Thursday, January 28, 2010

State of the Union (Part 1) - Defiant

Stubborn even. 

Obama's State of the Union address gave no indication of so much as a course correction aside from a partial freeze on spending increases.  Health Care -- game on.  Economic meddling for "jobs" -- game on.  While Obama is not the only person who failed to learn any lessons from the Scott Brown election, he is surely the most consequential.  Foreshadowed by his quasi-populist anti-bank rhetoric of late, Obama has made a conscious decision to shun the centrist path.  At times in the speech he projected this arrogance with a snarky, sarcastic tone.  And they say George Bush was hubristic!  This will be his political undoing.

Obama in the SOTU (bold added, full text quoted from the Daily Caller):

Our most urgent task upon taking office was to shore up the same banks that helped cause this crisis. It was not easy to do. And if there’s one thing that has unified Democrats and Republicans, it’s that we all hated the bank bailout. I hated it. You hated it. It was about as popular as a root canal.

But when I ran for President, I promised I wouldn’t just do what was popular – I would do what was necessary. And if we had allowed the meltdown of the financial system, unemployment might be double what it is today. More businesses would certainly have closed. More homes would have surely been lost.

So I supported the last administration’s efforts to create the financial rescue program. And when we took the program over, we made it more transparent and accountable. As a result, the markets are now stabilized, and we have recovered most of the money we spent on the banks.

Right there, Obama very nearly took credit for the financial rescue.  At other times he and others have been less cautious about that.  Now, there has been some confusion on the right about this as well.  Many conservatives, particularly those identifying with Austrian school economics, were totally against any bank bailout.  (I favored a bank bailout for reasons that go beyond the scope of this post.)  Perhaps by some reflexive opposition, perhaps partly as a defensive against Obama's TARP vote, the administration has taken rhetorical ownership of TARP.  Obama's main impact on the TARP, however, has been using it to bail out the auto companies, and by proxy, the UAW.  Secondarily, it was the Obama administration that was reluctant to let banks out of TARP.

To recover the rest, I have proposed a fee on the biggest banks. I know Wall Street isn’t keen on this idea, but if these firms can afford to hand out big bonuses again, they can afford a modest fee to pay back the taxpayers who rescued them in their time of need.

I already covered this in a previous post, but Obama wants to tax banks from which he's already recovered money in order to make up for others (such as GM and Chrysler) where we will never recover the money.  Justification: they can afford it.  Not, "they still owe us", but "they are out of political favor".

Let me repeat: we cut taxes. We cut taxes for 95% 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. And we haven’t raised income taxes by a single dime on a single person. Not a single dime.

 While the "making work pay" tax credit of 6.2% (a rate coincident with the employee's half of Social Security taxes, but capped at whopping $400, which works out to be the first $6,452 of wages) was surely welcome, a better solution would have been an uncapped payroll tax credit shared between employees and employers.  This would have had the effect of subsidizing labor, and would have been a better tool against unemployment.

But they screwed up the homebuyer credit, nearly allowing it to expire at the end of November before renewing it, causing a jump in November sales followed by a cratered December figure.  Unmentioned anywhere in the SOTU was the Cash for Clunkers plan, a complete fiasco.  (More on college later.)

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.

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. But you don’t have to take their word for it.

Well, construction employment fell, the "shovel ready" jobs did not exist, and "clean energy jobs" are a colossal boondoggle costing more than they are worth.  As to public sector jobs saved, there is some partial truth to that, but money is fungible, and the federal support for these positions only prevented the much needed cleansing of other wasteful state and local spending.  For the most part it wasn't the teachers on the line, it was corporate welfare and pet political projects. 

And are conservative economists really on board with the stimulus?  Really?

Obama followed up with some anecdotes, which are completely worthless from any empirical perspective.

But I realize that for every success story, there are other stories, of men and women who wake up with the anguish of not knowing where their next paycheck will come from; who send out resumes week after week and hear nothing in response. That is why jobs must be our number one focus in 2010, and that is why I am calling for a new jobs bill tonight.

So let me get this straight -- positive anecdotes are evidence that you did well, and negative anecdotes are evidence that you need to do more of what you did before that supposedly worked so well.  So absolutely nothing will dissuade the President from this course.  Okey-dokey.

I'm not overly wild about the small business tax credits he discussed (mostly because of their arbitrariness), but they're certainly not the worst thing ever.  Of course, the time to have done all of this was about a year ago.

The infra/high-speed rail stuff will probably end up being Amtrack 2.0, or the fictional Springfield Monorail writ large, but infrastructure is at least a conceptually good idea.  Of course, infra is long term, not so much short term, so yet again we're a year behind the eight ball here.

From the day I took office, I have been told that addressing our larger challenges is too ambitious – that such efforts would be too contentious, that our political system is too gridlocked, and that we should just put things on hold for awhile.

Actually, you were told they were bad ideas, and that they should be scuttled entirely.  I never bought this Chris Matthews-esque "too far, too fast" analysis.  It's not too far, it's just wrong and unwanted.

You see, Washington has been telling us to wait for decades, even as the problems have grown worse. Meanwhile, China’s not waiting to revamp its economy. Germany’s not waiting. India’s not waiting. These nations aren’t standing still. These nations aren’t playing for second place. They’re putting more emphasis on math and science. They’re rebuilding their infrastructure. They are making serious investments in clean energy because they want those jobs.

...and the Soviet Union will overtake us within the decade.  Japan didn't wait after their lost decade and they're doing w--- oh wait, they're totally screwed.  Never mind.

As to the financial reforms in the House, they're not all bad, but they're not all good either.  Saying "the lobbyists" are opposing the bills is sheer demagoguery. 

See if you can catch the wildly illogical transition here:
Next, we need to encourage American innovation. Last year, we made the largest investment in basic research funding in history – an investment that could lead to the world’s cheapest solar cells or treatment that kills cancer cells but leaves healthy ones untouched. And no area is more ripe for such innovation than energy. You can see the results of last year’s investment in clean energy – in the North Carolina company that will create 1200 jobs nationwide helping to make advanced batteries; or in the California business that will put 1,000 people to work making solar panels.

But to create more of these clean energy jobs, we need more production, more efficiency, more incentives. That means building a new generation of safe, clean nuclear power plants in this country. It means making tough decisions about opening new offshore areas for oil and gas development. It means continued investment in advanced biofuels and clean coal technologies. And yes, it means passing a comprehensive energy and climate bill with incentives that will finally make clean energy the profitable kind of energy in America.

He begins talking about innovation, which is fine.  There's a conservative/libertarian argument against funding research, but I think there's a place for it despite its flaws.  Obama's correct, we need more efficient alternative energy technology.  But he goes straight from that truth into a ridiculous argument about subsidizing the old technologies that are proven to be insufficiently economical.  Such funding is economically and ecologically counterproductive -- wasteful insanity.  And don't even get me started on biofuels, or that asinine Cap & Trade bill.  (I love that the "overwhelming scientific evidence" drew laughter.)

So tonight, we set a new goal: We will double our exports over the next five years, an increase that will support two million jobs in America. To help meet this goal, we’re launching a National Export Initiative that will help farmers and small businesses increase their exports, and reform export controls consistent with national security.

More arbitrary central planning.  Reminded me of when Mao tried to double Chinese steel production in the Great Leap Forward, or some Soviet Ten Year Plan.  And Obama's toolbox for trade looks like a box of matches ready to set flame to a trade war.  That should turn out well.

Obama showed some real chutzpa talking about education after they killed the DC voucher program.  The Department of Education was founded in 1979, and since then it has yet to serve a terribly productive purpose in K-12 education.  As for college, there are too many students entering college.  The entire system of funding higher education is broken, colleges and universities are not accountable for the quality of their product, and throwing more money at the system will not improve education.  It's laughable that Obama should talk about increasing college aid while simultaneously declaring, "it’s time for colleges and universities to get serious about cutting their own costs..."

Health care -- been argued to death, but Obama's clearly not backing down from an overwhelming popular opposition to his plan, or anything that even smells like his plan.  There is hope for America yet, if not for Obama.

As temperatures cool, I want everyone to take another look at the plan we’ve proposed.

We had about a year of looking at the plan.  We don't like it.   More time and "another look" won't help.

But if anyone from either party has a better approach that will bring down premiums, bring down the deficit, cover the uninsured, strengthen Medicare for seniors, and stop insurance company abuses, let me know. Here’s what I ask of Congress, though: Do not walk away from reform. Not now. Not when we are so close. Let us find a way to come together and finish the job for the American people.

What a joke. Obamacare would not bring down the deficit, covers a fraction of the uninsured at a massive cost, and weakens Medicare by robbing it of funds for other uses.  In most respects the status quo is better than Obamacare.  But nobody is defending the status quo, that's just another straw man.  Obama's calls for a better plan are empty bluster, and in the same breath he calls for Congress to finish the same old miserable job it has started.

[As Jake Tapper noted, the state of our union is LONG.  I'll finish this later.]


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