Obama calls for ‘smarter, more effective government’

President Obama used his Tuesday State of the Union address to call for a government and financial system for "Americans who work hard and play by the rules," defending his administration's use of regulations and pushing the plan he announced earlier to streamline the federal bureaucracy.

"The executive branch . . . needs to change," he said. "Too often, it's inefficient, outdated and remote. That's why I've asked this Congress to grant me the authority to consolidate the federal bureaucracy so that our government is leaner, quicker and more responsive to the needs of the American people."

Much of Obama's address was crafted around a detailed defense of government's role in regulating the financial, energy, agriculture and health care industries. "There is no question that some regulations are outdated, unnecessary, or too costly," he said. "In fact, I've approved fewer regulations in the first three years of my presidency than my Republican predecessor did in his. I've ordered every federal agency to eliminate rules that don't make sense."

Obama said just a fraction of his administration's more than 500 regulatory reforms would save businesses and citizens more than $10 billion over five years. "That's why we need smart regulations to prevent irresponsible behavior," he said. "Rules to prevent financial fraud, or toxic dumping, or faulty medical devices, don't destroy the free market. They make the free market work better."

It was an absence of sufficient regulation that led to the 2008 financial crisis, Obama said. "We learned that mortgages had been sold to people who couldn't afford or understand them. Banks had made huge bets and bonuses with other people's money," the president said. "Regulators had looked the other way, or didn't have the authority to stop the bad behavior."

He singled out the director of the Consumer Financial Protection Bureau, Richard Cordray -- installed this month via a controversial recess appointment -- as a watchdog. "So if you're a big bank or financial institution, you are no longer allowed to make risky bets with your customers' deposits," the president said.

Specific proposals in Obama's speech addressed areas likely to be controversial with Republicans in Congress. Besides his proposed tax hikes on millionaires and immigration reform, he asked the Senate to pass "a simple rule" that all judicial and public service nominations receive an up-or-down vote within 90 days.

Other initiatives that he announced affecting consumers, law enforcement, and the environment can be accomplished by his own authority. They include establishing a financial crimes unit of trained investigators to crack down on large-scale fraud and protect people's investments. Another would task the attorney general with creating a special unit of prosecutors to work with state attorneys general to combat abusive lending. He also announced creation of a trade enforcement unit to probe unfair or unsafe trade practices in countries such as China.

Citing major construction feats accomplished during the Great Depression -- the Hoover Dam and the Golden Gate Bridge -- Obama said, "In the next few weeks, I will sign an executive order clearing away the red tape that slows down too many construction projects."

In the job training area, he vowed to "cut through the maze of confusing training programs," to put them all on one website.

As a more general defense of government, Obama argued that industry innovation demands basic research, giving examples in natural gas, clean energy and renewable energy. "Today, the discoveries taking place in our federally financed labs and universities could lead to new treatments that kill cancer cells but leave healthy ones untouched. New lightweight vests for cops and soldiers that can stop any bullet. Don't gut these investments in our budget," he implored Congress. "Don't let other countries win the race for the future."

On the environment, Obama cited the Defense Department and the Navy in particular for making commitments to clean energy.

In a philosophical turn, Obama jabbed at his political opponents, saying he sided with Abraham Lincoln in believing "that government should do for people only what they cannot do better by themselves, and no more." That's why his administration is getting rid of regulations that don't work, he said, and why his health care reform law relies on a private market, not a government program. By contrast, he added, "even my Republican friends who complain the most about government spending have supported federally financed roads, and clean energy projects and federal offices for the folks back home." Calling on Congress to bridge differences in philosophy, Obama said, "We should all want a smarter, more effective government."

In the Republican response, Indiana Republican Gov. Mitch Daniels, who was budget director under President George W. Bush, blasted Obama's recent decision not to approve the Keystone pipeline proposed from Canada to the Gulf of Mexico. He referred to "the extremism that stifles the development of homegrown energy, or cancels a perfectly safe pipeline that would employ tens of thousands," according to advance excerpts.

Daniels called for "a pause in the mindless piling on of expensive new regulations that devour dollars that otherwise could be used to hire somebody."