State of the Union Address: ... the Bad ...

In my most recent post I talked about the “good”, or the parts of the State of the Union address in which I like what President Obama said, even though I doubt that what he says and what he means are always the same. This time, my focus is on the “bad,” what he said that I don't like. Next will come the “ugly.” Early in his speech, President Obama proposed a “fee” (euphemism for tax) on the largest banks in order to recover the money that was lent to some large banks in the TARP program, otherwise known as the bank bailout. What is bad about his proposed fee is that it isn't aimed at the banks that still owe the government money, but it is a tax on large banks in general. Extracting repayment from banks who haven't paid their debts is one thing and is good; punishing banks just for being big is wrong. It is just taking political advantage of the fact that large banks are unpopular. Not that the large banks are going to get hurt much; they will pass the extra cost on to their customers.

The President claimed that two million workers who would otherwise be unemployed have jobs because of the American Recovery and Reinvestment Act. His allegation is based on what the recipients of the stimulus money told him about jobs that were “saved or created” by the money paid out so far. There is a strong conflict of interest here – the recipients are motivated to claim that they created or saved jobs in order to continue to receive funds. I don't believe that there is any serious verification of the numbers of jobs actually saved or created, again because of a conflict of interest; the administration wants to claim great success for the Recovery Act and verifying the numbers might make them lower and less supportive of claims of success. While it is clear that the Recovery Act has been expensive, it is far less clear that it has saved or created any jobs when you consider the jobs lost because businesses hesitate to hire when government policies make the future of business so uncertain. The President proposed in his speech more of the same, except this time he calls it a “jobs bill,” in part because, the American Recovery and Reinvestment Act came to be called the “stimulus bill” and acquired a reputation for being expensive and ineffective. Doing the same thing again, but changing the name will not improve the results.

The President wants an energy and climate bill to “make clean energy profitable”. He was apparently referring to the cap and trade bill that had already passed the House of Representatives. What cap and trade will do is make most kinds of energy that people actually use much more expensive and decrease supply by making energy production less profitable or unprofitable, which will be devastating for the economy and would make hardly a dent in whatever global warming may be occurring. If clean energy requires subsidies from taxpayers for the companies that supply it to make a profit, then the clean energy isn't really profitable; what is profitable is getting favors from the government. If getting favors from the government is profitable, then that increases the influence of lobbyists, which is something that the President claimed he opposes. Despite the President's assertion that there is overwhelming evidence of climate change caused by greenhouse gas emissions, much of the “overwhelming evidence” is overwhelming only because data that didn't support the notion of global warming has been suppressed. Then he said that the nation that leads with a clean energy economy will lead the global economy. Not if Spain is any example. Spain spent much money subsidizing a “clean energy” economy only to see its debt and unemployment rates climb as a result.

The President said that he plans to end subsidies to banks for student loans. I like that idea because I am generally opposed to subsidies, but what he really meant is that he plans for the government to completely take over the business of making student loans. That does not represent an improvement. Taxpayer money is still spent to subsidize student loans but the people administering them will be government employees instead of bank employees. The improvement is – what? The President proposed that no student would be required to pay more than ten percent of his or her income to repay a student loan and the balance would be forgiven after 20 years, or after 10 years if the former student enters “public service.” Pardon me, but even though I have spent a career in the federal government and am presently employed part-time by the State of Connecticut, I reject the idea that people who are working in the private sector are serving the public any less than those who have government jobs; nearly all provide a valuable service and some in the private sector are serving the public more than those in the public sector because their compensation and even the existence of their jobs is more closely tied to performance.

The worst part of the speech was President Obama's continued support for “his” health reform plan. It changed from a health care plan to a health insurance plan when it occurred to him that health insurance companies were unpopular and could be demonized. Also, he has never really laid out what “his” health insurance reform bill is. The versions that passed the House and the Senate have several major differences between them. Is one of them his and the other not? Is his plan something that differs in some way from both? What exactly is his plan? His claim that Americans opposed the health insurance reform bills because he didn't explain them well enough is arrogant and untrue. He has made televised speeches, many containing health reform in the subject matter, on a regular basis. It hardly seems likely that he hasn't made enough speeches! Also, the more time the public has had to learn the contents of the proposed legislation (in either the House or Senate version), the less popular it becomes. It isn't because the public does not understand the proposed health insurance reform legislation that it is unpopular, it is because the public does understand it. President Obama then repeated his mantra that if anyone has ideas to bring down the cost of health care without reducing quality and without increasing the deficit, he would like to hear them. No, he wouldn't! The ideas are out there, but he is deaf to any proposal that does not increase the government's role in health care. I can't go into to much detail about better ideas for reforming health care without making this post unreasonably long, but I will mention some briefly. Tort reform would reduce the cost of health care by reducing what doctors have to pay for malpractice insurance. Insurance plans with coverage for only catastrophic medical conditions combined with health savings accounts for more routine care would reduce the cost of insurance by making patients more aware of costs and reducing administrative expenses. Shifting the tax advantages of buying insurance from employers to insured persons would make give consumers more control of the costs of health insurance and health care. Allowing insurance companies to sell each insurance policy in all states instead of individual states would give consumers more choices and reduce the cost of insurance premiums by promoting competition between insurance companies. Instead the health insurance reform bills passed by each house of congress give consumers less choice and less control and drive up costs of providing insurance while doing little or nothing to decrease the cost of providing health care. I intend to write more about health reform later. For now, it is enough to say that the proposals that the President supports are almost entirely backwards from what would provide the best health care to the most people at the least cost.

State of the Union Address: The Good ...

I looked forward to the State of the Union address this year because I was curious about what the President was going to say after the Democrats' loss of a Senate seat in Massachusetts marked the death, or at least a significant delay, of the health care reform legislation that President Obama had been pushing so hard for the last year. He had wanted the legislation to pass before the State of the Union address. Now, what would he talk about?

I found that President Obama said some things that I like, some that I didn't, and some things that were inappropriate. Therefore, I was going to write about the good, the bad, and the ugly, but I found out that saying everything I wanted to say about all three could lead to a blog post nearly as long as the speech itself, so I will just talk about the good this time.

Barack Obama is excellent at delivering speeches and as a politician is also excellent at saying things that people like to hear, including people that disagree with his policies. There are some things he has said over and over again that I agree with, but about which you have to doubt his sincerity because he says one thing and does another. Examples of things I keep hearing him say that I like but are contradicted by his actions are that he wants to be a “post-partisan” President and bring the parties together, that he wants to reduce the influence of lobbyists and special interests in government, and that he is willing to consider all ideas from whatever source.

President Obama has taken a step toward bipartisanship, but it wasn't until after the State of the Union address, and of course after he had been President for a little more than a year. He recently met with Republican members of the House of Representatives in Baltimore. Before that, he had rarely talked with anyone outside his own party. Apparently, he didn't see the need, considering that his party had a significant majority in the House and a “supermajority” of 60 Senators in the Senate. Because of a Senate rule that has existed nearly as long as the Senate itself, it takes a vote of 60 Senators to stop debate on a bill. Without the 60 votes, a minority can filibuster, which means to debate the bill endlessly so it never comes up for a vote. Technically, this means that if he can get all the Democrats to agree on a bill, the Republicans have no power whatsoever. That may work in theory, but in the real world, major legislation is rarely passed without bipartisan support. What the President didn't count on is that not all Democrats think exactly the same and that even without the need to compromise with Republicans, there remained the need to compromise among Democrats. President Obama originally wanted health care reform legislation to pass before the end of July. However, the process of compromising to get bills that got enough Democratic votes to pass delayed the process until Christmas Eve, when the Senate passed a bill similar to, but not identical with the one that the House had previously passed. Since the bills that the House and Senate pass have to be identical before they can become law, more compromise was needed to make them identical. More compromise meant more delay and the delay extended beyond the date of the special election in Massachusetts that deprived the Democrats of the filibuster-proof supermajority in the Senate. So now, to get any major legislation through Congress, the President is forced to do what he should have done voluntarily all along and negotiate with Republicans. If he or the Democratic leadership in Congress had negotiated with enough Republicans to get some of their votes, they probably would have health care reform legislation. Instead they played an all-or-nothing game and, at least so far, have gotten nothing.

As for reducing the influence of lobbyists and special interests, the President has placed several people who had been lobbyists in his cabinet and White House staff. Don't like lobbyists, Mr. President? Then why surround yourself with them? He also made a big deal about accepting ideas from whatever source. Specifically, regarding health care reform, he said that if anyone had any ideas that would make high quality health care more affordable and more available to more Americans without increasing deficits, he is ready to listen. No, he isn't! Several Republicans have suggested ideas that could do exactly that – make high quality health care more affordable and more available to more Americans without raising the deficit. Such ideas include (but are not limited to) tort reform (putting a limit on punitive damages that can be awarded in a medical malpractice suit) and allowing purchase of health insurance across state lines to promote competition and make more kinds of policies available to consumers. Tort reform is not going to happen in legislation that is passed only by Democrats because trial attorneys are one to the biggest sources of campaign contributions to the Democratic party. The President and others in his party may not agree with those ideas, but instead of saying so and arguing against them, they claim that the Republicans offer no ideas and are “the party of no.” I have a lot more to say about health care reform, but I will save that for the future and stay closer to the State of the Union address for now.

President Obama said other things in the State of the Union address that I liked and that surprised me because I had not heard him say them before. They included support for a new generation of safe, clean nuclear power plants, development of gas and oil offshore, and clean coal technology. He also supported biofuels, but I am undecided whether biofuels, such as ethanol and biodiesel, are a good thing or not. I have too much to say about energy to include in this post, so I will save that for the future. In any event, I would like to see some evidence that his unexpected support for nuclear energy, offshore drilling, and clean coal are serious or just words to appease independents. He also mentioned increasing trade with South Korea, Canada, and Colombia. Since the Congress has refused to ratify free trade agreements with South Korea and Colombia that were negotiated during the Bush administration, I'd say ratifying those free trade agreements is long overdue – and still not likely to happen. Since I work part-time for a community college, his support for revitalizing community colleges is in my personal best interest. However, I don't assume that what is in my best interest is also in the best interest of the American people. A lot depends on the details.

The President talked about cutting taxes on business to stimulate the economy and about tax cuts for the middle class. He would eliminate capital gains taxes on small businesses and providing tax incentives to businesses of all sizes for investments that would lead to hiring more employees or increasing wages. He talked about having tax cuts for the middle class, but when he started talking about specifics he talked about tax credits for raising children, going to college, buying a home, saving energy etc. It is good for taxes to go down, but lowering taxes by tax credits is using the tax code to influence people to behave in ways that the government wants them to behave rather than to raise revenue. It is one of the things that makes preparing tax returns such a chore and waste of time. If the government wants to lower taxes, it should just lower the rates. The tax code needs to made less complicated, not more complicated. Still, I suppose that a complicated plan for reducing taxes is better than none, so on balance I would say that his plan to reduce taxes on individuals and businesses so that businesses can employ more people and individuals have more money to live on is a good thing. However, compared with spending, taxes are a minor and short-term issue, because money that is spent has to be paid with either taxes or borrowing. Borrowing only postpone taxes; it does not replace them. That is the lead-in for the next discussion, the parts of the State of the Union address that were bad.

Serendipity

Serendipity is running across something good that you weren't looking for.  For those of us whose political perspective tends to be conservative or libertarian, who would have thought that that would describe the election of Barack Obama as President of the United States, with the election at the same time of a House of Representatives that is overwhelmingly Democrat, and followed (since the election of Senator Al Franken was delayed for so long) with a filibuster-proof Senate majority?  As it turns out, it seems like the far left of the Democratic party has been unwittingly hanging themselves and the American voters had been furnishing them the rope to do it with.  A couple of months ago, Glenn Beck drew heat for remarking that it may have been a good thing for Barack Obama to be elected because the sudden lurch to the left woke Americans up as the slower drift to the left by electing John McCain would not have.  Now it appears that the substantial majorities that the Democrats had in both houses of Congress under the leftist leadership of Nancy Pelosi and Harry Reid has had a similar effect.  Both houses of Congress passed health care reform legislation that came within a hair's breadth of being foisted upon an American public that for the most part didn't really want it.  Even the voters of Massachusetts (hardly the most conservative lot in the country) woke up to what was happening and effectively killed the health care reform legislation by given a convincing victory to Scott Brown as their newest Senator in a special election to fill the seat held so long by Ted Kennedy.  That was a sign that the American public has heard the wakeup call.

Think about what would have happened if Al Franken had not been elected to give the Democrats their 60th vote in the Senate.  Obama, Pelosi, and Reid would still be determined to pass health care reform that slanted as far left as they could get away with.  However, lacking the 60 votes needed to break a filibuster in the Senate, they would have had to compromise to get a bipartisan bill and instead of having an atrocious bill that failed to become law, they would have had one nearly as bad that did become law.  The Democrats would also not have had to take complete ownership of terrible legislation and could share the blame.  As it turns out (for the period before Scott Brown's election in Massachusetts) by getting what they wanted from the voters, the left wing of the Democratic Party failed to get what it needed.  For everyone else, serendipity.