| The President's full speech can be seen here. |
In his State of the Union Address Tuesday night, Obama gave us a "Blueprint for an American Built to Last." He outlined his plan to fix our economy, which is more than can be said for most of the Republican candidates right now. Although it's ridiculous to think that one term in office (assuming his reelection, which is pretty likely) is enough to fix an economy, it's good to see that someone has an actual plan to get us started in the right direction, instead of just saying, "Wow it really sucks right now, we should probably change it or something."
President Obama made many good points, along with several bad ones, and also several that had the right idea but obviously wouldn't work (at least not with how our tax code is as of today). I'll analyze his blueprint under three different subtopics: Strict Economics/Taxes, Education Related Economics, and Energy/Environmental Economics. I'll then conclude about my opinions of the speech as a whole and its probable effects moving forward.
Strict Economics/Taxes
The most surprising thing I heard come out of the President's mouth (which I suppose I shouldn't be shocked by, really) was that the costs of closing down a factory to move it overseas are tax deductible expenses. That's right, corporations that outsource their jobs actually get tax breaks for moving out of the country. This is something that needs to end. Soon. Like yesterday. We can't expect to grow as a nation if we essentially pay our companies to move their labor to other countries. I'm sure everyone knows our tax code needs some serious revisions, but this should be taken out immediately, and then we can look through the rest of it. Obama also wants to implement something that I've believed in for as long as I can remember having a political voice: an international minimum tax. He wants to tax corporations on the profits and labor they use overseas. And why shouldn't we? They file their taxes here, they're headquartered here, their CEOs live here, and their money determines policy here. They shouldn't be able to so easily avoid paying US taxes. A United States tax (with no loopholes to exploit to avoid actually paying it) on top of the taxes of whatever nation they're operating within might be incentive to start moving jobs back here. In addition to taxing companies overseas, he also wants to give tax breaks, probably those same deductions that went to moving out, to companies that move jobs back into America. These policies, if implemented, might reduce the incentives of outsourcing enough to alleviate some of our unemployment. My first disagreement comes at his next point: that we should lower taxes on companies that create jobs here. I can get on board with helping companies create jobs here, but they should still pay all the same taxes. Maybe we could afford to lower them slightly if we close some of the loopholes that allow companies to pay as low as -1.4% corporate tax. Yup, there are companies that, completely legally, are essentially making money where they should be paying it. If we can close these up and get corporations to pay the full 35%, maybe we could afford to give some businesses that make jobs at home a break, a small one anyway. But there's no point in lowering a tax that they already don't pay.
After the talk on corporations, the President decided to talk about the flaws in the tax code for individuals as well. He pointed out that the Bush tax cuts save the richest Americans. those making $1 million or more per year, on average $103,835, while the average middle class American making $40-50,000 a year saved $909. I don't think it takes a rocket scientist, politician, or economist to see that those numbers shouldn't look like that. Because of the Bush tax cuts, Warren Buffett, one of the richest men in the country, pays a lower tax rate than his secretary, who I can assure you is not one of the richest people in the country. Obama now realizes how unfair these are, and wants to implement what he calls a "Buffett Rule" that would require anyone making more than $1,000,000 a year to pay at the very least 30% in taxes. It's obvious that the tax breaks in this country have been going the wrong way for too long. We need to tax the rich because they can afford it, and offer tax breaks to the poor and middle class families that can't. His final point in this subcategory was that he wants to reduce the influence of money in politics. To do this he wants to ban insider trading in Congress, prohibit lobbyists from fundraising for candidates and fundraisers from lobbying, among other things. I found it very funny when he received applause from Congress for this point, because I know none of them are on board with that idea, because it would mean that they would lose money. But money in politics is one of the big problems with our nation that can be fixed by legislation. Voter apathy is a bigger problem, that if solved would make money irrelevant, but there can't exactly be a law requiring people to care and be informed, unfortunately.
Education Related Economics
Obama's plans concerning education are fewer, but overall are very good. He wants to promote partnerships between businesses and community colleges to train skilled laborers for specific jobs in those businesses. My brother took advantage of a program like this, his tuition being paid in full by Strain Measurement Devices, while he both worked full time for SMD and went to night classes at a nearby college for a degree in Mechanical and Electrical Engineering. It is jobs like these that are in high demand and growing, and if businesses can help people attend school to get the training, we can put a serious dent in our unemployment rates. The President also wants to help fund schools in areas hit hard by the recession, where budget cuts have caused the layoffs of numerous teachers. Mr. Obama acknowledges the high importance of education, and wants to do what he can to protect it. He wants colleges of education to be more selective, to ensure the highest quality teachers. He also wants for teachers to be paid on the basis of performance, not just seniority. This does cause problems in teachers artificially inflating scores in order to improve their salaries, but if we shift away from test scores being the only measure of achievement then this might be avoidable to some extent.
His education plans are also aimed at students. He wants to require all high school students to remain in school until they graduate or until they turn 18, essentially eliminating the ability to drop out. The difference that even a diploma makes in average lifetime earnings is tremendous, and it would be a good thing for a lot of people if they had them. President Obama also addressed the rising cost of higher education, and made a plan to keep it low. He wants to increase the number of work study jobs available to students to allow them to more easily earn money in college, but he also has other plans. He proposed that the government take aid away from schools that don't keep their tuitions under control, he wants to stop the interest rates on student loans from doubling later on this year, and permanently extend the American Opportunity Tax Credit to provide as much as $2,500 a year to some college students and their families. All of these things can easily increase the quality of life for many Americans. They can help those that can't quite afford college, especially with tuition rates rising at the rates they have been recently. And with the increased number of people with degrees and diplomas, more people will be able to get jobs that they previously weren't qualified for.
Energy/Environmental Economics
The number of ideas President Obama had in the category of energy and the environment is even more limited than what he had to say about education reform, which I think shows what his priorities are. It is good that he brought it up at all, even though he did so under a more economic lens, emphasizing more about the jobs that could be created and not quite as much the positive impact on the environment some of these policies will have. He first of all spoke in favor of moving our energy dependence away from oil, especially foreign oil, and towards natural gas, of which we have large amounts under our own soil. Natural gas is a cleaner alternative to oil, but is still not the best out there. I like it as an intermediate step towards overall greener energy sources, but we do have to remember that natural gas is still a fossil fuel and we can't get complacent with it. If we don't continue to invest our efforts into alternative, renewable, greener sources of energy in the meantime, we will eventually run out of gas and have nothing to fall back on. President Obama is right, however, that investing in domestic gas reserves and also in green technology will produce jobs here, and there is no reason whatsoever we should avoid either of them.
This All Sounds Nice But...
While I agree with the vast majority of what Mr. Obama suggested in his speech, I don't have much faith that much, if any of it, will come to fruition anytime soon. Obama has proved in the past three years that he is not a very assertive president. Even when the Democrats controlled Congress and he could have passed anything he wanted, he still struggled to get healthcare reform passed. Now, in this severely divided Congress with a Republican majority, I'm not too sure he can get anything done. Most Republicans have vowed to kill anything Obama suggests on the sole basis that he isn't from their party, which is selfish and not in the best interest of the country or their constituents. The President's favored line throughout the address was "If Congress gives me a bill that says this, I'll sign it tomorrow." The problem is that I have no reason to believe that Congress will send him any bills for any of the policies he suggested because of the huge party divide. If our country wants to progress at all, we need to suck up our pride and deal with the other party to pass legislation that will really help us. Almost all of Obama's ideas were great, and just like in his campaign he has a great way with words, but nothing has proved to me that he can get any of what he suggested done.
I certainly skipped over many of the President's points in his "Blueprint," I simply couldn't address them all. You can either follow the link under the picture to watch his speech, or click here to read the outline of his blueprint.
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