The following is a continuation of my Wednesday, January 13, 2016 post where I outlined, according to dailysignal.com, where Obama got it wrong in his last State of the Union Address. Of course, Obama gets everything wrong.
- The current president talked about long-term economic trends squeezing workers. He should have made it clear this squeeze is a recent phenomenon. Data from the Congressional Budget Office shows that workers at every income level prospered between 1979 and 2007. During that period, non-elderly households in the middle quintile saw their labor market earnings rise by a third. Households in the poorest quintile saw the labor market income rise well over 50 percent. From the Reagan presidency until the “Great Recession,” American economic opportunities expanded up and down the income ladder. Since the recession and the slow Obama recovery that has changed. Between 2007 and 2011, labor income for non-elderly households in the middle quintile dropped roughly 10 percentage points. These problems have predominantly occurred on Obama’s watch.
- The current president also said in his speech that Social Security and Medicare are more important than every; we shouldn’t weaken them, we should strengthen them. Beyond catering to his political base, Obama offered no details on how he would strengthen these programs. He has failed the nation during his term thus far when it comes to reforming Social Security and Medicare. One of every R10 produced by the U.S. economy in fiscal year 2015 was spend on only three federal programs. Social Security, Medicare, and Medicaid. These three programs alone consume more than half of all federal spending and they are growing rapidly. The next president must lead on entitlement reform upon entering office.
- Obama has suggested sending unemployment insurance recipients through federal job training. However, evaluations find one of the major federal job training programs makes it harder for workers to get jobs. The federal government funds “Trade Adjustment Assistance” benefits for workers who lose their job to foreign trade. The program includes generous federal subsidies and free job training. When Mathematica evaluated the program, it found participants made $27,000 less than workers outside the program. What were the results? Trade Adjustment Assistance encouraged jobless workers to enroll in federal job training programs instead of looking for new work immediately. But the job training didn’t improve their job prospects. So, they wasted over a year when they could have been job hunting in a training program that prospective employers did not values.
- In his speech, the president made a cursory mention of infrastructure, claiming that if only the federal government would spend more taxpayer money (gleaned from higher taxes on fossil fuels), the government can put tens of thousands of Americans to work on building a 21st century transportation system. While this may sound good, using government spending to stimulate job creation was a cornerstone of the Obama stimulus plan that ultimately failed to produce the shovel ready jobs that Obama promised. A big problem is that the infrastructure projects take a long time to plan and require highly skilled labor, meaning that spending on these projects is ineffective at creating new jobs for recently unemployed Americans, most of whom lack the necessary job skills. Federal promises of job creation and effective infrastructure investment have floundered. Rather than continuing the one size fits all approach out of Washington that has left millions of Americans stuck in traffic, the federal government should get out of the way to empower the state and private sector, who can best gauge local priorities to truly build a 21st century transportation system.
- In his final SOTU, the president suggested that the proposed Trans-Pacific Partnership (TPP) would open markets, protect workers, and the environment, and advance American leadership. The key factor for Congress to evaluate will be whether TPP really does promote open markets and economic freedom. If it does, workers and the environment will benefit. The latest rankings of trade freedom around the world in the Heritage Foundation’s forthcoming 2016 Index of Economic Freedom, confirm that citizens of countries that embrace free trade are better off than those in countries that do not.
- President Obama’s suggestion that government should become further entangled in the education and care of the youngest Americans would not serve children or taxpayers well. Washington already has a poor track record engaging in K-12 education, with federal spending more than doubling over the past three decades while academic achievement and attainment has languished, particularly among low income students. Further federal intervention in preschool and childcare will crowd out the private provision of care, increase costs for taxpayers, and will fail to create lasting academic benefits for children, as recent evaluations of state and federal programs have demonstrated.
- The president’s proposal to provide free community college is not the solution to the college affordability problem. Students who are low-income already have access to federal student aid such as Pell Grants, which can be used to finance the cost of attending community college. So, the proposal will serve as little more than a federal handout to the community college system. Furthermore, America’s 1.2 trillion student loan tab presents a serious problem in our economy. Americans would be better served by policies that actually help to lower higher education costs, making higher education an engine of upward mobility for Americans who choose to pursue it.
This article and my previous article on the SOTU, doesn’t touch on foreign policy. So, it looks like an additional article will be necessary in order to illustrate just how wrong the president has been on everything.