For a president aiming to inspire confidence in the American people, there was sure a lot of talk in tonight’s State of the Union about how we were being surpassed by the likes of China and South Korea. To that end, President Obama proposed new federal subsidies and mandates for a numbers of select industries. He finished out the speech noting regardless of how bad things are now, our economy and country are still the envy of the world.
But if that is America’s case, then why? America is not the most prosperous place in the world because when certain industries worried us, the government subsidized them. We didn’t become the most productive people in history, because we called on our government to spend us so deep into debt that we came out wealthy. And we certainly didn’t become the world’s beacon for freedom and individualism by growing the size and power of our government at the rate we are doing so currently. But that is what we are doing now with rather detrimental results.
To be fair, most of the speech was absent of substance. Obama talked about a lot of things that sound nice, but didn’t bother to offer burdensome specifics of how to get there. He promised that 80% of our electricity will come from renewable sources in 15 years. What he did not mention was that about 70% of our electricity comes from coal and natural gas currently, and that another 20% comes from nuclear (which, although renewable, liberals reflexively oppose). How much it will cost to turn our entire electricity industry on its head? He didn’t say.
He also promised that we will have the most college graduates of any country in the world in 10 years and that we will double our exports (that’s an extra $1 trillion worth of exports we’ll have to provide) by 2014. Empty promises and no specifics make for great speeches, but misguided governance.
The president, while attempting to reuse his old substance-free oratory that won him into the White House, also sounded like a man oblivious to November’s election and the past two years. Americans are frustrated that we are experiencing the slowest job recovery since WWII, in spite of the largest fiscal stimulus in our history (by far), which Obama said would keep unemployment at just 6%. His solution? The government hasn’t spent enough! Let’s spend new stimulus money–and call it “investment”–on industries he feels are most worthy.
Americans are frustrated by myriad regulations that make it expensive and difficult for businesses to create jobs. So he says there will be a federal review of unnecessary regulation. Great. But what about the 2,700 page healthcare bill, 2,300 page financial reform bill and countless other regulations that are being enacted without Congress’ approval? Can’t touch this.
Americans are furious that we are growing our federal debt to unimaginable and unsustainable levels, with no end in sight. Why then is the only concession the president will make on the budget a discretionary spending freeze that will save $400 billion over the next decade? Do the math: thats about $40 billion per year. Our deficit last year? $1.56 trillion. And never mind about all that new “investment” spending that Obama spent the first half of his address boasting.
And of course only about 40% of Americans still want the creation of a new government entitlement and unprecedented federal control of healthcare (“Obamacare”). There is no precedent for such a landmark piece of legislation being repealed by Congress so soon after an election. But the response the president thought most worthy of occasion was a one-liner.
Some good came out of the speech, however. Obama’s proposal to couple a cut in corporate tax credits and deductions with a cut in corporate tax rates is wise and overdue. Our corporate tax rate is the second-highest in the developed world, and a key ingredient to greater efficiency will be to make those taxes lower and simpler. It’s good to see the president agreeing with Republicans on that front. And obviously, the country needed his response to the tragedy in Tucson .
Still, important issues face us. America is at once experiencing its slowest economic recovery in modern times and the greatest growth of government. Those are the two most troubling and glaring facts about the state of the union today, and they are no coincidence. However, the president did not address the scope of those facts, which leaves much to be desired from his speech.
America can rebound, and it can reverse course, but only if it recognizes a simple truth: America is what it is because of its people, not its government. And contrary to what this president’s governance implies, it is through the individual endeavors of its people that our union will get back on track again.
See Dave Uberti’s left-leaning response.
“Obama talked about a lot of things that sound nice, but didn’t bother to offer burdensome specifics of how to get there.”
“Empty promises and no specifics make for great speeches, but misguided governance.
Increased spending, big government, empty promises. Three cornerstones of all three republican “revolutions”.
Reagan- Deficit as % of GDP doubled in his first term. Failed to reduce size of government at all (debatable if this was his fault, but still)
Ginrgich- reduced government and deficit initially (mostly due to Clinton’s tax increases), but in 2002, republicans control everything, pass Medicare and fight two wars without paying for either of them. Deficit spirals out of control.
Third times a charm- Republicans take back house, make gains in senate by pledging to cut taxes and spending, accomplish part one, have zero plans for how to go about part two.
I’m all for balancing the budget… but lets not pretend that Republicans are on board for cutting spending that will actually make a difference.
Timbo,
I hardly will defend the past profligacy of republicans. I think, in fact, that most of what the tea party was about in 2010 was the fact that republicans were not serious about spending and debt. Thats why you saw so many establishment republicans lose in primaries last year.
But while too many republicans show insufficient will to cut spending, almost all dems show no will to cut domestic spending. Consider that in 2010, under Obama, the federal deficit/gdp was a whopping 11%. The next highest figure (between 1946 and 2009) was 6% in1983. (Also consider that unemployment that year was even higher than it was in 2010.) I dont like the deficits that existed, even under Reagan, but the deficits that Obama and the dems have ushered in are almost twice(!) as large as anything that happened on republicans’ watch. And tonight Obama barely acknowledged the problem.
Since WWII spending/gdp has averaged about 19% of GDP. In 2010 it was over 25%. Even after this job slump is over by 2015 the federal govt predicts spending will settle in at about 23%. Thats more spending than any president has presided over since WWII. Our biggest spending problems ever are happening under this president. I dont have too much hope that republicans will solve all these problems, but they are still our best hope.
Hope that clarifies,
Ryan
“America is not the most prosperous place in the world because when were worried about certain industries we had the government subsidize them.”
First of all, WWII and Cold War defense/R&D spending say otherwise.
Second of all, while the government’s ability to control business cycles is highly questionable, organizations like the National Science Foundation and the National Institutes for Health are organizations which, in being crucial and effective drivers of scientific progress and thereby sustained economic growth, do not belong in the discussion of “What should we sacrifice to prevent a budget crisis?”
Writing off the effort to maintain our country’s lead in research – which whether you like it or not is an effort which unlocks huge positive externalities for our society – is shortsighted and indicative of the predictable and transparent way you shit on everything the Democratic party has to offer because you hate the most recent healthcare bill.
…
Boc,
If you honestly believe government subsidies over the long-term lead to positive externalities you are absolutely correct. However, it is not necessarily certain it will happen, seeing as usually subsidies encourage wasteful use of federal funds and complacency, and always are merely a redistribution of money in the national economy and within industries. One cannot possibly quantify those inventions that never and into being because of a lack of funding due to subsidies, capital, moving from the most productive and cost effective companies to those who are not as frugal. If an organization is partially or fully funded by the government, incentives to acquire new funds are lessened and results reduced–exempli gratia: NASA’s lack of results due to increases in funding over the past few decades, even public schools. If you are not fully convinced, check out the book The Economic Laws of Scientific Research by Terence Kealey.
Note: the only example I can think worthy of government subsidies would be contracts given to the private sector for the purpose of providing for the common/national defense–or for the industry thereof; even then, though, there should be limits to these and they are to be used only for equipment absolutely imperative toward bringing about these ends.
Boconz,
Defense spending in no way makes us wealthier. We cannot consume defense goods. they do not make our standard of living higher (directly). Of course we need defense for the sake of our livelihood, but lets not pretend it represents real economic growth. in fact it comes at the expense of money that taxpayers could otherwise spend, save, or invest, which was a big problem for the Soviets.
Public endowments are relevant in our scientific institutions, but on the whole they are proportionally much less relevant than that of other countries and that hasnt stopped us from being the scientific capitol of the world. Keep in mind how, while supported by the government, the top tier of our university system is dominated by private institutions. You certainly cant say the same for the asian countries. Additionally, technological development is probably more important in our economic growth and thats almost entirely privately driven even if it flows from science.
All im concerned with is that politicizing industry, science and industry will crowd out private investment, distort incentives, and reduce their flexibility. I doubt the coincidence that our science and technology are dominant in the world and that they are disproportionately driven by private forces. The two are inexorably connected.
Lastly I think this is a misnomer held by some Dems, some GOP and some people in between. Ill willingly debate it with anyone who holds the view…
Nuclear technology and the internet are two examples of ideas off the top of my head that would not have taken off like they did without a commitment to research and development as a result of defense spending.
And on the topic of private universities, how about Northwestern’s Nanoscale Science and Engineering Center, established by a grant by the National Science Foundation in 2001.
http://www.nsec.northwestern.edu/
And to C Fazz, of course positive externalities from intensive scientific research in the long-term is not guaranteed to happen, which is one of the primary reasons it is under-delivered by the private sector without added incentives.
*are not going to happen.
*guaranteed
Personal freedoms haven’t come up yet so I want to talk about them.
Fazio, you said this “And we certainly didn’t become the world’s beacon for freedom and individualism by growing the size and power of our government at the rate we are doing so currently.”
I would argue that Americans are continuously becoming more free as time continues, and going back through history we can see that as the Federal government’s power increases, American freedoms increase as well. For example, the government grabbed enormous amounts of power during and directly after the civil war. With that increase of national power we outlawed slavery, tried to give blacks equal protection under the law and increase minority rights. For whites, however, that meant sacrificing some of their personal freedoms, I guess, so if you want to argue that you can go ahead, but I think America on the whole was more free.
Then we entered a period of lesser Federal control. We see a rise of state’s rights, Jim Crowe laws and the efforts started under Lincoln disappear. Federal power decreased and freedom decreased. Yes, some people may had to become more individualistic as the government no longer provided them equal status under the law, but I don’t think that that was a good thing.
Then we hit Teddy! Under Teddy we see the first massive increase in government regulation (I know I’m going into economic stuff here but I want to). So now instead of our food having little pieces of people in them or other disgusting objects we have relatively clean food, fewer monopolies (yeah free market!) and overall less individualism. People no longer had to clean up their own processed food and didn’t have to fight for decent pay and working conditions. But lets continue…
Then we go to Wilson. He centralized the government some more with WW1. Women started getting the right to vote (however, it did start with the states, but you weren’t specific so technically thats a centralization of government power), and America had more freedom. I forgot the income tax. That income tax of 2% was probably detrimental to our economy, who knows where we would have been now without it. Probably in more debt because the income tax is a fair way to collect revenue for the government. It taxes people on what they can pay rather than a flat rate, which is regressive. A national sales tax that would replace an income tax would cause the poor to have less money. They wouldn’t be able to buy as much and thus they wouldn’t be able to power the economy. But I digress so I will move on.
WooHoo! We’re onto the roarin’ 20′s! It kind of reminds me of the roarin’ 00′s. Republican presidents preside over good economic times as people’s wages stay stagnant and the economy collapses at the end of the decade! But think of all the individualism!
Now we get the great depression. So much individualism here. People had to go hunting for their food and work and had to build their own slums. Hoover did nothing and America suffered. I would argue that our freedoms were decreased and that the increase in individualism didn’t make up for living in poverty.
So now we go to FDR. He spent lots of government money to stimulate the economy. He created public works projects, agricultural regulation and a whole bunch more. If we look at US growth, we see that our economy starts to climb! With all this government spending, however, we also get lots of regulation, regulation that wasn’t allowed before. The Supreme Court became much more sympathetic to government controls and took away freedoms from businesses and gave it to the government. Horrible I know. Now the government was able to set a minimum wage, set working hour standards, safety conditions, health conditions and a whole bunch more! Businesses saw a loss of freedom, but I would argue that Americans were better off. We no longer had to work in dangerous working conditions for eighty hours a week for a nickel a week. Americans saw their freedom go up.
Then came WW2 and the government grabbed more power and spent a lot more money. The government spent its way out of the Great Depression. It took almost a decade, but we succeeded. Our financial sector collapsed which has always required a long recovery, especially if the initial reaction is not big enough (look at Japan and the 90′s). When FDR stopped some of the government’s spending we saw another dip, so it was spending, not natural cycles that got us out of the depression.
So the government has just spent its way out of the Great Depression and has all this manufacturing capacity left over from the war. This presented a problem because here comes another potential depression causer. Luckily we could rebuild Europe, so thats what we did. We also sent our soldiers to college, with government money, and cared for our old people through social security. They no longer had to live in slums. Now they could live in nursing homes.
Well our soldiers in college had lots of babies and all these babies like to do drugs. Along the way, however, we build a national highway system (with government money) and grab power from the states and require them to desegregate, allow blacks to vote and start giving our criminals some of the rights that the Constitution gives them. Yea! More freedom along with more government power. Well at this point the babies start to do drugs and others are scared of communists so we get LBJ to start a Great Society. So now we give the poor healthcare and the old healthcare. We also try to educate babies and other things. Well not everything worked out like we wanted so we went to war, which only made things worse. The druggy babies hated our troops and America felt bad about losing Vietnam. That war was a tragedy. It was a gross abuse government power, and so was Watergate a few years later. However, America was still more free and possibly more individualistic than we were before. The world was open to us and we could do what we wanted to. Yes people now don’t have to pay for health care and with Obamacare even fewer have to but is that really so bad. We are freeing up people from having to spend large portions of their income on healthcare which allows them to do other things with their money. Its essentially a tax cut.
But now we hit another problem. We have a massive debt. Now we have to look over all that we have done throughout history and start cutting all of the things the government has given us. Yes, some of it may be excessive, but some of it is vital to improving the standard of living of the American people. I know I have been incredibly sarcastic for most of this response, but now I’m serious. The budget is a crisis but you cannot deny that entitlements have improved the standard of living for more people than the harm they have caused. You make this giant cry about the loss of individualism and dependency but its overblown. I know you won’t agree with this but welfare helps people and is required in American society. But we also have to take care of the debt and ensure our economy is dynamic enough to sustain a competitive economy in the future. The debt threatens this, over-regulation threatens this, and yes a welfare state can threaten this as well. But America has an incredibly limited system of welfare and regulation compared to Europe, and I want to ensure you that Democrats do not want to be Europe. We just want to help people through welfare and Republicans want to help people through business. Both have their benefits and weaknesses. The solution to both of our problems is to find that balance between a welfare state and an unregulated economy. I’ll be done now.
Just a note: I know I’ve skimmed over a lot of history and I make generalizations.
Looking over my post I want to apologize for the second to last big paragraph, its stupid. Although the main points are fine the parts about the drugs and the babies is so incredibly stupid that your life would probably be better if you just ignored those parts. Once again I apologize, I guess this is why school teaches you to reread something before posting it.
We could easily entitle that comment “Josh Noah’s History of the United States” so Im not going to respond to anything. But I think a couple of the issues are worthy of a column or two, so look for those going forward…