Tag: State of the Union

Our Brave Leaders

The Washington Post reports: “Obama has decided not to endorse his deficit commission’s recommendation to raise the retirement age, and otherwise reduce Social Security benefits, in Tuesday’s State of the Union address.”

When I read this, I thought of a song from Monty Python and the Holy Grail:

Brave Sir Robin ran away
Bravely ran away, away
When danger reared its ugly head
He bravely turned his tail and fled
Yes, brave Sir Robin turned about
And gallantly he chickened out
Bravely taking to his feet
He beat a very brave retreat
Bravest of the brave, Sir Robin.

In the movie, Sir Robin and the other knights are galloping along on horseback, except when you look closely you see that their aides are banging coconuts together only simulating the sounds of brave mounted knights.

Isn’t that what’s going on in Washington? A giant fiscal disaster looms over the nation, and our leaders are only simulating leadership. Republican leaders can’t name a single program that they would cut, and President Obama runs away from a reform to the nation’s most costly program that should be a no-brainer.

Rather than chasing the Holy Grail of “investment” spending, the president needs to sit down with his congressional knights at a roundtable and get the kingdom’s finances under control with major spending cuts.

Weekend Links

Topics:

Post-State of the Union Links

  • Time for the SOTU fact check:  Cato experts put some of President Obama’s core State of the Union claims to the test. Here’s what they found.
  • During this year’s SOTU, President Obama criticized the Supreme Court decision in the Citizens United case. Today’s podcast examines the Court’s ruling.

Obama’s SOTU Export Promise: Bold and Unrealistic

In his State of the Union speech, President Obama vowed to double U.S. exports in five years to (all together now) “create jobs.”

Exports are dandy, and they do support higher-paying jobs, but the president’s pledge was unrealistic and raises false hopes that it will make any dent in the unemployment rate.

U.S. exports have not doubled in dollar terms during a five-year period since the inflation-plagued 1970s, not exactly a golden era for the U.S. economy. In real terms, according to the U.S. Bureau of Economic Analysis, exports have not come close to doubling during any five-year stretch in the past 40 years. The fastest growth in inflation-adjusted exports came in the second half of the 1980s, when they grew by two-thirds from 1985 to 1990. Other periods of robust growth were the mid-1990s, and during the second term of George W. Bush, when five-year export growth approached 50 percent.

Export growth is certainly enhanced by a weaker dollar and lower trade barriers abroad, but the primary driver of export growth is rising GDP and demand abroad, and that is something outside even this president’s direct control. The key to reducing U.S. unemployment is not primarily selling more to growing markets abroad, but selling more in a robustly growing market at home.

Other Obama policies will actually make it more difficult to achieve his export pledge. The president renewed his misguided pledge last night to raise taxes on U.S. multinational companies that “ship jobs overseas.” Yet, as I pointed out in a Free Trade Bulletin last year, U.S.-owned affiliates in other countries sold $4 trillion worth of U.S. branded goods and services in 2006. A large chunk of our exports go to those affiliates to help them make their final products for sale. Forcing U.S. firms to cut back their foreign operations will douse an important source of demand for U.S. exports.

The only major foreign market that has recently doubled its demand for U.S. exports in a five-year span is China. Yet President Obama has needlessly antagonized potential customers in our fourth-largest export market by imposing tariffs on Chinese tire imports and threatening other trade-reducing actions.

We can best promote more open markets abroad by setting a good example ourselves.

State of the Union Fact Check

Cato experts put some of President Obama’s core State of the Union claims to the test. Here’s what they found.

THE STIMULUS

Obama’s claim:

The plan that has made all of this possible, from the tax cuts to the jobs, is the Recovery Act. That’s right – the Recovery Act, also known as the Stimulus Bill. Economists on the left and the right say that this bill has helped saved jobs and avert disaster.

Back in reality: At the outset of the economic downturn, Cato ran an ad in the nation’s largest newspapers in which more than 300 economists (Nobel laureates among them) signed a statement saying a massive government spending package was among the worst available options. Since then, Cato economists have published dozens of op-eds in major news outlets poking holes in big-government solutions to both the financial system crisis and the flagging economy.

CUTTING TAXES

Obama’s claim:

Let me repeat: we cut taxes. We cut taxes for 95 percent of working families. We cut taxes for small businesses. We cut taxes for first-time homebuyers. We cut taxes for parents trying to care for their children. We cut taxes for 8 million Americans paying for college. As a result, millions of Americans had more to spend on gas, and food, and other necessities, all of which helped businesses keep more workers.

Back in reality: Cato Director of Tax Policy Studies Chris Edwards: “When the president says that he has ‘cut taxes’ for 95 percent of Americans, he fails to note that more than 40 percent of Americans pay no federal incomes taxes and the administration has simply increased subsidy checks to this group. Obama’s refundable tax credits are unearned subsidies, not tax cuts.”

Visit Cato’s Tax Policy Page for much more on this.

SPENDING FREEZE

Obama’s claim
:

Starting in 2011, we are prepared to freeze government spending for three years.

Back in reality: Edwards: “The president’s proposed spending freeze covers just 13 percent of the total federal budget, and indeed doesn’t limit the fastest growing components such as Medicare.

“A better idea is to cap growth in the entire federal budget including entitlement programs, which was essentially the idea behind the 1980s bipartisan Gramm-Rudman-Hollings law. The freeze also doesn’t cover the massive spending under the stimulus bill, most of which hasn’t occurred yet. Now that the economy is returning to growth, the president should both freeze spending and rescind the remainder of the planned stimulus.”

Plus, here’s why these promised freezes have never worked in the past and a chart illustrating the fallacy of Obama’s spending claims.

JOB CREATION

Obama’s claim:

Because of the steps we took, there are about two million Americans working right now who would otherwise be unemployed. 200,000 work in construction and clean energy. 300,000 are teachers and other education workers. Tens of thousands are cops, firefighters, correctional officers, and first responders. And we are on track to add another one and a half million jobs to this total by the end of the year.

Back in reality: Cato Policy Analyst Tad Dehaven: “Actually, the U.S. economy has lost 2.7 million jobs since the stimulus passed and 3.4 million total since Obama was elected. How he attributes any jobs gains to the stimulus is the fuzziest of fuzzy math. ‘Nuff said.”

An Appalling Breach of Decorum

This morning, Politico Arena invites comments on Obama’s SOTU attack on the Supreme Court.

My response:

I join my Arena colleagues, Professors Bradley Smith and Randy Barnett, in condemning the president’s remarks last night singling out the Supreme Court for its Citizens United decision last week, which overturned law that the government itself admitted would even have banned books.  Not only was Obama’s behavior an appalling breach of decorum, but he didn’t even get his facts right.  As Brad, former FCC chairman, noted in his Arena post last night, and a bit more fully here, the decision did nothing to upset law that prohibits foreigners, including foreign corporations, from contributing anything of value to an American election.  Obama, the sometime constitutional law professor, should have known that.  At the least, his aides had plenty of time to research the question before he spoke.  This is just one more example of the gross incompetence or, worse, the indifference to plain fact that we’ve seen in this administration.

But it’s the breach of decorum that most appalls.  By constitutional design, the Supreme Court is the non-political branch of government.  Like members of the military, Supreme Court justices are invited to the State of the Union event, but they do not stand and applaud when the president makes political points that bring others to their feet.  For the president to have singled the justices out for criticism, while others around them stood and applauded as they sat there still, is simply demagoguery at its worst.  I would not be surprised if the justices declined next year’s invitation.  And Obama wanted to change the tone in Washington?  He sure has.