Conservative Political Commentary

...usually with an attempt at historical and economic context

Thursday, January 28, 2010

State of the Union: Plus and Minus on Obama’s Talking Points


In President Barack Obama’s State of the Union Speech of January 27, 2010, he said some noteworthy things, some positive, and others that actions thus far have not supported (earmark reform, for example), or that simply don’t register with many Americans. (Speech transcript [1] words in bold).

Positive

And by the way, it's time for colleges and universities to get serious about cutting their own costs -- (applause) -- because they, too, have a responsibility to help solve this [high cost of education] problem.

This is probably the first time I have heard any liberal mention that educational institutions have any responsibility for their costs. Because of government and other financial aid, schools have little incentive to keep costs in line. Government likes to send money to colleges and universities, and expects them to indoctrinate students with liberal ideas, and to turn out liberal bureaucrats and politicians. And they expect to exercise some control.

Starting in 2011, we are prepared to freeze government spending for three years. (Applause.) Spending related to our national security, Medicare, Medicaid, and Social Security will not be affected. But all other discretionary government programs will. Like any cash-strapped family, we will work within a budget to invest in what we need and sacrifice what we don't. And if I have to enforce this discipline by veto, I will. (Applause.)

A spending freeze would be welcomed, but, as has been pointed out numerous times, this proposal only covers a relatively small part of total spending. But it’s better than nothing. Note that it takes effect in 2011, after the government has had time to spend a lot more. The proposal is not pleasing to the more leftist side of the Democratic Party, and thus may not be approved, or may be watered down considerably.

But to create more of these clean energy jobs, we need more production, more efficiency, more incentives. And that means building a new generation of safe, clean nuclear power plants in this country. (Applause.) It means making tough decisions about opening new offshore areas for oil and gas development. (Applause.) It means continued investment in advanced biofuels and clean coal technologies. (Applause.) And, yes, it means passing a comprehensive energy and climate bill with incentives that will finally make clean energy the profitable kind of energy in America. (Applause.)

I am grateful to the House for passing such a bill last year. (Applause.) And this year I'm eager to help advance the bipartisan effort in the Senate. (Applause.)

If the president stays with some these suggestions, significant economic and energy progress can be made. Where have these suggestions been? Except for the parts about climate change and biofuels, I have to agree with this one. Climate change legislation should be scrapped, and hopefully is dead. The role of biofuels should be completely re-evaluated, especially as they relate to food crops.

But we could truly benefit from nuclear power, more domestic oil and gas production and clean coal. These are more urgent than alternative energy, which should be left to the private sector.

Negative

Let’s Blame Bush!
We can't afford another so-called economic "expansion" like the one from the last decade -- what some call the "lost decade" -- where jobs grew more slowly than during any prior expansion; where the income of the average American household declined while the cost of health care and tuition reached record highs; where prosperity was built on a housing bubble and financial speculation.

Well, how does that compare with where we are now? There was an event called “9/11” that contributed to the deficit. Jobs grew rather than shrank. The bubbles were largely brought about by government forcing banks to make bad loans, and Congress failing to allow effective regulation of Fannie Mae and Freddie Mac, despite obvious and serious misbehavior. Banks issued dangerous derivatives, but government didn’t step in to stop them. For years before the meltdown, liberals criticized the state of the economy, but when they got in power, they pretended that they didn’t know what its actual condition was.

At the beginning of the last decade, the year 2000, America had a budget surplus of over $200 billion. (Applause.) By the time I took office, we had a one-year deficit of over $1 trillion and projected deficits of $8 trillion over the next decade. Most of this was the result of not paying for two wars, two tax cuts, and an expensive prescription drug program. On top of that, the effects of the recession put a $3 trillion hole in our budget. All this was before I walked in the door. (Laughter and applause.)

Now -- just stating the facts. Now, if we had taken office in ordinary times, I would have liked nothing more than to start bringing down the deficit. But we took office amid a crisis. And our efforts to prevent a second depression have added another $1 trillion to our national debt. That, too, is a fact.


Just a reminder, there were valid causes of much of the Bush deficits, but the ill-advised bank bailouts, which Obama supported, more than doubled the “inherited” deficit he keeps complaining about.

The recession was caused by various things, including government missteps, but because of the government’s response, it has lasted longer and been worse than it otherwise would have been. If Obama had not tried to take over the financial industry (Bush, too on this one), and much of the economy, while at the same time, proposing massive tax-laden and job-killing projects like “health care reform” and cap and trade, we would have likely been well out of the recession and back to normal employment by now. With these proposals hanging over employers’ heads, how could a quick recovery be expected? Obama’s mistakes are not Bush’s fault (except the bank bailouts).

On “Health Care Reform”
Still, this is a complex issue, and the longer it was debated, the more skeptical people became. I take my share of the blame for not explaining it more clearly to the American people. And I know that with all the lobbying and horse-trading, the process left most Americans wondering, "What's in it for me?"

But I also know this problem is not going away. By the time I'm finished speaking tonight, more Americans will have lost their health insurance. Millions will lose it this year. Our deficit will grow. Premiums will go up. Patients will be denied the care they need. Small business owners will continue to drop coverage altogether. I will not walk away from these Americans, and neither should the people in this chamber. (Applause.)


The problem was not a lack of clear explanation. The problem is that the more it was explained, the more obvious it became that this plan was an unacceptable and very costly government takeover that would require large tax increases and a degradation of health care. Its passage was to be achieved by unethical special deals, closed-door negotiations, and plain bribery. Talk of “death panels” hurt the effort, because it rang true. There would be government rationing.

The government should walk away from this effort entirely. It’s a plan that should be killed, not tweaked. Suggestion: If you can’t get the American people on board, and bipartisan support, forget it. The Obamacare plan, House or Senate version, is no good.

From some on the right, I expect we'll hear a different argument -- that if we just make fewer investments in our people, extend tax cuts including those for the wealthier Americans, eliminate more regulations, maintain the status quo on health care, our deficits will go away. The problem is that's what we did for eight years. (Applause.) That's what helped us into this crisis. It's what helped lead to these deficits. We can't do it again.

“Investments in our people” means “more government spending.” This increases the deficit. “Extend tax cuts…” Obama tries to maintain the fiction that tax increases on the wealthy don’t hurt people who aren’t wealthy. The “wealthy” means people who could be in a position to hire workers. High taxes discourage economic activity, and workers will suffer from these higher taxes, either through unemployment or lower pay. Lower taxes in the Bush years resulted in record revenues to the government and did not cause the financial crisis.

Supreme Court and Campaign Finance
With all due deference to separation of powers, last week the Supreme Court reversed a century of law that I believe will open the floodgates for special interests -- including foreign corporations -- to spend without limit in our elections. (Applause.) I don't think American elections should be bankrolled by America's most powerful interests, or worse, by foreign entities. (Applause.) They should be decided by the American people. And I'd urge Democrats and Republicans to pass a bill that helps to correct some of these problems.

Liberal opposition to this decision seems to be based on the weird notion that unions represent “people,” but corporations and some other organizations do not. The decision actually restores First Amendment rights that McCain-Feingold and other laws have suppressed. Freedom of political speech is protected except under dictatorial regimes.

Other Items
Earmark Reform – The president’s words sound good. We’ve heard a lot about the need for earmark reform before. Nothing significant has been done. Yet.

“Investments” in this or that equals government spending. The government should leave more “investment” situations to the private sector.

New Fees on Big Banks – See my previous article, “Obama: We Want Our Money Back. And We’re Going To Get It,” and my next article, about Obama’s war on Wall Street.

Financial Reform – Look for a big battle over this. The Administration isn’t making any friends among Wall Street bankers. Timothy Geithner reportedly has been working with banks to craft a regulation plan that would do the job and have some support from bankers, but Obama appears to be undermining that effort.

Guantanamo detention facility – not mentioned.

Conclusion

The Massachusetts U.S. Senate election, and the election of Republican governors in Virginia and New Jersey, plus the retirement of several Democrats, and prospects of Republican victories in the November elections, have forced a resetting of Administration priorities. The president is urging Congress to stick with his health care and climate change priorities, but these are doubtful of approval now. I hope.

Obama doesn’t see anything wrong with his proposals, apparently thinking that better PR is what’s needed. What’s really needed is a better program, based on free markets, low taxes, reasonably limited government, and respect for the wishes of the people.

[1] “Obama’s first State of the Union. Transcript,” appearing in Lynn Sweet’s Chicago Sun-Times column The Scoop from Washington, 01/27/2010, at http://blogs.suntimes.com/sweet/2010/01/obamas_first_state_of_the_unio.html


Photo: Official White House photo by Pete Souza. Found at whitehouse.gov.

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