important to realize the extent to which the mechanisms of the professionalization process has been co-opted to service the needs and interests of large firms, whether it’s how medical research gets funded or who can give you enough of a yearly bonus that the student loan becomes negligible.
The government can’t afford the private car service home for regular workers if you stay after 9pm like the firms do – but they can forgive student debt; it’s a huge competitive advantage in government hiring that should be leveraged more.
Instead of just cutting costs for colleges and universities, I like ideas similar to what Kevin Carey has pointed out – information about colleges that can be used for comparison isn’t available. Disclosing information about student experiences can force competition that will also lead to price reduction.
5) Financial reform:
Now, the House has already passed financial reform with many of these changes. And the lobbyists are trying to kill it. But we cannot let them win this fight. And if the bill that ends up on my desk does not meet the test of real reform, I will send it back until we get it right. We’ve got to get it right.
Great to hear! I think this is important, to let everyone know that a muddled, second-rate financial reform bill won’t cut it. In fact, though he didn’t bring it up, it could make matters worse unless it seriously gets at the problems we have right now.
Mike Konczal is a Fellow at the Roosevelt Institute.