January 20, 2015

SOTU 2015: What the President Won’t Say


  • This is the president’s second-to-last State of the Union address, his first to a Republican-led Congress, and an opportunity for bipartisan solutions.

  • The president should not use this speech as another opportunity to divide Americans – there are too many bipartisan proposals such as the Keystone XL pipeline and Iran sanctions legislation that create jobs and enhance American security.

  • Senate Republicans are working in a bipartisan way to deliver results, create a healthy economy, provide better health care, defend our national security, and set a domestic agenda that works for Americans again.


Tonight, President Obama will deliver his State of the Union address to the nation, and to a new Republican Congress. In the past six addresses, the president boosted Democrats and complained about Republicans. Democrats are no longer in charge of the Congress, and the American people are optimistic about new leadership. The president will have to deal with a Republican Congress that is already working to increase economic opportunity for all, including more jobs, better wages, and lower costs for health care, education, and energy. Presidential complaints will be met with bipartisan ideas and solutions.

Here are some things the president won’t be talking about tonight.

Economy

The economy under President Obama and Democrats has suffered from a lack of good jobs, a discouraged labor force, and little growth. For all of the progress made in this last year, President Obama and his Democrat Congress had one of the worst economic records over any time period.

The president won’t mention in his speech tonight that many Americans continue to struggle in this economy. Last year, hourly wages were stagnant – increasing only 1.7 percent in 2014, barely faster than inflation at 1.3 percent. Last month was the 64th straight month that year-over-year hourly wage growth was below 2.5 percent. Prior to the recession, wage growth routinely exceeded three percent. The president and Democrats’ answer to this is increasing the minimum wage. The president won’t mention that the nonpartisan CBO has said raising the minimum wage would destroy hundreds of thousands of jobs and that it is a barrier to entry for young people, who are facing 19 percent unemployment.

The president will tout recent economic growth. He won’t talk about how GDP growth was so tepid for so long. Over the last four quarters for which data is available (ending in the third quarter of 2014), inflation-adjusted GDP has only increased by 2.7 percent, and some of the recent good news is due to the 2.1 percent contraction in the first quarter of 2014. In contrast, President Reagan’s last six years in office had inflation-adjusted growth that was never below 3.5 percent. We need to ensure that tepid growth does not return. Republicans will send the president initiatives to grow the economy by growing the private sector, not by growing the government.

Taxes

The president will propose more capital gains taxes and a new tax on large financial institutions. This proposal is just more class warfare. The president will not talk tonight about how the Senate Finance Committee is already at work on revenue-neutral tax reform. The committee has already set up five bipartisan working groups to study various areas of the tax code and possible options for reform.

For six years, President Obama has been absent on the tax reform issue. His Treasury Department and White House staff wrote a 23-page white paper in February 2012 on corporate tax reform, but the president has not made tax reform a priority. 

On the contrary, the president has often pursued political gimmicks like the ones he will outline in the State of the Union. These would add complications to our tax code and limit economic growth. Under Democrat control, the Senate considered the president’s class warfare tax proposals and voted them down.

Budget

The president will talk about reduced deficits – the fiscal year 2014 deficit is $483 billion. This is only the second year in which President Obama has not had a trillion-dollar deficit. President Obama’s lowest deficit is still higher than any other president’s deficit in U.S. history (in nominal dollars).

Any deficit, even a smaller one, still means that the national debt is growing. Washington’s debt has increased by $7.4 trillion under President Obama, and now stands at more than $18 trillion. The debt limit is currently suspended through March 15, 2015.

Deficits are projected to begin to increase again in a couple of years due to mandatory spending. The president has refused to propose a way to protect vital programs so that they are there for future generations. He did offer a means-tested version of chained CPI in his fiscal year 2014 budget, but that is a technical adjustment of how inflation is calculated for the purposes of adjusting benefits and tax brackets. It is not even close to reform.

Republicans will focus Congress on two of its primary duties: passing a budget resolution on time; and passing appropriations bills that fund the government and provide oversight of the executive branch.

Health Care

Last year, Americans faced more negative side effects of the president’s health care law. Exchange premiums increased, provider networks narrowed, more people lost workplace insurance, and HealthCare.gov was hacked. The president won’t mention this year could produce even more problems as people pay the individual mandate penalty for the first time, employers struggle to comply with the employer mandate, and people learn that their income tax refund has disappeared. And in a few months, the Supreme Court may decide that the administration has been engaged in an illegal taxing and spending scheme to prop up the president’s signature law.

The Supreme Court is expected to decide the legality of the IRS regulation that extends health insurance subsidies to people in states with a federal exchange. Two federal courts have already ruled that the regulation is illegal. Since the availability of subsidies often triggers penalties under the employer mandate and individual mandate, tens of millions of Americans face negative side effects like tax penalties because of the regulation. The IRS decision to issue subsidies in the federal exchange, in violation of the letter of the law, also increased spending, taxes, and debt beyond what Congress authorized.

Democrats repeatedly promised their health care reform would reduce premiums for the average family by $2,500 per year. Contrary to these promises, health care costs grew significantly after the passage of Obamacare. Between 2009 and 2014, the average family premium for employer-sponsored coverage rose by nearly $3,500 – from $13,375 to $16,834 – even as deductibles and cost-sharing increased significantly.

The president also won’t mention that late last year HHS officials lowered the number of people that it expects to sign up for coverage in exchanges this year. The administration cut its estimate to between nine and 10 million people, substantially lower than CBO’s projection of 13 million people. HHS also recently admitted that it “erroneously” over-counted 2014 exchange enrollment by nearly 400,000 people.

National Security

President Obama should, and probably won’t, devote a large portion of his State of the Union address to explaining to the American people how he is going to re-calibrate his rhetoric to more accurately reflect the reality of the world.

The president should talk to the American people about how the war against Islamist terrorists will not end on timetables he outlines in speeches, but rather it will end with the defeat of the enemy. In May 2013 President Obama said “history advises” that the war against terrorist organizations, “like all wars, must end.” Current history makes clear the enemy usually gets a vote on such things, as demonstrated by the terrorist attacks in Paris, Sydney, Ottawa, and Nigeria. It is likely that the president tonight will claim credit for ending the war in Afghanistan, much like he claimed credit for “ending the Iraq war” in his 2012 State of the Union address. With more than 3,000 U.S. troops now authorized to be re-deployed to Iraq, the president should instead talk about how he will calibrate the withdrawal of U.S. troops from Afghanistan to security conditions on the ground, rather than to a political calendar outlined in speeches.

The continuing war against terrorists demonstrates the folly of the president’s rhetoric on closing Guantanamo and combatting ISIL. In his 2009 address, the president spoke of how he “ordered the closing of the detention center at Guantanamo Bay” to happen in his first year in office. Five years later, in 2014, he said, “this needs to be the year ... we close the prison at Guantanamo Bay.” In signing the defense authorization act for this year, the president once again complained he has “repeatedly called upon the Congress to work with my Administration to close the detention facility at Guantanamo.” There is no evidence the president has engaged Congress in a substantive discussion on the subject. He has failed to address the benefits of holding terrorists in law-of-war detention in order to gain the intelligence critical to preventing terrorist attacks.

The president also has said he would “welcome congressional support” for his military actions against ISIL. The president should speak tonight about how he plans to work with Congress to seek that support in a meaningful way. As presidential candidate Obama said in 2008, “military action is most successful when it is authorized and supported by the legislative branch.”

The president probably will not explain why he broke the promise he made in last year’s State of the Union address that he would be “the first to call for more sanctions” if Iran did not negotiate a final agreement on its nuclear program. He has continued to extend the deadline on this matter, along with sanctions relief of billions of dollars for Iran. Rather than carry out his promise from last year’s speech to increase pressure on Iran so that it might actually come to an agreement on its illicit nuclear program, the president has threatened to veto such an effort. The president should make clear tonight that there will be no more extensions of the deadline beyond the end of June. Sanctions relief provided to Iran was supposed to be “limited” and “temporary.” It appears to have become limitless and permanent.

Trade

In every single one of his State of the Union addresses, President Obama has either requested Trade Promotion Authority or spoken of the job-creating benefits of increased international trade. He has used those occasions to point out that increasing trade is absolutely vital to increasing economic growth. His own U.S. Trade Representative has explained: “Every $1 billion in exports of U.S. goods and services supports more than 5,000 U.S. jobs. In 2012, exports of U.S. goods and services supported an estimated 9.8 million American jobs, including 25 percent of all manufacturing jobs.” Secretary of State Kerry has spoken to our European allies about how “[trade] could have a profound impact on jumpstarting the economies for all of us. It’s worth millions of jobs.”

President Obama has done nothing to encourage Congress to grant him Trade Promotion Authority. He has not negotiated a single trade agreement to conclusion in his entire time in office. This should be the State of the Union where he follows-up his rhetoric by actually pushing his own caucus to give him the authority he says he needs.

Immigration

The president will highlight the success of his Deferred Action for Childhood Arrivals program. He will also use tonight as an opportunity to discuss his new Deferred Action for Parents of Americans and Lawful Permanent Residents program announced last November.

The president will not be telling the American people that his unilateral immigration policies expand executive power in a way not provided for in the constitution and that they weaken law enforcement efforts against illegal immigrant criminals. The president will certainly not remind the American people that he previously said more than 20 times that he had no authority to do any of these things. He will not talk about his failure to work with Congress to come to a legislative solution to our immigration system.

Republicans in Congress will find solutions to our immigration problem and will do so with appreciation for the history of immigration in this country, as well as respect for the rule of law.

Energy

President Obama may claim in his speech that his administration has pursued an “all-of-the-above” energy strategy. In reality, he has attempted to use federal power to shape the U.S. marketplace to give “green” energy an advantage over conventional fuels, while dismissing Republican proposals that would have advanced both.

For example, the president will likely take credit for the more than 40 percent drop in the average price of gasoline since the peak of $3.70 reached on April 28, 2014. The price of gasoline in the U.S. closely tracks the price of Brent crude oil, which fluctuates with supply and demand in the global market. The Obama administration cannot take credit for U.S. oil production growth over the past six years. Crude oil production increased by 61 percent on state and private lands from 2009 to 2013. The president won’t mention that it fell by six percent on land the federal government controls, according to an April 10, 2014, Congressional Research Service report.

Republicans will champion the use of every American energy resource to ensure affordability and reliability of gasoline, electricity, and other energy products. There will be ideas to encourage public and private-sector research and development partnerships that find innovative solutions to our energy sector’s most challenging problems. Energy consumers and producers will be empowered; not federal policymakers and bureaucrats. By doing this, Republicans will increase people’s standard of living and put millions of Americans back to work.

Infrastructure

The president will likely talk about more infrastructure spending, but will not propose any real way of funding it. Senate Republicans intend to fund highway and transportation programs across the country, including the Highway Trust Fund, in a fiscally responsible and measured approach prior to the expiration of the current funding on May 31, 2015.

In July 2014, Congress authorized $10.8 billion through the Highway and Transportation Funding Act of 2014. The bill was offset by pension smoothing ($6.4 billion); customs user fees ($3.5 billion); and a transfer from the Leaking Underground Storage Tank ($1 billion) account. Senate Republicans will examine prudent ways to pay for highway and transportation programs.

Cybersecurity

President Obama recently introduced a number of cybersecurity proposals. Cybercrime costs the United States approximately $100 billion per year, and it is imperative the president and Congress get serious about tackling the issue. President Obama has started a dialogue on some important topics, including data breaches, cyber theft, and information sharing. That said, the most effective policy to thwart cybersecurity threats will be to advance proposals based on a balanced public-private partnership.

Senate Republicans intend to pass cybersecurity legislation addressing the increasingly sophisticated threat to our economy and national security. There will be bipartisan proposals aimed at enhancing protections for the private sector, government, and consumer stakeholders. Legislation is expected to address information sharing between the public and private sectors; enhancement of cyber research and development; cyber theft; and building a sufficient cyber workforce. Senate Republicans will also continue to support a voluntary and flexible cybersecurity framework and cultivate a public-private partnership.

Education

The president will propose to make community college “free for everyone willing to work for it,” at an estimated cost of $60 billion over 10 years. The plan calls for Washington to pay 75 percent of the cost, leaving the remainder to states as they face budget shortfalls and competing priorities. States will likely have to cut other programs or raise taxes to pay for it. What the president won’t say is that community college tuition is already covered for low-income students by the need-based Pell Grant.

Meanwhile, Republicans are looking at ways to reform No Child Left Behind in a bipartisan way to ensure that all 50 million students in our nation’s 100,000 public schools can succeed. Republicans are working on a bipartisan basis to ensure we keep the best parts of the law while enhancing its flexibility and restoring responsibility to state and local officials. 

The president has a chance, starting tonight, to work with a new Republican congress. He can embrace the next two years and leave a better legacy than Obamacare and climate change regulations. If he takes the opportunity, it would mean a stronger economy and country. Two of the first pieces of legislation the Republican Senate is offering do just that. The Keystone XL pipeline approval legislation will help create thousands of jobs, and Iran sanctions legislation will make our country more secure. They both have bipartisan support, and they will both make it to the president’s desk. If signed, they will start us down the path to a government that works again.