Overall, I think Obama’s State of the Union was a success. While it had its own unique problems, it seemed like a genuine attempt to bring the nation together and focus on solving issues in a bipartisan manner. As always, the devil is in the details and in future weeks, action will speak louder than words.

The Good

Solid Delivery

As usual, President Obama was articulate, inspiring, and grand. A showman – par excellence. In particular, he reminds us of what it means to be an American:

“America still has the largest, most prosperous economy in the world. No workers are more productive than ours. No country has more successful companies, or grants more patents to inventors and entrepreneurs. We are home to the world’s best colleges and universities, where more students come to study than any other place on Earth.”

His reference to Speaker Boehner’s humble background was also very touching:

“That dream is why someone who began by sweeping the floors of his father’s Cincinnati bar can preside as Speaker of the House in the greatest nation on Earth.”

However, those who know me well, know that this aspect of a leader counts for nothing in my book. What matters most are results and a logical plan of action.

Acknowledging the Job Gap

President Obama forthrightly acknowledges the central problem facing Americans today: jobs. He emotes with Americans’ frustrations with job growth by admitting that the old world in which those without college degrees could easily get jobs has changed and that “for many, the change has been painful.”

Call to Action on Clean Energy

In my opinion, this seems to be Obama’s strongest substantive part of his speech. His call for Americans to use the clean energy technology race as a “Sputnik moment,” is a position I have taken in a prior blog (see “Rebuke of Republican Rejection of Renewables Not Far Off the Mark“). In fact, I have used the exact same language to characterize the challenge.

Politically, linking the American jobs crisis with a call for fashioning a new industry is a brilliant one. I also think it is the right one. While spurring development of a clean energy industry will unlikely solve the near-term jobs crisis, it will certainly be an area of future jobs growth in this country. It will also be necessary to innovate America’s way out of its high dependence on foreign oil. Finally, a national focus on the energy problem will be a source of future American innovation. This is critically important as America’s ability to innovate is one of the only sustainable advantages our country possesses with respect to the Chinese.

I also think his recommendation that he pay for innovation in clean energy by “asking Congress to eliminate the billions in taxpayer dollars we currently give to oil companies” is a good one. I think the Exxon’s of the world can probably live without them given the high levels of profitability in the oil and gas industry.

Lastly, the President’s call for 80% of America’s electricity to come from clean energy sources is an audacious one. What is even more effective is his rational admission that the country can achieve this goal not only with wind and solar, but also with nuclear and clean coal. His advocacy for a broader and more comprehensive energy solution is critical to get buy-in from both the left and the right.

This is the first time I have ever heard someone on the right or left propose a reasonable way to reach such an objective. Bravo, President Obama!

Education is a Parent’s Responsibility No Less Than it is a School’s

Most politicians forget that education is a joint venture between parents and schools. They tend only to blame schools. Obama quite rightly calls out one major part of the problem: parents’ abdication of their educational responsibilities.

“That responsibility begins not in our classrooms, but in our homes and communities. It’s family that first instills the love of learning in a child. Only parents can make sure the TV is turned off and homework gets done. We need to teach our kids that it’s not just the winner of the Super Bowl who deserves to be celebrated, but the winner of the science fair; that success is not a function of fame or PR, but of hard work and discipline.”

Putting out this fact is the first step in reforming this country’s failing educational system.

Presidential Pledges to Improve America’s Business Climate

President Obama’s pledge for a regulatory review to reduce barriers to business is a positive sign that he is committed to improving the business climate in the United States. The President’s commitment to double America’s exports by 2014 was also a key positive, especially since his recent trade agreements with China, India, and South Korea are already showing progress in that direction. His call to simplify the tax code and to freeze discretionary spending are also a welcome proposals.

The Bad

Some Bad Clean Energy Policies Portrayed as Successes

In reference to his clean energy policy, President Obama suggests that: “We’re not just handing out money. We’re issuing a challenge.” I don’t mean to take the wind out of his sails, but in some cases giving out handouts is exactly what the government is doing.

For instance, his reference to the the California Institute of Technology’s program to develop “a way to turn sunlight and water into fuel for our cars” is the very example of a government boondoggle.

The intent of the project is a good one. It is funding basic scientific research. The government should allocate its dollars to fund basic scientific research on technologies that do not exist. The problem in this specific case is that the government is funding an organization to develop a technology that has already existed for over fifteen years. While JCAP is spending 122 million dollars over five years to discover a process that a Princeton scientist discovered in 1994, Liquid Light, a venture-backed start-up, is working on making it commercially viable. Is this really the most efficient use of taxpayer dollars?

Here’s another example. Certain portions of the government’s federal loan guarantee program for clean energy have misaligned incentives. The primary problem with the federal loan guarantee process is that government bureaucrats choose the winning companies rather than letting the free market sort things out. At the outset, one could argue that there is an adverse selection problem in the process, because the companies that do not need government financing are also likely to be the healthiest and most competitive companies. A larger percentage of the companies, therefore, that apply for financing are also more likely to be less competitive. There are also significant conflicts of interest in this process. For instance, companies may win grants and loan guarantees based on the location of their plants whether or not those plants are located in areas of the country where the costs are cheapest or there is an abundance of engineering and scientific talent. There is also more risk that a sitting administration will favor companies that benefit its political loyalties the most. For instance, unions are making a killing from the federal loan guarantee program.

As of December 6, 2010, the federal government awarded a total of 8.3 billion dollars to five separate companies in nineteen different projects that created or saved 38,700 jobs as part of its Advanced Technology Vehicle Manufacturing (AVTM) Loan Program. The program provides loans to automobile and automobile components manufacturers to reequip, expand, or build manufacturing facilities in the United States that will produce advanced technology vehicles or components.

Two of the recipients of this government largesse are Tesla Motors and Fisker Automotive, two innovative Silicon Valley startups. However, nearly ninety percent of these funds went to support hidebound industrial corporations like Ford and Nissan North America that have a large number of union mouths to feed. Both companies also stand to benefit from 34,700 out of the 38,700 jobs that this program saved or created.

I do not think propping up unions is what the American people had in mind when they voted for the President and his pledge for a green technology revolution. This is classic cronyism at its best and not an effective solution for spearheading American energy independence.

President’s Agenda Seems Too Broad, Expensive, and Expansive

The President’s speech was ambitious. I worry that much of what he wants to do will be unaffordable. His agenda is too broad. He needs to pick an area and focus on it. I think that area should be clean energy. However, he wants to invest in schools, innovate in clean energy, build crumbling infrastructure, subsidize healthcare, among other things. This broad agenda is simply too much.

The Ugly

Governance Will Now be a Shared Responsibility Between Parties

One particular line that seemed to betray the President’s claims of being a “post-partisan” President was:

“With their votes, the American people determined that governing will now be a shared responsibility between parties.”

Whoops. Since when wasn’t there shared responsibility between parties? I know that until recently Democrats controlled both the legislative and executive branches of government, but there were still Republicans working in both Houses of Congress at the time.

This particular comment made me feel uncomfortable. It felt like Obama was, despite the silly wayward ways of the ignorant plebeians, reassuring his children that he would “share” power only because of their vote, not because of their wisdom.

The President probably did not intend this phrase to have this effect, yet it seems to display a thinly-veiled condescension toward the average American that seethes beneath the surface.

This little gem also implies that before the last election, governing was not a shared responsibility, which seems to fly in the face of Obama’s past “post-partisan” rhetoric six years ago:

“Well, I say to them tonight, there’s not a liberal America and a conservative America; there’s the United States of America. There’s not a black America and white America and Latino America and Asian America; there’s the United States of America.“

Overall, the speech was a strong one, despite some of these occasional warts. I just hope he lives up to many of his words, especially, “We do big things.”