(Centennial Fellow) President Barack Obama, in his State of the Union speech, praised deficit reduction while pledging deficit enlargement, coming across like a phony dieter sneaking ice cream. Only he wasn't sneaking it. He was as much as licking the spoon in front of the nation as he said implausibly that we've got to have splurges of the kind that got us in trouble.
It won't work, least of all a splurge like a national high-speed rail system, which Obama called for and which may sound like fun except that we cannot afford to build it and certainly cannot afford to sustain it. Europe's smart and Europe does it, right? If you call $42 billion in annual government train subsidies smart, yeah, sure, but the benefits we would derive do not equal the price we would pay. Not even close.
We also need to get less dependent on oil, Obama said while pointing as an answer to biofuels, one of which, ethanol, is a mandated, subsidized, special interest scam making your food prices go up while doing zip to give us a cleaner environment. Biofuels of the future might be better, but let's let them prove themselves in the market.
You want jobs, maybe? We're going to get them, says Obama, by government interventions that will put past ones to shame – in energy, for instance. Let me turn society green and watch the jobs grow, he says, only they won't because, as any number of economists have pointed out, government-foisted energy jobs would come at the expense of government-negated energy jobs. As Obama confessed, the government doesn't know what's going to work in many energy fields, and here's the answer he did not agree to. Let the private sector figure it out through capitalist trial and error.
That's a solution that does work, and mightily, as Obama seemed to understand when he told the story of Brandon Fisher, a remarkable young man who started his own company in drilling technology and made the equipment that enabled the rescue of 33 men who might otherwise have died after a mine collapse in Chile. The lesson here is the power of entrepreneurial energy and how it can do one great thing after another if government does not dampen it with too many regulations and uncertainties, taxes that are too high or the threat of economic calamity caused by deficits and debt.
Prior to the speech, Obama had given some hints he was closing in on this reality, as opposed to remaining lost in statist dreams, and in the speech he also had some kind words for cutting back on spending, though not, I am afraid, very meaningful ones.
He talked about a freeze on discretionary spending, which is a tiny piece of the budget and a place that needs serious cuts after the additions he has piled on in just two years. And he talked about a deficit commission's compromise proposal while rejecting one of the most significant parts of it, a recommendation on how to restructure Social Security. His language on this was the language of an uncomprehending demagogue even if it's a known fact that some of his top advisors have agreed with commission points.
What's needed more than money in some of the areas he talked about is reform, if not by the federal government, by the states or localities: Get the tenure out of teaching and get the frills and pork out of publicly financed infrastructure, for instance. Obama needs to get past this notion that it is primarily the federal government that can accomplish anything and understand that its intrusions can in fact have massively disastrous consequences. He needs to lay off the ice cream.