The President's speech yesterday hit the ball out of the park. There should be no question about that. He did a fantastic job addressing the problem of the budget. The New York Times editorial President Obama, Reinvigorated accurately points out

The deficit-reduction plan he unveiled did not always live up to that vision and should have been less fixated on spending cuts at the expense of tax increases.

And therein lies the problem. Too many forget the lessons of the "Great Depression," World War II, and the decade following World War II. One lesson of the great depression is that prematurely attempting to end deficits kills recovery. In 1937 (See TIMELINES OF THE GREAT DEPRESSION)

Economists attribute economic growth so far to heavy government spending that is somewhat deficit. Roosevelt, however, fears an unbalanced budget and cuts spending for 1937. That summer, the nation plunges into another recession. Despite this, the yearly GNP rises 5.0 percent, and unemployment falls to 14.3 percent.

That is right, the country enters another recession, and in 1938

The year-long recession makes itself felt: the GNP falls 4.5 percent, and unemployment rises to 19.0 percent.

Lesson not learned. Now to look at borrowing we need to remember as Paul Krugman wrote in 1938 in 2010 that

Over the course of the war the federal government borrowed an amount equal to roughly twice the value of G.D.P. in 1940 — the equivalent of roughly $30 trillion today.

Marginal tax rates on the rich were also much higher from 1932 through the 1970s. Sometimes as high as 90%. See op US Marginal Income Tax Rates, 1913--2003. Also the debt to GDP ration following World War II was much higher than is being proposed by anyone.

My response to the President and Republicans is largely the same. Yes medical costs, defense spending and marginal income taxes need to be better managed. To better manage medical costs is simple, move to single payer medicare with stronger sanctions against those, like the current Governor Florida and the health care organization he ran, corporations and people who abuse medicare.

Managing defense costs is also simple. End the wars in Iraq and Afghanistan. Reduce the fleet size by reducing the number of aircraft carrier groups and submarines. Remove foreign military bases in Europe, Japan, Korea, and other places. Stop buying needless aircraft and reduce the number of aircraft in the air force.

Raise top marginal tax rates to the 70-80% level in increments. Second, make social security (FICA) tax rate flat across all income levels. Third, make capital gains taxes the same as income taxes, after all capital gains are income.

In addition we need to spend a trillion a year to increase productivity and get people employed.