A 'state of the union' fight ahead over US government spending

With Republican Rep. Paul Ryan facing off against President Obama over the "state of the union" next Tuesday, the stage is set for a night that could reveal the shape of political battles to come.

At issue: Are Americans best served by a federal government that goes on a strict spending diet, or should the path toward fiscal discpline be more gradual and less focused on shrinking the size of government?

Both men agree that America's current path is unsustainable – that persistently high budget deficits at some point will imperil the economic security and dynamism.

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But Mr. Obama is expected to argue Democrats' case for the gradualist approach, with an eye on government's ability to make economy-enhancing investments, not simply BE a millstone around the neck of the private sector.

Congressman Ryan of Wisconsin, whom Republican leaders named Friday to give their party's televised response to the president's State of the Union speech, will take up the case for deep cuts in government spending as an aid to economic growth. He became a rising star in his party not for charisma but for his energetic forays into the weeds of the federal budget, conservative principles in hand.

One night of dueling visions won't settle the debate, but it will help frame it. Moreover, the battle lines drawn Tuesday are likely to be important for some time to come. Washington appears to be entering an era when difficult budget realities – and the interplay between government policies and job creation – are top-of-mind concerns for voters.

House Speaker John Boehner framed this point through a Republican lens in announcing the selection of Ryan on Friday.

“We’re broke," Mr. Boehner said, "and decisive action is needed to help our economy get back to creating jobs and end the spending binge in Washington that threatens our children’s future."

Democrat Peter Orszag, until recently Obama's budget director, emphasized the nation's fiscal peril in a Financial Times opinion article the same day. "If policymakers will not act before we have a fiscal crisis at the federal level, a fiscal crisis we will ultimately have." He warned that tremors of such a crisis could erupt in financial markets this year, triggered perhaps by a debate in Congress over whether or not to lift the national debt "ceiling."

In the long run, federal politicians are under pressure to figure out how best to rein in health-care costs, adjust Social Security for continued solvency, and reform the tax code and the budget process in a sustainable way. A bipartisan fiscal commission, which Obama created and on which Ryan served, recently showed both the possibility of finding consensus and the political difficulty of getting votes for middle-ground positions.

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