He spoke well, as he usually does. The main thrust of the speeech was partisan, announcing the twin spending packages for the banks and the rest of the economy again, telling us he will spend even more than he has so far told us, and reminding us why he thought they are needed. This was all wildly acclaimed by high spending Democrats, enjoying having their hands on other people’s money.
Woven into the speech was some Republican rhetoric on value for money, and the extraordinary pledge that he will halve the deficit by the end of his first term. He told us that his team have already identified $1,000,000,000,000 of cuts in the federal budget for the next ten years, or an average of $100 billion a year. That part of the speech was a little light on detail. It emerged that some tax increases on high earners and companies will also be part of that deficit reduction package.
It would be good to believe his ability to tame the deficit. The markets surely want to know that sometime the USA will come off its debt fix and earn enough to pay all the bills.. That confidence can be built by the Administration announcing cuts in programmes that do not work or are badly run or are no longer needed. For the moment it sounded a bit like the overweight person who tells us they are definitely going on a strict diet to curb their excess, but only after one more blow out on the cream cakes, as they need to stave off hunger in the short term.
The dangers of too much spin can be seen in the gyrations of Wall Street this week. On Monday the market plunged around 250 points when the authorites implied they were about to nationalise some banks, only to recover most of the lost ground on Tuesady when the authorities confirmed they would not do that. Errors like that do not build confidence or help the stability
Mr Obama tells us he wishes to create from his huge spending packages.