SOTU 2013: False Hopes And Distortions Dominate President's Speech

The president delivered his first State of the Union address of his second term on Tuesday night. The speech was chock full of promises that will not be kept; class warfare, which is wreaking havoc on our nation; and exaggerations about the health of our economy. 

The false hopes that pervade statements by President Obama are astounding. Let’s look below the surface of some of Obama’s major themes in his SOTU address. 

The economy and jobs

True, the stock market is improving for the time being, which will be a boon to investor confidence, to pension funds, and retirement accounts that Americans depend upon. But, is the economy markedly better? Last quarter, GDP declined 0.1%. Prospects for 2013 are tepid at best, as some economists are projecting GDP growth at about 2.5%, compared to an Obama estimate of 4.2%. Unemployment continues to hover at 7.9% and is not expected to decline to 6.5%, the Federal Reserve target, until 2015. 

The irony is that the celebration encouraged by the president is not in order and far too premature. African Americans, who are suffering the most in the present environment with an unemployment rate of 13.8%, are still leading the Obama parade. Similarly, millennials continue to support the president in spite of high unemployment rates (13.1%), greater tuition costs (up 439% since 1982), higher debt ($1 trillion), and the specter of decreased Social Security and Medicare services in the future

The national debt crisis

Many informed people, excluding Obama and Paul Krugman of the New York Times, are finally stipulating that our nation’s debt is too high as a percentage of GDP and that entitlements could bankrupt our country in the not to distant future if they are not reformed. The timing will coincide with the ascension of millennials to the most important positions in America and their dependence upon federal support. Unfortunately, millennials will not receive the same level of services from their government as their parents and grandparents unless huge changes are made. 

Social Security and Medicare will engulf the tax receipts of our nation in the coming years. Then, all discretionary expenditures will have to be funded with more debt or by printing new money. The latter will create an era of devastating inflation for the next generation. 

Class warfare

Perhaps the most devastating political ploy at work is the president’s continuing war against the affluent; he attacked this group numerous times in his speech in subtle and not so subtle ways. Obama does not represent all of America, as he has chosen to abandon and demonize 1% of our citizenry. He has wantonly turned the nation against certain Americans because they are successful, an odd justification for his actions. Our nation has become the greatest in the world through hard work in a capitalistic system. The president seeks to destroy this system along with American exceptionalism as he caters to the most radical elements in his political base and rams his ideology down the throats of all Americans. 

The irony is that Obama needs to create or encourage the creation of new jobs. Astonishingly, he has been unable to understand the fact that the principal sources of new employment in the country are wealthy Americans and the businesses they manage. 

The president has already extracted billions from the wealthy by increasing their taxes, and his sense of balance is to continue an assault on the affluent by eliminating loopholes. This strategy would be comical if it were not so shortsighted and unproductive. Increasing taxes only on the rich cannot correct revenue shortfalls, the numbers do not add up. The middle class will have to pay more if our nation eschews spending cuts. So much for shielding the middle class. 

A second irony is that loopholes Obama and his ultra-liberals want to eliminate will be protected by middle class special interest groups, real estate interest and tax deductions by the real estate lobby, charitable contributions deductions by the not-for-profit lobby, taxation of free health care by the medical lobby, increased capital gains taxes by the securities industry lobby. 

Affluent people will not lead the charge against the president’s loophole strategy, nor will they be dramatically affected by the loss of some deductions. However middle class workers will feel the pinch. 

Health care 

The president continues to falsely contend that health care costs are decreasing. Certainly, some individual cost savings have been implemented, but Americans on the whole are paying more for health care and health insurance everyday. And, what of the $1 trillion cost of the program? Are these expenses being offset by cost reductions as originally promised? Hardly, the president’s arithmetic, once again is faulty if not outright misleading.

Sequestration

Ironically, the sequestration is a positive step towards sanity relating to federal spending. The problem is that it is not being targeted correctly. For some inane reason, the president and Congress created a mini doomsday strategy that would force them to compromise. Do any Americans believe there is no waste in our defense budget? That congressmen protect unproductive defense programs in their districts to retain jobs? Or that there are no social programs that are antiquated and should be terminated? 

The president twists the sequestration issue by saying that conservatives are conspiring to end welfare, take food out of babies’ mouths, and decrease the nation’s security and ability to fight those who would attack us. The entire conversation is untrue, insulting, and inflammatory. 

Balance

For the president, balance means more taxes for the rich. Taxation of the affluent seems to be the only arrow in Obama’s quiver. As I alluded to earlier, the liberal resolve to avoid entitlement reform will eventually increase taxes for the middle class. Consider recently elevated payroll taxes, one of the harshest forms of taxation that affect even poor people. The country’s spending problem is so destructive and the deficits so great that the administration did not dare suggest freezing FICA payments for the middle and poor classes. It would have easily taken the current fiscal deficit far in excess of $1 trillion; the attainment of deficits less than this amount in 2013 is therefore a facade. 

Balance should include efforts by Congress to reform entitlements now. They are excessive considering the country’s current tax rates and debt levels, and they are based upon demographic assumptions that are no longer reality. The national debt will increase when taxes are less than spending, unless the money supply is increased. It would be terrific to have no restraints, but in the long run, even the all-powerful United States of America must balance its books because it cannot increase its debt in perpetuity. 

What is the solution? Simple, new jobs, then more jobs. Congress must incentivize businesses to hire more and spend more. Why don’t our lawmakers consider a new tax on businesses who do not increase employment by 5%? There are many things Congress could do to encourage hiring, which would increase tax rolls and decrease welfare costs. 

In his address, Obama presented some very good proposals to decrease the danger of gun ownership in the country and a plan to educated preschoolers (not sure how he will pay for the second item), but the speech contained too much of the same attitude, false promises, and rhetoric of the past.

I suspect the president is going to face an enormous amount of obstruction from his opponents, which I fully support.