Thursday, 27 January 2011

From hemp-wearing hippies to Tea Party patriots: something for everyone in Obama's 2011 State of the Union

Wow. That was impressive. It wasn't even one of his best speeches, but... wow. The more I read about (or this case, watch) US politics, the more impassioned and interesting it seems compared to UK politics. Therefore, here's my assessment of Obama's 2011 State of the Union speech.

Before I start my ramblings, here's a Wordle of the speech, which helps to give an idea of the key themes of Obama's speech. The larger the word, the more often it was used.

Click image for larger. Created on Wordle

Earmark veto
One of the key points to come out of the Address is the pledge that Obama will veto any legislation with earmarks attached to it. This is part of the drive towards less spending in order to reduce the deficit. Earmarks are little addons that members of Congress can stick onto legislation that add funding for projects in their state. The funding requirement may be completely unrelated to the legislation.

My initial thought was, that's a good and decent thing to do. However, as I chronic cynic, I then considered whether it might be a tactical move to empower Democrats in Congress. With a Republican-led House of Representatives, Democrats could utilise the President's promise to their advanatage by seeking to tag on earmarks to legislation they are unfavourable to, thereby guaranteeing that the bill will be vetoed by Obama. So when Obama vetoes Republican-led legislation which he disapproves of, his cover for this action can be that there are earmarks attached, rather than ideological and policy differences.

But Politico suggests my cynicism was misplaced. It seems that the Democrat heavyweights in the Senate, including the irritating Harry Reid, are upset by Obama's pledge to veto all earmarked legislation. Their concerns are actually fairly reasonable, though; they don't simply want the roughly 0.1% of the Federal Government budget spent on earmarks being used by the President in a different way. Either the funds are left alone, or gotten rid of entirely, they demand.

Controversies aside, it's a smart move. Even though the cost of Earmarks is minuscule compared to the total Federal Government spend, it's an important show of solidarity which has been sorely missed in UK politics. When a Government is reigning in spending, likely causing difficulty for the most impoverished in society, it's important to show that those who imposed such austerity are also reigning in their own spending. In contrast to this, the expenses scandal and wealthy Cabinet in the UK Government has made the cuts in spending in the UK more difficult to swallow for some, due to there being a perception of double-standards. It's also a smart move in terms of the President asserting himself and making it clear that he doesn't plan to live up to the idea of being a lame duck President. If he actually follows through with his promise to veto any and all legislation with earmarks attached, it would be victory for the office of the President and a clear signal that Congress cannot push him around.

5-year spending freeze
In contrast to the above hard push to assert his authority was a very clear sign of compromise and common sense. Obama seems to recognise that, with a Republican-dominated House and the increasingly dire Government finances, spending must be brought under control. Even if he wanted to continue spending at current levels, it would result in a Congress divided along party lines and an increasingly hostile public and media with concerns over Government debt. I was pleasantly surprised by Obama's intention to put in place a 5-year spending freeze, as I had expected his attempt to address the deficit and debt to be mostly weak and more symbolic than substantial. On top of his proposal, he even sent out positive messages to Republicans - especially those of a Tea Party persuasion - by saying he'd be willing to work with Congress to implement deeper cuts. This was tempered, however, by the intention to avoid hurting the most vulnerable in society, which I suspect is mostly political spin because in the short-term a spending freeze will affect the poorest the most.

Whilst the spending freeze is likely to help slightly lessen opposition from Republicans in Congress and encourage them to work with him rather than consistently oppose him, there may be concerns from some - particularly the Tea Party-aligned Republicans - who will firstly think that cuts are needed, not just a freeze, but are also likely to be concerned that defence spending is going to see a "cut [of] tens of billions of dollars in spending that he [Sec. Defence] and his generals believe our military can do without."
Again, the cynic comes out. The announcement of the spending freeze has two key political motivations: the first being to lead the way in bipartisanship and therefore seek to reduce the vehement opposition to most of his agenda that the President can expect from Republicans in Congress. He certainly succeeded in coming across as the pragmatic elder statesman in the speech on this issue. Secondly, I suspect the POTUS has his eye on the poll ratings, and with the candidates for the 2012 Republican Presidential election nomination flexing their muscles, he doesn't want to give them ammunition by allowing it to be said that he's done nothing to solve the deficit. By acting on the Government financial issues, but in a less dramatic way than the Republicans would be likely, he will be able to take the line that he's reducing the deficit, but out of necessity and in a compassionate way rather than out of ideology and savagely. This will therefore help him to keep the votes of Democrats who should see Obama as a more sympathetic President, and pick up votes from the centre ground who are concerned about the deficit, but who would not support larger-scale cuts which would be likely under a Republican administration given the party's shift to the Right recently. By reducing the gulf on finances between the two parties, he helps to remove dividing lines which risked leading to wavering voters worried about the finances to abandon Obama in favour of the Republican candidate.
Whilst I was initially impressed with Obama being willing to instigate spending freeze, I also feel then need to point out that the elimination of earmarks, 5-year spending freeze, and cuts of wasteful spending are not going to get anywhere near running a surplus. I used the NYT budget calculator, and in order to stop running deficit by 2015, I had to: Eliminate earmarks, eliminate farm subsidies, cut pay of Government workers by 5%, reduce the number of Government workers by 10%, cut 250,000 government contractors, other cuts to federal Government (eg national parks),
cut aid to states by 5%, reduce the number of troops in Afghanistan and Iraq to 60,000 by 2015, enact medical malpractice reform, increase the Medicare eligibility age to 70, reduce tax breaks for employer-funded health insurance, cap Medicare growth from 2013 onwards, raise the pension age to 68, reduce social security benefits for those on high incomes, tighten eligibility for disability benefits, allow the Bush tax cuts to expire for those earning more than $250,000 a year, and eliminate tax loopholes (Bowles-Simpson plan).
Even if only eliminating the deficit by 2030, most of the above still needs to be done. By a huge margin the largest saving was capping the rise in Medicare to GDP growth+1%, which would save $562bn by 2030. Obama's spending freeze and measly cuts are therefore going to be easily ripped apart by anyone who takes the deficit seriously. There's only so far he can push the reducing the debt through economic growth line; if he wants to be seen as taking the deficit seriously, he either needs to pursue spending cuts coupled with tax rises to soften their blow. Obama risks alienating himself with his stance on the spending freeze; as CBS News notes, 2A literal handful of lawmakers clapped when the president mentioned his spending freeze". I suspect this is because most Democrats are opposed to spending cuts and would prefer tax rises, and most Republicans recognise the need for much, much larger spending cuts if the deficit is going to be tackled in this way.
Personal taxation
However, the President did indicate his intention to readdress the Bush tax cuts which were kept after compromise between the two parties. Whilst he came out in favour of keeping the cuts for middle-class families (US politicians never seem to refer to working class for fear of offending someone), he said that he wouldn't let the tax cuts for the wealthiest 2% go unchallenged. To me singling out 2% sounds a bit weak and measly; it may have sounded better in PR to say the top 10% should not have tax cuts in order to help reduce the deficit further without large spending cuts. But again he successfully saw what will help him to win middle America; it will be difficult for Republicans to defend tax cuts for everyone, including the most wealthy, whilst welfare, health, and defence is being hit.
Investment and encouraging business growth
The announcement of the spending freeze was also tempered by the promise of investment in industries that the President believes are vital to economic growth in the USA. In particular, medicine, IT, and renewable energy. The latter of which I thought was especially notable for its lack of applause from Republicans in the audience and Boehner who had obviously begun to suck two lemons by this point, as opposed to the single one he was sucking throughout the rest.
The intention behind this investment being to continue stimulating the economy, with Obama continuing his pursuit of aspects of Keynesian economics. He attempted to sway those who may have been skeptical of further economic stimulus by the Government by using that old favourite of US politicians creating a bogeyman. This time, it involved invoking fear of China becoming a stronger economy than the USA and sapping jobs and industry from them. Whilst I've called it a bogeyman, it's a very true observation, and if the USA wants to continue to compete with the fast-growing rival in the Far East, it needs to ensure it gets back to consistent growth and attracting investment, and fast.
Similar government action was proposed in widening access to the high-speed Internet, and improving train and road networks to ensure that business and industry can transport goods quickly and with ease.
Aside from government investment in particular industries, he also advocated a clearing of complicated taxation, suggesting that lower business taxes could be expected provided complicated exemptions, loopholes, and reductions were swept away, and to this end, he appeared to encourage Congress to pass legislation which would put this into effect.
Environment and energy
Obama also attempted to reach out to the environmentally-concerned left with his plan to have 80% of America's energy come from renewable sources by 2020. That's a steep target that is unlikely to be met considering it currently only accounts for about 10% of the USA's energy production. Whilst the prospect of throwing money at inefficient renewable energy sources is Al Gore's fantasy, it's unlikely to cause many others particular excitement, especially due to consistent scepticism of man-made climate change. However, as with most of this speech, Obama successfully made the topic one of bipartisan co-operation and compromise, suggesting that he would not ideologically pursue only naff energy sources like wind and solar, but would also be turning to nuclear and natural gas in order to achieve his aims. The reference to nuclear in particular makes it clear that Obama seeks to pursue the pragmatic centre ground on this issue, even if it comes at the expense of upsetting the leaf-eating fake leather-wearing greens. Even those who are not won over by the pursuit of 'green' energy may be in support of the proposals if it means American being more self-dependent for its energy needs, rather than being held hostage by rising prices of Middle-East oil.
Therefore it's likely to be a PR victory on two fronts. Firstly with the moderate greens, so long as they are not ideologically opposed to nuclear power, but more importantly with normal Americans who want cheaper electricity and the peace of mind that the lights won't go off one night and not come back on again the next day.

Government reorganisation
A little bit of the speech which piqued my interest was reference to desiring a "major reorganisation of Government", which is likely to play a small role in the savings of wasteful spending that Obama is pursuing. I inferred that the planned to abolish and merge different agencies and functions, thereby reduce bureaucracy and wastefulness. It was explicitly stated that he would submit these proposals to Congress to vote on and encouraged the legislative body to vote in its favour. I am again sceptical of these proposed changes, and I doubt they will be a particularly effective vote-winning move. Whilst most are likely to be in support of a more sleek, efficient Government, Obama is not promising anything fundamental - there will be no major shift in what Government does and how it operates; it will simply be a case of simplifying and making it more sleek and cheaper. It's not likely to be opposed by many, but neither will anyone get excited about it.
That is, of course, excluding people like me who are sad enough to blog about politics and get excited about this sort of thing.
The level of compromise Obama was willing to make was limited when it came to healthcare. Whilst he said he would be willing to work with any and all in Congress who had good ideas on how the legislation could be changed and improved, he point-blank refused repeal. This was to be expected; it be a disaster from an electoral point of view, with healthcare reform being one of the President's key policy pledges and crowning achievements, but accepting repeal would be and admission that he was wrong and practically hand a on a plate election campaign fodder to the Republicans. Moreover, Obama and most Democrats genuinely believe that the healthcare reform was the right thing to do, believing the new legislation to have made healthcare fairer, more affordable, and to have kept costs down for patients in the future.
Obama can use his unwavering support for keeping the reforms well in his electoral strategy at the 2012 election. First and foremost, the Republicans seeking repeal of the changes - in spite of the assessment that repeal will result in higher costs to government - can easily be portrayed as being an ideological move which not only lacks compassion and goes against the GOP's stated aim of reducing the deficit.
Yet again the President sought to reach out to Republicans through moderate compromise. He appealed to their view that Federal Government ought to interfere less by espousing localism in education, touting the view that schools don't get better as a result of top-down Government intervention, but through good teachers and dedication at a local level. To this end, he tugged at the heartstrings of young Americans, appealing to their sense of patriotic duty by calling upon them to become a teacher if they want to make a difference. The aspects of the speech relating to education were not particularly enticing or exciting; it was simply an continuation of the Clinton-esque view tha "the era of big government is over."
A little bit more of interest was said in this area. Obama brought up the DREAM Act, legislation which would give young illegal immigrants a path to citizenship. This was recently blocked from moving to the vote stage by Republicans in the senate, concerned about rewarding illegality. Obama's suggestion that he will continue to pursue this legislation shows guts and a moral conviction in the President. It is the right course of action to pursue, though it is a difficult bit of legislation to get right in order to appease the legitimate concerns of Republicans. Therefore, it is likely that the process of compromise and concessions will continue, perhaps with the legislation being watered down further before it can gain the support of Republicans in Congress.
Obama will be able to argue the cause to the public on two fronts. The first one being most appealing to liberals being the humanitarian issue of allowing those who entered the USA illegally whilst children to avail themselves of the opportunities the US offers without living in fear of deportation. However, for those more sceptical of this, there is the argument of more manpower in the military, due to one of the routes to citizenship being serving in the army; and more educated manpower for the economy, since an alternative route is by attending university.
That's just about it. Overall, it wasn't one of his best speeches, but it was impressive. There was a clear commitment to bipartisanship and cooperation, but an otherwise good State of the Union was let down by the proposal to freeze spending for five years. It draws attention to the necessity of reducing the deficit, but is ineffectual for tackling it.

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