Business Times - 27 Jan 2011
America's new 'Sputnik moment'
Obama calls for unleashing of another wave of innovation for economic renewal and to meet globalisation challenges
By LEON HADAR
THE results of a poll of American opinion that was published on the eve of Chinese President Hu Jintao's visit to Washington found that a large majority of Americans regard China and the other rising economic powers of Asia as the most important challenge facing the US in coming years.
In fact, according to the nationwide poll by the Pew Research Center, 47 per cent of Americans see China - incorrectly - as the world's leading economic power.
Addressing the US Congress and the American people on Tuesday night, President Barack Obama tried to respond to these rising concerns that the US is losing its global economic competitive edge to China, India and other emerging markets.
'This is our generation's Sputnik moment,' President Obama declared during his State of the Union Address, referring to the US need to invest in research and development to revive the economy and secure its ability to compete in the new global economic markets.
The original Sputnik moment came on Oct 4, 1957, when the Soviet Union launched Sputnik 1, the world's first Earth-orbiting satellite.
That single event had caught the US off-guard and triggered the launching of the space race between the US and the Soviet Union, including the creation of NASA in 1958.
'Half a century ago, the Soviets beat us into space with the launch of a satellite called Sputnik,' President Obama said during his address. 'We had no idea how we'd beat them to the Moon,' he noted. 'But after investing in better research and education, we didn't just surpass the Soviets; we unleashed a wave of innovation that created new industries and millions of new jobs.'
Citing the growing efforts by China, Korea, India and other Asian economies in developing their high-tech industry and in raising their educational standards, Mr Obama called for more US investment in biomedical research, clean energy technology, and in reforming the nation's educational system.
He called on Congress to support more investment in scientific research at home and in the expansion of new markets for American exports abroad, including approval of the free trade accord (FTA) with South Korea and an ambitious regional and global trade liberalisation agenda.
President Obama's blueprint for economic renewal and for placing more emphasis on scientific innovation and economic competitiveness - coupled with concrete plans to reduce the federal deficit - seemed to be part of a broader strategy of moving to the political centre and of strengthening ties with the business community.
Indeed, presiding over a resurging economy - and rising federal deficits - Mr Obama was also trying to define this year's political battles over the nation's economic policies.
Confronting an empowered but divided Republican opposition, President Obama wanted to redefine his administration's agenda in what should also be regarded the unofficial kickoff of his 2012 presidential campaign; an American economy that is winning in the global markets in the next two years will help President Obama to win two years from now.
More specifically, the case for investment in infrastructure and education was presented as the most effective way to create more American jobs over the next 18 months of his presidency. Mr Obama's call for taking steps to slash the mounting US federal deficit - including a proposal for a five-year freeze on non-defence government spending - were aimed at burnishing his credentials as a fiscally responsible leader.
Public opinion polls suggest that President Obama is starting to recover politically at a time when he seems to be moving to the political centre. This was demonstrated by his willingness of reach a compromise over tax cuts with the Congressional Republicans.
Mr Obama was also provided an opportunity to play the role of a national unifier in the aftermath of the Tuscon shooting. In a rare gesture of unity following the national tragedy in Arizona, more than two dozen Democrats and Republicans were sitting together in the audience during the president's address, as opposed to splitting along party lines as usual.
But notwithstanding the show of national unity, Democrats and Republicans remain divided on major policy issues. And Tuesday night's event was the first State of the Union address before a divided Congress - with the House of Representatives now under Republican control for the first time since 2006.
The Republicans, responding to the pressure coming from the far right-wing elements of the Tea Party movement, are calling for drastic cuts in government spending, including the repeal of the legislation passed in the last Congress to create a national healthcare insurance system, coupled with major cuts in taxes for households and businesses.
The Republican political strategy is aimed at denying President Obama a second term by attacking him as an irresponsible Big Government spender. But according to recent public opinion polls, Mr Obama's approval level is now close to 50 per cent - higher than that of former presidents Ronald Reagan and Bill Clinton during the third year of their first term in office; these two popular presidents ended up getting re-elected for a second term.
President Obama's aides believe that he will follow in the electoral footsteps of Mr Reagan and Mr Clinton, and are hoping his address will help him re-energise his political base.
Opinion polls suggest that many independent voters continue to be worried about the slow pace of the economy and, in particular, about the high unemployment numbers. But the same voters are also opposed to large government spending that increases the US$14 trillion federal deficit, while they insist that their favourite federal programme - national insurance (Social Security) and healthcare for the elderly (Medicare) - be kept intact.
From that perspective, Tuesday night's address seemed to target these independent voters as well as the general American electorate. The address was both a call for national renewal and the political spin of a re-election strategy.
It presented a US president who is trying to unify the nation and who is optimistic about America's political and economic future, projecting very much a Reagan- and Clinton-like 'sunny' face and bullish persona that Americans love - and so unlike the angry posture of the Republicans, the so-called 'Party of No', and the divisive and xenophobic Tea Partiers.
President Obama's economic policies were described as 'investment' in the 'American future', in the creation of 'jobs' and in the strengthening of US global economic 'competitiveness' through necessary spending in education and infrastructure, and by working together with the private sector in building new industries and export markets.
At the same time, President Obama was calling for a 'responsible' effort to cut the federal deficit - in a way that doesn't bring the economic recovery to a halt or devastates critical social and economic programmes. Sounds like a winning narrative.
Now President Obama needs to ensure that the economic realities in the next 18 months - more economic growth, more jobs, lower deficits - will be consistent with the main outline of this narrative and that, like Messrs Reagan and Clinton, he can deliver.
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