New York Daily News  - January 23, 2010

In his State of the Union, President Obama has the opportunity, and even mission, to articulate the new direction he has taken in his presidency since the shellacking in the 2010 midterm elections. There is no doubt that he has radically changed course by backing the Bush tax cuts, sending olive branches to big business and reshuffling his team. But so far, the public has had to read the tea leaves on what he is really thinking and where he wants to take the country. And when it comes to fixing the economy, he has completely lacked any coherence, veering from bailouts of Wall Street to sharp condemnations.

In 1996, former President Bill Clinton was as clear as a bell, declaring that the "era of big government is over,” but this did not mean a return to fending for yourself for those in need. He went back to his New Democratic philosophy of opportunity, responsibility and community, backing a balanced budget that, at the same time, would preserve entitlements.

The best I can make of the Obama retooling is that it will be based on something less coherent but potentially just as potent — a revised economic philosophy that is based more on private sector renewal while holding firm to liberal views on social issues like choice, gay rights and stem cell research. Politically, he will leave the radical right Christian coalition behind while seeking to attract moderates who reject the Republicans on social issues but have been attracted to lower taxes, smaller government and toughness on national security.

This is potentially very successful for him - because it both splits the Republican Party and keeps together much of the Obama 2008 base, which is made up of better educated, upper-income voters who are fine with gay marriage as long as their taxes are kept low.

Last year, the President used his State of the Union speech to launch into the breach, telling Democrats to stand their ground, calling Republicans the "party of no” and basically suggesting that the assembled Supreme Court justices sitting at his feet had turned a blind eye to the need to get corporate money out politics.

This year we can expect something quite different - a tribute to working together to pass a tax compromise, a desire to put aside politics to make progress and an emphasis on putting people back to work. Last year, he was Superman; this year, he will strive to be the super statesman.

The first job for the President is jobs. This issue tops every poll and for good reason: He has to convey an economic strategy for America to succeed in the global economy. He has to be an optimist about America - and portray the growth of China, India, Brazil and Russia as vast opportunities, not threats, similar to how America was able to succeed after World War II. Back then, it took a Marshall Plan to get those other countries growing; today the less developed parts are growing on their own, providing vast new marketplaces.

Finally, with the appointment of General Electric chief Jeff Immelt to run Council on Jobs and Competitiveness, Obama has recognized the importance and feasibility of finding more US exports to create jobs here. This signals that, just as GE has recognized that China needs vast industrial equipment, so America must look for those openings to create more opportunity at home. And those areas of success will be based on the great American know-how that has propelled it to be the world's foremost economy for decades running.

He also has to give special attention to the Midwest, which is being drained of jobs. Without Ohio, election to the presidency as a Democrat is almost impossible (though Florida is equally crucial). Obama should bring back the concept of economic development zones, making them bigger and more tax-free than ever in exchange for locating good new jobs there.

When Gene Sperling, Obama's new chief economic adviser, led this concept to prominence under Clinton, it brought new resources to under-served markets. He could revive and revamp the program now. The Midwest is where Obama's political future lies - and his ability to target the area with help rather than spreading aid among 50 states is critical to making a difference in areas with double-digit unemployment and double-digit electoral votes.

Next, people are looking for his position on the deficit. The end to the era of trillion-dollar Obama programs is here, that is for sure. And "we will worry about it when we have jobs" is no longer working as an answer to mounting deficits, even though the truth is that economic growth, and with it growing tax receipts, are the only sustainable answer to the problem.

A new CBS News New York Times poll illustrates the problem: Everyone calls for deficit reduction, but no one wants to pay for it. The closest thing to a popular consensus in the poll is to cut the military budget, which is hard for Obama to do while he has stepped up forces in Afghanistan. However, once troops are largely out of Iraq and Afghanistan, the public is justifiably expecting a significant reduction in overall military spending. And they continue to worry that unless health care is modified, it will cause the government to take on vast new costs it cannot afford. Obama has to demonstrate a sustained willingness to confront out-of-control health care costs, above and beyond the legislation he signed.

And the growing problem of state and local indebtedness must now be on the President's radar. Having saved Wall Street, it would seem hard to let New York and California go down the tubes. "Ford to City: Drop Dead" was the infamous headline in this newspaper when former President Gerald Ford refused to help New York City out of its fiscal crisis in 1975. Here, Obama should bring back the Build America Bonds program and consider a new federal assistance corporation with guarantees for state and local debt, together with tougher new standards for the issuance of new debt. State and municipal default would be as catastrophic as any other default in the system, and the President has an opportunity now to get out ahead of the problem rather than wait for it to become a crisis.

Immigration reform is the biggest piece of legislation in memory that has faced endless gridlock while the problem itself becomes worse rather than better. Here is a chance for the President to reach to the center and try to mold a compromise that rejects the extremes of both parties. The public views immigration reform as a surprisingly high priority and a chief example of gridlock in the system, to the detriment of just about everyone involved.

After these big issues, the President has to focus on the important areas of everyday life - how we protect our kids from guns and drugs; how we bring broadband to every household; how we curb childhood obesity. These next-tier issues are sometimes ridiculed as too small, but they can make a huge difference in people's lives and show how the President can be a constructive moral force. Banning automatic clips after what happened in Tucson would make a lot of sense and has public support; it would show some presidential courage to take up the issue.

There is no doubt that the White House is scrambling to write the perfect speech. Obama has already made the first moves toward making this a potentially successful, if not defining moment, in his presidency. He has made some bold and quick compromises on taxes while pushing through the end to “Don't Ask, Don't Tell."

The State of the Union will be his opportunity to recast his politics and show that the last two years of lurching to the left with trillion-dollar spending programs will look nothing like the Obama presidency of today.