Obama’s State of the Union Speech

27 thoughts on “Obama’s State of the Union Speech”

1. //day care centers have to pay big salaries to attract the competent and must pass these costs along to consumers//

   This is a complete load of bullshit. The average day care worker makes less than the average Starbucks shift supervisor, and the day care worker has a college degree in many cases.

   http://odonnellweb.com/pelican/this-is-why-we-cant-have-good-childcare.html

2. Philip wrote:
   ‘ “over the past five years, our businesses have created more than 11 million new jobs.” The Census Bureau says that in the same period of time the population has grown by 12 million people’

   I’m not sure that total population is the best benchmark, wouldn’t working age population be a better baseline? Unfortunately, looking at the Census Bureau web page, there doesn’t appear to be an age breakdown for 2014 yet: http://www.census.gov/popest/data/index.html. However, there was a July 2009 estimate of 193,014,187 people aged 18-64 and a July 2013 estimate of 197,838,893, for a difference of about 4.8 million in four years. Doing a simple minded extrapolation, the population aged 18-64 would have increased by around 6 million between July 2009 and July 2014. So it seems plausible that employment may have been growing significantly relative to the total working age population.

3. Midgets and dwarves are the same thing, or possibly midgets are an inch taller. “Midget” is perjorative in any case.

4. Philip wrote:
   ‘ (BLS shows that the number of workers is just barely larger today compared to January 2008, when the population of the U.S. was smaller; I’m wondering if this “11 million new jobs” figure fails to include a subtraction for jobs eliminated.)’

   Since Obama didn’t assume office until January 2009, he probably wouldn’t want to be held responsible for earlier employment numbers.

5. Carter just sent in a written report to Congress for one of his SOU’s. That had been the custom from Jefferson until Wilson. It’s clear that not one of his proposals will be enacted into law by the Republican held Congress. Zero, nada. He could have made most of the same stupid proposals earlier when the Democrats controlled one or both houses of Congress and he had some chance of enactment, but he didn’t.

   So what was the point, since none of these proposals will ever become law? Clearly this was meant to be the 1st campaign speech for the Democrats for the 2016 election cycle. As a campaign speech, the goal is to promise (whether deliverable or not) a grab bag of “free” goodies to at least 51% of the population, to be paid for by some or all of the other 49% (or even in part by that same 51% or their children, but disguised in a way that they won’t realize that they are paying for their own “free” lunch). This is a proven winning formula in a democracy (and a flaw of democratic systems without adequate checks and balances).

   You wonder why the media should carry a campaign speech for free, since usually they charge big money for airing campaign ads?

6. Today’s child care has a lot of hidden costs, even if the child care workers are not paid much. Kids can’t play in the school yard after school any more, as they are all being used by the kid’s child care programs. What today’s parents have found is that your kids cost you about $7 an hour for every hour they are not being watched by a family member. Many people disagree with this – see the free range kids movement. Two generations ago, kids usually cost $0/hour – I was one of those kids.

   So, maybe child care workers don’t make much, but we have taken something that used to be free, made an industry out of it, and billed the parents.

7. 2¢ —- Republicans would have a winning agenda if:
   1) Keep first century myths out of government.
   2) Stay out of peoples bedrooms and my daughter’s uterus.
   3) Establish a no excuses draft, where the call list is sorted by adjusted gross income (AGI). Those with most to lose go first. And are given the privilege of defending their good fortune. This will silence a lot of trigger happy loud mouths who say, “Let’s go get’em boys!” when their boy is at Yale and Jessica Lynch is doing the getting. It will also save a trillion dollars, give or take.

8. “That’s why I am sending this Congress a bold new plan to lower the cost of community college to zero.” Wow, that Obama really is a miracle man. It will cost NOTHING to operate a community college. Utilities will be provided for free, the faculty and staff will work as volunteers, etc. Oh, no wait, that’s not what he meant – Community colleges will cost just as much to operate as before (more because there will be more students – when you lower the price of a good, the quantity demanded increases) but SOMEONE ELSE other than the students will be paying those costs. This is not quite the same thing as “lowering the costs”.

   Who will that someone else be? Here’s a brilliant idea – let’s tax the 529 accounts of people who were prudent enough to actually save their own money in order to pay for their kids college. We have a name for such people in Washington – chumps. Oh, wait, that’s not it – we call them the undeserving rich.

9. paul kramarchyk, your proposal 3) was very interesting, but I couldn’t help wondering how it might work in detail. It sounds like a person’s draft position would depend on the the AGI of the parents, which would make for some interesting dinner time conversation when a 19 year old’s parent got that big promotion!
   Shouldn’t the potential draftee’s income count as well? That way when a lucky young Bill Gates, Steve Jobs or Mark Zukerberg closed their IPOs, they would have to immediately pack their bags for boot camp.
   Or should the rules be consistent with the logic of ‘The Son Also Rises” by Gregory Clark, mentioned by Philip in earlier posts? Use the sum of the incomes of a draft candidate’s ancestors for many generations back. If you’re a Rockefeller your children have to go, even if your grandparents renounced their inheritance and the family always lived in a commune.

10. P.O’K, you’re not suggesting that the most fortunate among us are somehow adverse to defending their good fortune. Are you?

    If a “dependent,” selective service uses your parents AGI. Not hard. The IRS traces financial activity all the time to determine if you’re really a resident of Florida (no state income tax) with a second home in Greenwich, Connecticut. And not the reverse. (The IRS reviews credit card and ATM receipts as proof of your location.)

    Currently, with no draft, it’s too easy to go to war. Or whatever you call the screwing around we’ve been doing in Iraq and Afghanistan. And it’s people like Jessica Lynch and Pat Tillman doing the fighting and suffering the consequences. More, it’s costing us a fortune. I’m sure young people like Bill Gates and Mark Zuckerberg would be happy to serve their country in its time of need. (Steve Jobs family had no money, would be far down the call list.) Or maybe, if we had a no excuses draft the rich and powerful would pull the appropriate strings to ensure The Country does not enter war lightly. And when we do, we fight the war the old fashion way, and win it.

    Israel, and many other countries, have a “must serve” policy. It keeps the public’s attention focused on policy and the real cost of war. There was a time when serving your country was a point of honor. The Kennedy and Bush men all served honorably in WWII.

11. Izzie, making proposals is the large majority of what happens during the SOTU. Even if most of the proposals have no chance of passing, that doesn’t mean that it’s a waste of time for the president to make them. Obama may have started some conversations that will bear fruit in future Congresses.

    Also, when you say that campaign speeches promise “free goodies to at least 51% of the population, to be paid for by some or all of the other 49%”, you have to keep in mind that the government often takes actions which provide free goodies to the top 1% at the expense of much of the rest of the population. Those programs are just discusses in closed-door meeting, not in public speeches.

12. p.k. sorry I didn’t intend to suggest that, I don’t really know. I somehow doubt that statistics are kept on the socioeconomic backgrounds of U.S. military enlistees. But there’s at least one quite privileged young woman, Sophia D. Chua-Rubenfeld, who is Harvard ROTC and plans to join the military after graduating from law school. Both her parents are Yale Law School professors, and her mother, Amy Chua, wrote “Battle Hymn of the Tiger Mother”:
    http://www.thecrimson.com/topic/fifteen-most-interesting/sophia-chua-rubenfeld/. Philip’s review of that book is here: http://philip.greenspun.com/book-reviews/battle-hymn-of-the-tiger-mother.

13. Actually I was able to find some information on socioeconomic status in the military.
    In this 1997 report http://prhome.defense.gov/portals/52/Documents/POPREP/poprep97/html/chapter_7.html
    “These results have been confirmed in recent editions of this report, which portray a socioeconomic composition of enlisted accessions similar to the population as a whole, but with the top quartile of the population underrepresented.”

    Alas, according to this 2005 GAO report http://www.gao.gov/products/GAO-05-952
    “DOD has not collected information on a recruit’s socioeconomic status since 1999. ”

    However, this 2008 Heritage Foundation report found:
    “Enlisted recruits in 2006 and 2007 came primarily from middle-class and upper-middle-class backgrounds. Low-income neighborhoods were underrepresented among enlisted troops, while middle-class and high-income neighborhoods were overrepresented.”
    http://www.heritage.org/research/reports/2008/08/who-serves-in-the-us-military-the-demographics-of-enlisted-troops-and-officers

14. Re: the class background of the military, the military requires that troops take an entrance exam (AFQT) and excludes anyone with a below average IQ. Since IQ is correlated with socioeconomic status, this also excludes most low income youth. The idea that rich guys are sending poor ghetto youths to fight their wars for them is a lie. Modern armies required people who can be trained for various technical specialties and not cannon fodder.

    I haven’t made a study of past SOTUs to see what % of proposals made had zero chance of passage, but if this is what they are really ALL about then they are ALL a waste of breath. What (other than political point scoring) is the point of making a proposal that has zero chance of being implemented? You say it is to lay down a marker for future Congresses – I doubt that. Do you recall anything that Bush proposed in his SOTU’s that was implemented during Obama’s term? If OTOH, the next president and Congress are all Democrats, they won’t need Obama’s old dusty speeches to remind them either. In any case, President Hilary will probably want to propose her own boondoggles (free childcare or free housing or something) instead of recycling Obama’s. There really is an endless list of free stuff that the government can give out from cradle to grave.

    If a corporate president sent a message to his shareholders proposing various items that he knew the board of directors would never approve, he would be (rightly) accused of wasting everyone’s time instead of focusing on things that might realistically be implemented.

15. General Stanley McChrystal says the U.S. should reinstitute the draft:
    Q) So we’d go to war less often and take it more seriously when we did?
    A) “I think that would be the outcome.”

    http://www.washingtonpost.com/blogs/worldviews/wp/2013/02/19/stanley-mcchrystal-says-the-u-s-should-reinstitute-the-draft/

    http://foreignpolicy.com/2012/07/03/mcchrystal-time-to-bring-back-the-draft/

    http://www.aspenideas.org/session/stanley-mcchrystal-leadership

16. “Also, when you say that campaign speeches promise “free goodies to at least 51% of the population, to be paid for by some or all of the other 49%”, you have to keep in mind that the government often takes actions which provide free goodies to the top 1% at the expense of much of the rest of the population. Those programs are just discusses in closed-door meeting, not in public speeches.”

    Vince makes a very good point. Most obviously are all the tax expenditures, which economists equate with cash payments.

    For example, what is the policy rationale for the home mortgage interest deduction up to $1 million? To subsidize the building of mini-mansions in Arizona?

17. “Tax expenditure” is double speak. It works from the premise that the government is entitled to 100% of your income, so whenever they let you keep a cent of your own money, it is a government “expenditure”. I would have no problem with a flat tax with no deductions for home interest but it would have to be at a much lower rate. Getting rid of all the deductions without cutting the rates amounts to a massive tax increase. I have no interest in giving the government even more money to waste – they are wasting more than enough already.

18. Respectfully, you don’t understand the term. Tax expenditure is not “double speak,” but a widely accepted principle in economics.

    With a tax expenditure, a decision has already been made to enact a broad-based tax, but then an exemption is carved for a small class of people (sometimes literally only 1 business or person after the lobbyists are done). It’s really no different then if the rest of the taxpayers wrote them a check.

    Here’s N. Gregory Mankiw explaining it:

    http://www.nytimes.com/2010/11/21/business/economy/21view.html?_r=0
    The Blur Between Spending and Taxes

    By N. GREGORY MANKIW
    Published: November 20, 2010

    SHOULD the government cut spending or raise taxes to deal with its long-term fiscal imbalance? As President Obama’s deficit commission rolls out its final report in the coming weeks, this issue will most likely divide the political right and left. But, in many ways, the question is the wrong one. The distinction between spending and taxation is often murky and sometimes meaningless.

    Imagine that there is some activity — say, snipe hunting — that members of Congress want to encourage. Senator Porkbelly proposes a government subsidy. “America needs more snipe hunters,” he says. “I propose that every time an American bags a snipe, the federal government should pay him or her $100.”

    “No, no,” says Congressman Blowhard. “The Porkbelly plan would increase the size of an already bloated government. Let’s instead reduce the burden of taxation. I propose that every time an American tracks down a snipe, the hunter should get a $100 credit to reduce his or her tax liabilities.”

    To be sure, government accountants may treat the Porkbelly and Blowhard plans differently. They would likely deem the subsidy to be a spending increase and the credit to be a tax cut. Moreover, the rhetoric of the two politicians about spending and taxes may appeal to different political bases.

    But it hardly takes an economic genius to see how little difference there is between the two plans. Both policies enrich the nation’s snipe hunters. And because the government must balance its books, at least in the long run, the gains of the snipe hunters must come at the cost of higher taxes or lower government benefits for the rest of us.

    Economists call the Blowhard plan a “tax expenditure.” The tax code is filled with them — although not yet one for snipe hunting. Every time a politician promises a “targeted tax cut,” he or she is probably offering up a form of government spending in disguise.

    Erskine B. Bowles and Alan K. Simpson, the chairmen of President Obama’s deficit reduction commission, have taken at hard look at these tax expenditures — and they don’t like what they see. In their draft proposal, released earlier this month, they proposed doing away with tax expenditures, which together cost the Treasury over $1 trillion a year.

    Such a drastic step would allow Mr. Bowles and Mr. Simpson to move the budget toward fiscal sustainability, while simultaneously reducing all income tax rates. Under their plan, the top tax rate would fall to 23 percent from the 35 percent in today’s law (and the 39.6 percent currently advocated by Democratic leadership).

    This approach has long been the basic recipe for tax reform. By broadening the tax base and lowering tax rates, we can increase government revenue and distort incentives less. That should command widespread applause across the ideological spectrum. Unfortunately, the reaction has been less enthusiastic.

    Pundits on the left are suspicious of any plan that reduces marginal tax rates on the rich. But, as Mr. Bowles and Mr. Simpson point out, tax expenditures disproportionately benefit those at the top of the economic ladder. According to their figures, tax expenditures increase the after-tax income of those in the bottom quintile by about 6 percent. Those in the top 1 percent of the income distribution enjoy about twice that gain. Progressives who are concerned about the gap between rich and poor should be eager to scale back tax expenditures.

    Pundits on the right, meanwhile, are suspicious of anything that increases government revenue. But they should recognize that tax expenditures are best viewed as a hidden form of spending. If we eliminate tax expenditures and reduce marginal tax rates, as Mr. Bowles and Mr. Simpson propose, we are essentially doing what economic conservatives have long advocated: cutting spending and taxes.

    Yet another political problem is that each tax expenditure has its own political constituency. If Congressman Blowhard ever got his way, the snipe hunters of the world would surely fight to keep their tax break.

    One major tax expenditure that the Bowles-Simpson plan would curtail or eliminate is the mortgage interest deduction. Without doubt, many homeowners and the real estate industry will object. But they won’t have the merits on their side.

    This subsidy to homeownership is neither economically efficient nor particularly equitable. Economists have long pointed out that tax subsidies to housing, together with the high taxes on corporations, cause too much of the economy’s capital stock to be tied up in residential structures and too little in corporate capital. This misallocation of resources results in lower productivity and reduced real wages.

    Moreover, there is nothing particularly ignoble about renting that deserves the scorn of the tax code. But let’s face it: subsidizing homeowners is the same as penalizing renters. In the end, someone has to pick up the tab.

    THERE are certain tax expenditures that I like. My personal favorite is the deduction for charitable giving. It encourages philanthropy and, thus, private rather than governmental solutions to society’s problems.

    But I know that solving the long-term fiscal problem won’t be easy. Everyone will have to give a little, and perhaps even more than a little. I am willing to give up my favorite tax expenditure if everyone else is willing to give up theirs.

    The Bowles-Simpson proposal is not perfect, but it is far better than the status quo. The question ahead is whether we can get Senator Porkbelly and Congressman Blowhard to agree.
    N. Gregory Mankiw is a professor of economics at Harvard.

19. Easy, I understand perfectly and you are the one that has this wrong. You have to view the tax code as a whole – the broad based tax (with high marginal rates) and the exemptions are both part of an overall scheme to divert a certain share of the GDP to the government. You can’t say “let’s keep the broad based tax with progressive and high rates, but get rid of all those exemptions that favor certain groups.” Well, actually you can say it , but it’s wrong. As I said before, I would be in favor of a revenue neutral flat tax that got rid of BOTH the high progressive rates AND all the loopholes (ala Simpson-Bowles) as part of a comprehensive restructuring of the tax code, but I don’t get the feeling that is what you have in mind. And as Mankiw points out, there are tremendous and powerful vested interests (not just home builders and charities and other loophole beneficiaries but all those tax lawyers who would lose their jobs under a simplified code).

    Going back to my original point, let’s imagine Congress passes a income tax which entitles the government to 100% of everyone’s income (that would certainly be a “broad based tax”) . In the past, marginal rates were as high as 90% (and due to certain flukes, at times could exceed 100% – making one more $ would DECREASE your after tax income in certain cases) so passing a 100% tax (with certain exemptions and deductions) is not that far fetched. According to your definition, under such a system, every cent that the government permitted you to keep would be a “tax expenditure”. In effect, we are all slaves of the government and anything we are allowed to keep of our own money is only by the grace of His Majesty. To say that the government is SPENDING its money when they are merely allowing you to keep more of your own money is to misunderstand the nature of our limited government, even if the bank balances at the end are the same.

20. Izzie, regarding this question:

    What (other than political point scoring) is the point of making a proposal that has zero chance of being implemented? You say it is to lay down a marker for future Congresses – I doubt that. Do you recall anything that Bush proposed in his SOTU’s that was implemented during Obama’s term?

    The nature of political movements is that there is often a great deal of discussion necessary to make things happen. For example, the movement to give women the vote took decades to bear fruit. Harry Truman recommended national health insurance as part of Social Security in 1945. Twenty years later the Medicare program accomplished part of that goal. It wasn’t in a SOTU, but it was in a message to Congress.

21. So are you saying that if Truman hadn’t sent that message to Congress in 1945, Medicare would not have been passed 20 years later?

22. I haven’t read about the history of Medicare in any detail. However, If you think of Medicare as being the result of a political movement, successful political movements are usually the work of many people over a long period time. Clearly, we can only speculate about what would have happened to the movement if Truman had not made his statements both to Congress and to the public. It’s possible that he put the issue on the agenda and generated a lot of discussion which helped make the passage of Medicare more likely 20 years later than it would have been without his efforts.

23. I think SOTU’s are one day stories. (Some) people pay attention that day (around 10% of the US pop. watched) and the next day it’s all forgotten forever by 99%+ of us.

24. Politicians always like to take credit for an improving economy, claiming it confirms their economic policies. But that is misguided. No one can say if the economy recovered because of economic policies or in spite of them. The world is not a scientific experiment with a control group for comparison.

    More middle class jobs would help the middle class more than further tinkering with the tax code. But the increased expense of Obamacare and possibly paid time off discourages employers from hiring.

    The proposed “equal pay for equal work” rules seem particularly unwieldy. The problem of defining “equal work” seems impossible. It is always framed as a gender equality issue but it would have to apply within genders too. There would be no motivation to work harder knowing you will be paid the same.

25. Dave D
    “The world is not a scientific experiment with a control group for comparison”

    Tho it does seem that Kansas implemented an experiment with extreme right wing fantasy policies, and the economy has drastically tanked, in contrast with neighboring states.

26. Wally: Kansas’s “extreme right wing policies” result in them spending 9.4 percent of residents’ income on state and local government (http://taxfoundation.org/state-tax-climate/kansas ), putting them exactly at the median for the U.S. (25th out of 50 states). As to their economy having “drastically tanked,” Google shows the Kansas unemployment rate as 4.4 percent, compared to neighboring Missouri’s 5.9 percent (California is at 7.3 percent). The more interesting stat is labor force participation. http://www.governing.com/gov-data/economy-finance/state-labor-force-participation-rates-data.html shows that Kansas had 69 percent compared to Missouri’s 65 percent or California’s 63 percent in March 2012 (most recent data that I could find conveniently sorted by state).

    Keep in mind that one of their major industries (business jet manufacturing) is in the process of disappearing due to competition from Pilatus in Switzerland, Embraer in Brazil, and Gulfstream in Georgia.

27. Wally: Kansas’s “extreme right wing policies” result in them spending 9.4 percent of residents’ income on state and local government (http://taxfoundation.org/state-tax-climate/kansas ), putting them exactly at the median for the U.S. (25th out of 50 states). As to their economy having “drastically tanked,” Google shows the Kansas unemployment rate as 4.4 percent, compared to neighboring Missouri’s 5.9 percent (California is at 7.3 percent). The more interesting stat is labor force participation. http://www.governing.com/gov-data/economy-finance/state-labor-force-participation-rates-data.html shows that Kansas had 69 percent compared to Missouri’s 65 percent or California’s 63 percent in March 2012 (most recent data that I could find conveniently sorted by state).

    Keep in mind that one of their major industries (light- and medium-sized business jet manufacturing) is in the process of disappearing due to competition from Pilatus in Switzerland, Embraer in Brazil, and Gulfstream in Georgia.

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