SOTU: Where’s the rest?

President Obama did a good job last night in directing our attention to the
future. We must take the steps as a country necessary to compete with China and
other economic powers around the world. We must have the best-educated workforce
or we will not be No. 1 on the world stage.

Also, he recommended some very positive steps in promoting job growth in the
United States — lowering the corporate tax rate and streamlining our regulatory
environment.

However, it is legitimate to ask: “Where is the rest?”

Specifically, the president appeared to reject virtually all of the major
proposals his own deficit reduction commission made last December. The public
is willing to give the president the benefit of the doubt on setting a bold
path for the future, but ultimately they will look under the hood and ask what
he’s really doing about deficit reduction.

A five-year budgetary freeze on most domestic discretionary spending is a
start, but is not enough.

The president’s deficit reduction commission made a very sweeping (and somewhat
controversial) proposal to lower both corporate and business tax rates,
reducing both from 35 percent to about 28. The total effect of both lowering
the rates and vastly reducing tax breaks for business and individuals would be
to raise more money for the government than the current system, with the excess
being used for deficit reduction.

Last night President Obama only took a portion of their recommendations. He
called for lower corporate tax rates (not lower individual rates) and said this
should be done in a way that is deficit-neutral. In other words, it would
neither increase nor lower the deficit. Rejecting the basic thrust of the
commission’s plan — tax reform as a way to help reduce the deficit — will be questioned
by many who really want to see major progress on the deficit.

Also, the president sidestepped the commission’s recommendations for
entitlement reform. Granted, this is not popular among many Democrats, who
don’t want to touch a hair on Social Security’s head, but any major progress on
reducing the deficit long term must include a serious examination of Social
Security and Medicare. Hopefully this can be done in a way that does not do
significant harm to seniors, as leading Republicans would do by privatizing
Social Security and turning Medicare into a vouch program, but you can’t
totally ignore entitlement reform in dealing with long-term deficit reduction.

Last night’s speech was a good beginning. Now the president must really get
serious about deficit reduction or he risks losing the good will created by way
of his speech.