Thursday, January 28, 2010

Obama's State of the Union Address

I don't have many positive things to say about President Barack Obama's State of the Union speech delivered last night. For someone who kept talking about how he wanted to change the tone and tenor of speech in Washington, he spent quite a bit of time reminding everyone that the tone and tenor of politics inside the Beltway includes always blaming your predecessors for problems that you've inherited and on which you've failed to make any headway. When all else failed during the course of the speech, there was always the trusted quip to Blame Bush. 

Reminding the nation of the actions of the past eight years should remind voters that they elected President Obama in 2008 and he's been in office for one of those eight years. His party was in control of Congress and pushing irresponsible spending since 2006. It was that Congress that went along with TARP; and President Obama could have chosen not to use his $350 billion portion of TARP to stabilize the credit markets. It was his decision to do so. His advisers, including Tim Geithner wanted that to happen. Blaming President Bush for TARP ignores that he was in the room when those negotiations were underway to stabilize the markets.

Complaining about massive deficits and ignoring that you've doubled down on spending is hypocritical.

Stating that he's created or saved millions of jobs with the stimulus package is unsupported by the facts or logic. Claiming that hundreds of thousands of teachers, police, and fire jobs were saved or created is nonsense given that those jobs were not in jeopardy from budget cuts.  No, what people see is unemployment rates significantly higher than they were a decade ago or at any point in the past eight years and the stimulus package has not improved matters.

Claiming that he's engaged in tax cuts is disingenuous at best. There is a difference between cutting taxes and providing tax credits and deductions that reduce a tax burden. The tax rates haven't changed; only added tax credits that not all taxpayers can use. Tax credits such as the homeowners tax credits, are not useful to someone who just lost their job; and that's where the speech fails most.

Calling for a spending freeze to help curtail spending but only after 2011 is cynical. He's proposing a jobs bill that would cost billions that we don't have and is attempting to help fellow Democrats win reelection in November, ignoring that doing so violates fiscal responsibility and a need to curb spending money that the nation simply does not have. The message he sent on that point was that getting his fellow Democrats reelected is more important than fiscal responsibility. Don't think that isn't going to resonate with voters.

Blaming Wall Street may be the populist thing to do these days on both sides of the aisle, but the banks that took TARP money didn't all want to do so, and many were deterred from an immediate payback because the government didn't want to stigmatize those banks that truly needed the money. Banks that have repaid their TARP obligations did so with interest, so tacking on more taxes and fees is only going to reduce credit lines and hit New York's budget situation hard; the reason New York (and New Jersey) are in budget deficits is because Wall Street got whacked in the recession - both in terms of job losses and because market capitalizations dropped precipitously. That meant less tax revenues - and that money had to be made up elsewhere.

The speech was also short on the fact that states around the country that used stimulus money to balance their budgets last year aren't getting those funds this year - and face massive budget deficits once again. The Administration only delayed inevitable and fundamental changes to the state and local budgeting processes that are needed to bring them into fiscal balance.

Obama also stated that combat troops would be out of Iraq this August. That's just flat out disingenuous. The US isn't withdrawing all of its troops, and how you define combat troops in Iraq is in the semantics since the US isn't leading on military operations inside the country and is really just a backstop for the Iraqi military which is leading the security operations throughout the country these days. Even after August there will be tens of thousands of American troops stationed in Iraq.

Where he does score points is again calling for the construction of new nuclear power plants and improved energy efficiencies. The US has not had a coherent energy policy and it would be to Obama's credit if we finally got one; the problem is that all too many Democrats are standing in the way on developing nuclear power or even renewable energy sources because they don't want them in their backyards and aren't willing to push through legislation that would make it easier to build necessary transmission lines to upgrade power distribution in the country.

He also scores points against Congress when he calls their leadership on the carpet for not actually engaging in leadership and squandering supermajorities in the Senate. That's going to put pressure on Democrats Sen. Harry Reid and Rep. Nancy Pelosi because they pushed health care into limbo by their incompetence.

Meanwhile, the top story on the blogosphere isn't the speech itself, but that President Obama called out the recent Supreme Court decision on campaign finance reform and Justice Alito was seen mouthing "not true" in response to Obama's characterization of the case. It's highly unusual for the President to call out the Supreme Court in such a fashion (and to egg on Congress to do the same), and just as unusual for a justice on the court to respond in any fashion. That was inappropriate all the way around - and once again par for the course in a speech that preached that we were going to get a new tone and tenor in politics but which reverted to the same old song and dance time and again.

The AP has put together a list of 10 issues that the President got wrong during the course of his speech. There's some overlap with the issues I address above, but the point about health insurance hits the President hard. He claimed in the speech that the reform plan wouldn't mean that people would lose their existing plan coverages or prevent them from seeing their own doctors. Neither the House or Senate versions would protect existing plan coverages and permit patients to continue seeing their own doctors; there are phase-outs and as people engage in their annual renewals, those plans will likely change significantly in response to what the federal government's plans require.

President Obama should also get credit for proposing an end to "Don't Ask, Don't Tell". That's a policy that is long overdue for review.

The President made mention of the high costs of higher education, and made some curious proposals to that end. Higher education costs are out of control and he called out the institutions to do more to curb the increases. While Dick Morris and Eileen McGann found this part favorable, I see serious issues with them. He further proposed a tax credit of up to $10,000 per year and for loan forgiveness to occur 20 years (10 years if entering public service). Given that most student loans are initially drawn up for 10 years, the 20 year period means drawing out the repayment period over a longer term, increasing the overall cost to the borrower. It also ignores the fact that most people going to college are not in a position to benefit from a $10,000 tax credit since they don't have the income to utilize the full credit. The devil is in the details, and I expect not much to come of it since most programs mentioned in any State of the Union address are simply a wish list/laundry list for applause and not going to go anywhere.

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