Obama says 'We will rebuild, we will recover'
If optimism and the ability to acknowledge problems on the way to dealing with them are any indicators, U.S. stock markets should open higher Wednesday and remain higher throughout the day, on the strength of President Obama's first address to a joint session of Congress.
Obama laid out an ambitious agenda in a speech that forced listeners to remember that the president wants to achieve his goals -- on health care, energy, education, Social Security, national security -- in the same year that he and Congress are working to fix the banking system, get credit flowing again, and end a pronounced U.S. recession that has already resulted in more than 3.5 million job layoffs.
Health care reform deemed a key
And, amazingly, but logically, from a fiscal standpoint, Obama wants to achieve health care reform in this year. Health care reform is logical from an Obama administration standpoint, due to the hand the president was dealt upon taking office: a more than $1 trillion budget deficit. Savings from health care reform will cut costs across the government spectrum -- such as lowering costs for Medicare and Medicaid -- two expense reductions that must occur if Obama hopes to cut the federal budget deficit in half to about $500 billion by the end of his first term, in fiscal 2013, as promised.
Still, Obama said his first priority remains, obviously, the economy, and building on his fiscal stimulus package win, Obama said his administration would move quickly on its home mortgage refinance program, designed to substantially reduce foreclosures. The president also said the U.S. Treasury will announce soon the start of its new program to remove toxic assets from the banking system, stabilize banks, and get credit flowing freely to businesses and consumers.
In addition, Obama has called for major new initiatives on education (efforts to increase the level of education and training across society) and energy policy, calling for new investment and tax credits to develop the solar, wind, and other renewable energy technologies in the U.S. and create good-paying jobs; the president also favors clean coal technology development.
In addition, Obama also said he expects large results from the U.S. government's investment in the auto sector, while also reaffirming the government's commitment to the Big Three: Obama said he refuses to accept the notion that the nation that invented the automobile shouldn't make them. Obama said he wants next-generation, alternate-fuel and electric cars built in the U.S., with Detroit at the forefront.
Fiscal Policy/Economic Analysis: Simply, President Obama has laid out an enormous agenda. In normal times, it would take two presidential terms to accomplish half of the agenda items listed above. But we are not in normal times, and this is not a typical president. It's an age that demands multitasking at the national issue level, and Obama's intellect, grasp of issues, temperament, training, seriousness, determination, and urgency make him the right man at the right time. It's as if he symbolizes the nation's psyche and effort to make up for eight years of lost time, particularly on the domestic issues front. To be sure, there is another party across the aisle in Congress, but they must avoid taking the obstructionist stance, and offer constructive, viable alternatives to Obama's proposals or acceptable modifications, or it will cost them even more congressional seats in the 2010 election.
Based on Tuesday's speech, investors should expect health care reform this year, but the economy remains the key. Obama needs a growing U.S. economy to give the government the resources essential to address the nation's numerous problems, so fixing the banking system and jump-starting GDP growth remain paramount.
Financial Editor Joseph Lazzaro is writing a book on the U.S. presidency and the U.S. economy.