Obama just completed his 2014 State of the Union address, and the speech was full of things that he would like to do, and like to see, but the plans showed little appreciation for the actual behavior of markets or economics. It was a wish-list, as was last year’s SOTU address. The lame duck president was flat, and seemed to lack his usual flair. He mentioned his great accomplishments: lowest unemployment in five years, more oil production, and that he helped to cut the deficit by 1/2.
The economy and small business
The president talked of a “breakthrough year for America,” and attempted to frame Congress as the sticking point for changing regulations and tax breaks. The president wants tax loopholes closed (apparently, because they are only available to certain people and not everyone who takes advantage of them – the exact reason was left unclear). The president points to the growing economy, and cites the levels of the burgeoning Dow Jones, on the heels of months and months of quantitative easing. He also calls on Congress to undo cuts enacted last year, which affect things like education.
The issues with business and the economy, were contradicting activities. The president wants minimum wage raised, and he called on state governors to do it. Obama told them not to wait on Congress to act — this allows him to paint Congress as lazy or uncaring about the plight of minimum wage workers, as they move toward 2014 elections, while at the same time allowing state governors in tight races to pick up support.
Increasing the minimum wage would somehow lead to more money for consumers to spend, but Obama never mentioned the effect on the employers. While calling for businesses to pay their employees more, he neglected to mention the oncoming, but currently delayed, employer mandate for Obamacare. He also called on energy to continue to become cleaner, and mentions that may force families to make difficult choices.
President Obama says his energy policy is working – never mind that there is a propane shortage, coal and power producers are complaining, and gasoline is much higher than when he first took office. He calls on Congress to end tax cuts on fossil fuel companies (saying that they “don’t need them”). Carbon output is down in the U.S. more than in any other country (but he does not mention why – perhaps his regulations on the coal industry or the recession?)
He calls on Joe Biden and Congress to act to fund new job training programs. There are jobs that cannot find workers, and he wants to train these new workers. Starting new apprenticeships and increasing on-the-job training are the main ways he wants to fill these jobs. Again, he accused Congress of acting callously, and he called on them to restore unemployment benefits to the unemployed workers who have previously exhausted the 99 weeks of benefits.
Further, Obama stated that he does not resent people who make more than others, but was no where close to saying that they have earned it, or that they should not have to pay more in taxes to fund his domestic policy wishlist. Along with not resenting others’ salaries, he says he wants women to earn just as much as men do, and he restates the fallacious claim that they earn $0.77 for every $1.00 that a man earns – despite the fact his own staff underpaid women. “When women succeed, America succeeds, ” he tells us.
Surprisingly, he did mention Obamacare, but called it by its legislative name, “The Affordable Care Act,” perhaps because of its massive unpopularity. He told mothers to get their children to sign up, and for children to get their parents signed up, in what was the most disturbing and desperate part of the speech. He tells us that over nine million Americans have already signed up for the ACA, and he illustrated how it worked for a single patient who needed emergency surgery (although he neglected to share her deductible or how much her final bill was). Obama challenged Republicans to come up with a plan of their own, leaving a door open to have his own signature program finally buried and forgotten.
All in all, this year’s State of the Union address was incredibly similar to last year’s address. Obama issued the same promises, he engaged in the same rhetoric, and the same fundamental misunderstanding of the economy and labor market was evident, too. We are five years into the Obama presidency, and tonight, he illustrated that he still has not learned much. For his promise for a “year of action,” he has some major inertia to overcome.