PRESIDENT BARACK Obama planned to focus his first state of the union address last night on the economy, promising to reduce government spending and create jobs.
The White House said he would also discuss healthcare reform, which has been on hold since Democrats lost their filibuster-proof 60 seats in the Senate last week.
In his speech last night, as well as in the budget he will send to Congress on Monday, Mr Obama was to propose freezing government programmes unrelated to national security for three years.
The move is more a signal to the middle classes than a significant reduction in spending. The Pentagon and State Department, Homeland Security, Medicare, Medicaid, Social Security and education are exempted from the freeze, which will take effect in October and affects only one-eight of the $3.5 trillion budget.
In a poll published by the Wall Street Journal yesterday, 51 per cent of Americans said Mr Obama was devoting too little attention to the economy while 44 per cent said he spent too much time on healthcare reform.
Though Mr Obama’s approval rating has improved slightly, at 50 per cent, the percentage of Americans who believe the country is headed in the wrong direction has risen to 58 per cent, the highest since his inauguration.
In an interview with ABC television, Mr Obama refuted claims he is changing course to please disgruntled voters in the run-up to the November mid-term elections.
“I don’t make apologies for trying to solve some big problems that this town has proven incapable of solving for way too long,” he said. “The one thing I’m clear about is I’d rather be a really good one-term president than a mediocre two-term president.”
Mr Obama’s critics on the left say he is repeating the mistake of depression-era president Herbert Hoover by attempting to rein in deficit spending when he ought to be injecting more money into the economy.
In his speech last night, the president was to favour tax advantages for small businesses over further stimulus spending, by endorsing draft legislation that would cut capital gains taxes on investments by small businesses, and give tax credits to employers who hire.
Mr Obama was to provide details of plans to double the child and dependent-care tax credit for families earning less than $85,000 (€60,000) a year, limit the repayment of student loans to 10 per cent of income above the basic living allowance and require employers to withhold a percentage of pay checks for retirement accounts unless workers specifically opt out.
He is also simplifying tax credits for retirement savings.
Meanwhile, Democrats were chastened by the loss of late senator Ted Kennedy’s seat in Massachusetts last week to Scott Brown, a Republican. Kennedy held the seat for four decades. The Progressive Caucus, a group of more than 80 liberal Democrats in Congress, says the White House misread the defeat in Massachusetts. “I don’t think it was about healthcare. It was because change didn’t happen fast enough – that’s the frustration,” said representative Lynn Woolsey.
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