The speech seems to have played well in the country. It was lofty, optimistic and goal-setting without many specifics. The concessions to the other side were frankly small, things like tort reform and the 1099 reporting requirement in health care. Even the five- year spending freeze, if you think about it, is a net $0 change for the next two budget years, since a three-year freeze was already announced last year. Obama restated a lot of policies we already knew he supported in updated terms, and most of the “centrism” was thematic or tonal.

The call for new investments in infrastructure is great, but combined with a spending freeze, they make no sense and will provide no net demand increase. Money may be spent more efficiently with a better multiplier, but you’d have to shift far more than possible from so-called “waste” into these more productive categories to make a difference. And of course, this baseline freeze on discretionary spending, with the addition of the Gates proposal of $78 billion in Pentagon cuts over 5 years, is simply not enough for Republicans and even some Democrats.

I appreciated Obama talking about Medicare and Medicaid in the context of reducing overall health spending, and the acknowledgment that this is where the budgetary problem lies. Social Security didn’t add one dime to the deficit and shouldn’t be discussed in that context; nevertheless, getting the President to reject anything that “slashes benefits for future generations” is a victory for the large coalition that opposes benefit cuts, which includes the vast majority of the country.

But enough about policy, since there was little to react to in the speech. The President went for a visionary approach, one that I’m sure will play well. But he didn’t talk about a country I recognize from the shared set of facts we all have. Unfortunately, the speech was long on mythology and short on reality.

He talked about how anything is possible in America, but for 15-25 million unemployed, that’s no longer true. He talked about the ability for someone with a dream to rise to the top, but for someone who’s had their home taken from them illegally, that’s not true. He talked about the spirit of entrepreneurship making this country great, but unless that entrepreneurship is a financial innovation, that’s not really true. This isn’t an upwardly mobile country anymore, statistically speaking. And it’s a country, in the short term, in crisis. I’ll yield to a few words from Dean Baker:

“The most disappointing aspect of the speech is that it largely skipped over the current economic crisis. This may reflect a view that there is little that Congress will agree to do to at this point. But it still is unconscionable to accept the idea that 25 million workers will go unemployed or under-employed, with millions more losing their home, because of the economic mismanagement by the country’s leaders.

“The first stimulus was signed into law by President Bush at a time when the unemployment rate was just 4.8 percent. It is difficult to believe that a Democratic president will sit back and do nothing when the unemployment rate is 9.4 percent. The unemployed should have been featured prominently in the State of the Union address. They are suffering enormously for the greed and incompetence of others.”

It’s worse than this, in a sense, the only time banks were mentioned at all (three times in the speech) was prospective, as in “we stopped the student loan subsidy to banks” or “we put in rules to stop future financial crises.” We sure showed them!

It’s almost as if the current economic circumstances got thrown out in an early draft. This felt like a speech that a CEO gives at Davos to his CEO buddies, all visionary and “win the future,” but the audience for this speech is the average American. And the average American is in trouble.

Many Americans enjoy and accept this mythology about the American dream. That’s why the speech succeeded. But the lack of attention to the foreclosure crisis, or the suffering of millions in the economy, is unbelievably. As Dean says, Obama probably reckoned that Congress won’t agree to much of anything along these lines. But that just cedes the rhetorical space, allows that the only people talking about these things will have deeply wrong views about them.

This is the undiscovered country. These millions of people have no voice and the President just blotted them out of his vision. It was uncomfortable for him to govern during an economic crisis, not what he signed up to do, so he just acted as if it doesn’t exist. I’m sure his retort would say that a rising tide lifts all boats, and shared prosperity can arise out of this “win the future” vision. Maybe. That does nothing for people who need immediate help and protection from predatory forces, and it doesn’t see the country as it is – one with growing inequality, a crisis in demand and a complete mismatch between productivity and wages. That’s a problem to attack for the long run. That’s something that will lead to better growth and prosperity for all.

…I’ll throw a few sample reactions on the back end.

Harry Reid:

“Republicans have a responsibility to work with us to create jobs instead of wasting time with pointless political stunts. Republicans should join us in looking to the future instead of refighting old battles and pressing extreme, ideological plans to end Social Security and Medicare. I hope they will join us in finding common-sense solutions to the challenges we face as a nation – to rebuild our economy today, create the jobs of the future and strengthen the middle class.”

Nancy Pelosi:

“The President outlined a Sputnik-type commitment to the entrepreneurial spirit of the American people, through which we can lead the world in innovation, secure energy independence and create clean energy jobs, and strengthen small businesses. That plan can build a broad-based prosperity that will ensure economic security for our children.

“Democrats are ready to win that future by creating jobs, strengthening the middle class, and reducing the deficit and we will work with civility, with everyone who is committed to maintaining America’s leadership.”

Sen. Jeff Merkley:

“America has the potential to lead the global economy, but only if we rebuild our own economy in a way that benefits all Americans. We need to invest in education and innovation in order to give every child the opportunity to thrive. And we need to promote manufacturing to boost job creation. The fact is – we won’t have a middle class in America if we don’t make things in America.”

“One specific opportunity for innovation and job growth that President Obama noted this evening is the development and adoption of electric vehicles in America. I’ve been working with Republican Senator Lamar Alexander to advance legislation along the lines of what President Obama proposed tonight to promote electric vehicle deployment. By building electric vehicle infrastructure and stimulating research and development we can strengthen national security, reduce global warming pollution, and reduce our dependence on foreign oil.

“I am, however, disappointed that President Obama did not directly address the foreclosure crisis that continues to harm American families, weaken communities, and hamper prospects for economic recovery. If job creation is truly a priority, we must move quickly to help families keep their homes and strengthen the housing market. We did not hear specific plans tonight to fix the foreclosure crisis, but I believe the Administration will partner with Congress to refocus efforts to assist families and recharge the economy.”