Obama, in 2015 State of the Union, says crisis has passed and takes credit

21 Jan 2015 | Author: | No comments yet »

‘That’s what our enemies want us to do.’.

From left, Ford plant manager Phillip Calhoun, President Barack Obama, Ford President and CEO Mark Fields and Bill Ford check out a new Mustang at Ford Michigan Assembly Plant, Wednesday, Jan. 7, 2015, in Wayne, where the president spoke about the resurgent American automotive and manufacturing sector.(Photo: Carolyn Kaster, Associated Press) Even though he kicked off a pre-State of the Union tour in metro Detroit just two weeks ago, stopping at a Ford plant to talk up the resurgence of the auto industry, Obama didn’t so much as mention the city during the hour-long speech Tuesday. He drew a broad portrait of a liberal economic program that would take billions from the wealthiest Americans and use it to finance a long list of programs for the working and middle classes. “Will we accept an economy where only a few of us do spectacularly well?” Obama asked a joint session of Congress gathered in the Capitol where he took office exactly six years earlier. “Or will we commit ourselves to an economy that generates rising incomes and chances for everyone who makes the effort?” Speaking for the first time to a Congress that is now entirely Republican-led, Obama suggested ways he could work with the House of Representatives and the Senate, including on tax reform and trade. After years of fighting with Republicans over where to take the country, Obama delivered an hour-long defense of his policies that at times sounded like a victory lap. The president on Tuesday night pitched an ambitious package of tax hikes for some, tax cuts for others, education aid and other government protections. But he also worked to seize for himself – and presumably for 2016 Democrats – the banner of income inequality, arguing that while the U.S. economy is recovering and Wall Street is booming, the middle class still needs a boost.

He asserted that the brightening economic picture — including accelerating job growth, more people with health insurance and lower gas prices — had proved that he was right, and his adversaries misguided, all along. This year, he acknowledged rising U.S. oil production and the benefits of cheap energy that have come with it, and then he made a backhanded reference to the Keystone XL pipeline.

The president had been cautious over the past two years not to gloat over news of fitful economic growth, mindful that the economy remained tenuous and public confidence uneasy. In calling on both parties to support the infrastructure projects such as “modern ports, strong bridges, faster trains and faster internet,” he then encouraged lawmakers to pass a bipartisan infrastructure plan by saying: “So let’s set our sights higher than a single oil pipeline.” Certainly, the Keystone pipeline has become a far greater political punching bag than a meaningful piece of infrastructure. And, in a break from past addresses, he made no call for reforming entitlements like Social Security and Medicare, the latter being a major driver of deficits and debt. In fact, the president didn’t even make mention of Tiairris Woodward, 43, of Warren, a Chrysler employee who was one of the numerous guests of the first lady in the U.S. Republicans, who took control of both chambers in November on a platform that included vows to cut spending, had rejected many of Obama’s proposals before he began speaking. “The American people aren’t demanding talking-point proposals designed to excite the base but not designed to pass,” Senate Majority Leader Mitch McConnell, R-Ky., said Tuesday on the Senate floor. “Challenge us with truly serious, realistic reforms that focus on growth and raising middle-class incomes – reforms that don’t just spend more money we don’t have.” “We heard the message you sent in November – loud and clear,” said Ernst, whose November victory helped Republicans take control of the Senate. “Now we’re getting to work to change the direction Washington has been taking our country.” Obama called for $320 billion in tax increases over the next 10 years, including fees on certain Wall Street firms, eliminating a “trust fund loophole” the White House says allows the super rich to pass on estates tax free, and raising the top tax on investment gains for the wealthy.

Environmentalists have greatly exaggerated its role in climate change, and Republicans in Congress are now determined to push through legislation supporting it almost out of spite for the administration’s foot-dragging on a decision. Instead, he pointed to those programs as models for how the government protects Americans from “adversity” and examples of the kind of “middle-class economics” he supports. “That’s what middle-class economics is — the idea that this country does best when everyone gets their fair shot, everyone does their fair share, everyone plays by the same set of rules,” Obama said.

According to our Taxes and Growth model, this tax increase would shrink the economy by 0.8 percent in the long run, lose over 130,000 jobs, and cost an American family that makes $50,000 a year about $345 in annual income. He harked back to the themes of national unity that helped him get elected in the first place in 2008 and called for more bipartisan cooperation on key issues.

That is comeuppance, he said, for Republican critics who say the man who declined to bomb Syria or arm the Ukrainians is too timid in the face of foreign adversaries: “When we make rash decisions, reacting to the headlines instead of using our heads; when the first response to a challenge is to send in our military — then we risk getting drawn into unnecessary conflicts, and neglect the broader strategy we need for a safer, more prosperous world,” Obama said. “That’s what our enemies want us to do.” Obama was particularly boastful — cocky, even — about the dismal state of Putin’s economy. “Last year, as we were doing the hard work of imposing sanctions along with our allies, some suggested that Mr. Senior administration officials, in a briefing before the address, admitted the omission of any call for entitlement reform is an acknowledgement that the chances of a “grand bargain” on the budget is not likely during the next two years. The president hopes his tax credits will provide relief for the American family–and they are sure to provide some–but the real issue taxpayers face today are stagnant incomes. If Obama’s focus was decidedly non-Michigan-centric, however, the state shouldn’t complain too much considering how much attention his administration has given the region since taking office in 2009.

In return, Obama proposed using the new tax revenues to make two years of community college free for students, tripling the child care tax credit to $3,000 per child, increasing the minimum wage, providing workers with paid leave and creating a second-earner tax credit of up to $500 for families. But in doing so, Obama also served to remind the GOP of the reasons their relationship is so fraught — pausing at one point from his prepared text to deliver a spontaneous, and quite partisan, barb. As the Senate begins debating the issue, it’s worth remembering that Keystone represents the sort of energy infrastructure into which we should be investing proceeds from the current oil boom.

The second kind is the difference between long term promises we have made – for retirement income, medical bills, disability payments, etc. – and the income we expect to fund those promises in the form of taxes, premium payments, etc. “The fiscal gap — the difference between our government’s projected financial obligations and the present value of all projected future tax and other receipts — is, effectively, our nation’s credit card bill. When Republicans jokingly applauded after Obama noted that he had run his last campaign, the president quipped: “I know because I won both of them.” Obama took the spotlight in front of Vice President Biden and House Speaker John A. Similarly, Obama cast his international coalition against ISIL as a diplomatic effort as much as a military one, contrasting it with the major ground wars launched by his Republican predecessor in Iraq and Afghanistan. “Instead of getting dragged into another ground war in the Middle East, we are leading a broad coalition, including Arab nations, to degrade and ultimately destroy this terrorist group,” Obama said. But the failure to mention the issue, which still weighs heavily over the country’s long-term fiscal outlook despite shrinking deficits, did not go unnoticed by fiscal watchdogs.

Instead of a tax increase that hampers investment and a tax cut that does little to lower the tax cost of working, the president would be wise to focus on policies that grow the economy. He did hit on one thing much on the mind of some Michiganders, however — a desire to help write the rules for trade between America and partners in Asia and Europe. Like his claims about Putin’s Russia, experts say that’s debatable: Obama said the coalition was “stopping ISIL’s advance,” but by many accounts the group continues to acquire territory in Syria and remains potent in Iraq. We remain the world’s biggest energy consuming country, and when prices begin rising once again, we are going to need better energy infrastructure to ensure adequate supplies. Maya MacGuineas, head of the Campaign to Fix the Debt, said in a statement that while his focus on economic growth was important, “his failure to level with the American people about our serious long-term fiscal challenges was disappointing.” “But they are projected to rise again next year and exceed $1 trillion annually within a decade,” she said. “Meanwhile, debt levels are the highest they have ever been other than around World War II, and without a serious course correction they will only continue to rise over the long run.” The only references in Obama’s address to debt were related to student debt.

When Obama first introduced is “all-the-above” energy plan, he envisioned energy that was “cleaner, cheaper and full of new jobs.” At the time, I argued that job creation shouldn’t be a focus of a long term energy plan. Obama’s speech came amid an uprising in Yemen, which Obama last year pointed to as a model of counterterrorism cooperation as he has resisted pressure to intervene militarily at flashpoints around the globe.

Energy is definitely cheaper now than it was just two years ago, and as the president point out, the U.S. leads the world in wind power, and solar installations are on the rise. “Every three weeks, we bring online as much solar power as we did in all of 2008,” he said in his speech. He framed portions of his address around a letter he received from a woman in Minneapolis named Rebekah Erler, who said that she and her husband struggled to pay bills during the recession shortly after they were married and had a son. “We are a strong, tightknit family who has made it through some very, very hard times,” Obama said, quoting a letter from Erler, whom he visited during a trip to the Midwest last summer. Solar panel manufacturing has risen at a compound annual rate of 52 percent since 2008, and the cost of manufacturing has fallen to 65 cents a watt from $3.95. But we will succeed.” Obama also followed on his historic decision last month to normalize ties with Cuba by calling on Congress to lift the economic embargo against the island.

Obama has said that sanctions would fracture the delicate international coalition pressuring Tehran — “will all but guarantee that diplomacy fails,” as he put it Tuesday, promising to veto new sanctions legislation. A brighter future is ours to write.” In the wake of the GOP rout in the midterms, the president responded by announcing a series of aggressive executive actions, including measures to protect millions of illegal immigrants from deportation, to work toward reestablishing diplomatic relations with Cuba and to strike a climate agreement with China. A president who has sought to move America from what he has called a “permanent war footing” spent more time touting his diplomatic breakthrough with Cuba (“new hope for the future”) and his October climate deal with China (“offering hope”) than he did the fight against radical Islam. And the president and his advisers were determined to begin to frame his legacy as having delivered on his promise to improve the lives of ordinary Americans.

One way to measure the “fiscal gap” is to calculate how much a country needs to tax and save each year (as a percent of its GDP) in order to be able to meet its future spending obligations. On foreign policy, Obama sought to build on the idea, first enunciated during a lengthy speech at West Point last spring, of a “smarter kind of American leadership” in which the United States balances military intervention with diplomacy and coalition-building. We need to use the current slump in oil prices to fund a more diverse energy portfolio — both out of concern for the climate and for the economic future of the country. But such a declaration seemed premature, set against images Tuesday of two orange-clad Japanese hostages kneeling in the desert before a black-robed militant. Instead, the president faced a divided Congress, half of which has unrealistic views about the immediate potential of renewable fuels, and the other that has unrealistic views that the oil markets will sustain us forever.

By contrast, the US fiscal gap is 10.5 percent — higher that any European country and considerably greater the European average of 2.4 percent. (See Table 3.5 of the European Commission’s Fiscal Sustainability Report, 2012.) During the 2008 election, I was actually hopeful about Barack Obama. But Obama was determined to project an optimistic view of the nation’s future, and he maintained faith that the country could rise above its divisions. It’s held up as proof not just of my own flaws — of which there are many — but also as proof that the vision itself is misguided, and naive.” “I want this chamber, I want this city, to reflect the truth,” he said, “that for all our blind spots and shortcomings, we are a people with the strength and generosity of spirit to bridge divides, to unite in common effort.”

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