On sticky wicket

President Barack Obama has made his first state of the union address in a difficult political and economic environment when his popularity has sharply plunged. The message that he has sent out is a mixture of populism and hard talk which may boost his ratings but may not ultimately help the economy or lessen his political troubles. He has concentrated on the domestic agenda and sidestepped most of America’s problems abroad. He has also diagnosed the major problems as America’s soaring budget deficit, spendthrift ways and the inability of the economy to create more jobs. The revival of the economy is still shaky and unemployment is at a high 10 per cent. But the solutions that he has offered may not be the best, especially the proposal to disincentivise and even to penalise outsourcing of jobs.

Obama has returned to his populist campaign theme of preventing loss of American jobs to foreign nationals. In May last year he had made a call to say no to Bangalore and yes to Buffalo and ended tax incentives to American companies that created jobs abroad. The same populist streak is there behind the proposal to give tax rebate to companies that create jobs in America. American companies outsource jobs in areas where skilled manpower is scarce or not available. It has only helped the economy, and increased curbs can be counter-productive. The plan to tighten financial regulation, as seen in last week’s move to restrict the activities of banks, may help to prevent malpractices, which triggered  the economic downslide two years ago. Obama has reiterated his commitment to healthcare and educational reforms which had suffered a setback after the recent political reverses in Massachusetts and New Jersey.

Financial reforms and the proposed three-year freeze on domestic spending to bring down deficit, can be the mainstays of revival, if the plans can be implemented effectively. But Obama will have to face serious political impediments and fight against lobbies to make the plan a success.
The challenging and determined tone of the address and the rhetoric that Obama has been famous for may help to brush up his image. But a realistic and sustained programme, without populist tilting at windmills like outsourcing, will be a better and surer recipe for economic recovery.