SOTU 2011 Post-Game Analysis - Spend Spend Spend

To summarize Obama's SOTU, stay the course on spending and don't change the substance of the agenda. As Rand Paul noted, Obama still sees government as the solution to all of our problems (both real and imagined, I would add). If anyone heard in Obama's SOTU speech a move to the center, they were listening to the mellifluous tone of Obama's voice and not paying any attention to the lyrics of his siren song.

Obama stepped up to the teleprompter at a time when our economy is in deep trouble. Growth is tepid and far below where it should be coming out of a recession. A record forty one million people in the U.S. are on food stamps. Housing prices have sunk faster and lower than Katy Couric's Nielsen ratings. The cost of basic commodities - oil, gas and food - are going through the roof. Real unemployment, UH-6, is at 16.7% - and that is actually up from a year ago. So how does Obama address these problems in the opening of his SOTU speech? He puts a happy face on it:

“Two years after the worst recession most of us have ever known, the stock market has come roaring back. Corporate profits are up. The economy is growing again.”

It was a disingenuous start to a disingenuous speech.

Two days ago, I forecast what Obama would say in his State of the Union speech with fair accuracy. The majority of Obama's speech was given over to justifying more spending for his radical green agenda, to hire more teachers, and to pay for another stimulus under the guise of infrastructure spending. And when it came to deficit reduction, Obama tried to portray Obamacare as the heart of deficit reduction. To my surprise, he mentioned entitlements, but he did so only in passing. Obama also offered a freeze of entitlement spending in an act of symbolism over substance. Lastly, when it came to “reforming government,” Obama hyped reducing the regulatory burden, yet said nothing about the tsunami of regulations waiting in the wings.

To give the devil his due, Obama did make some very good proposals in his speech:

: Reforming the corporate tax – As a general principal, this is a positive step. Obama said he wants Congress to reduce our corporate tax from the current rate of 35%, the highest in the developed world. He did not propose a new rate, but said that any such reform should be “revenue neutral." That is bad news, as it means it will not promote growth. That said, if it means getting rid of ALL the subsidies that special interests have worked into our tax code, then great. But Obama made crystal clear that he wants to heavily subsidize his favored industries, particularly the green ones. So it would seem that Obama's call for tax reform may in reality be a backdoor way to soak businesses in America to fund Obama's version of crony capitalism. We have to see the details on this one.

: Medical Malpractice reform – this is incredibly important if we are ever to bend down the cost curve of medical expenses. I am glad that he mentioned it, but it is likely a red herring. The left, owned in part by the trial lawyers lobby, would sooner chew off their right arm than pass national med mal reform. To date, neither Obama nor Congressional Dems have shown the slightest interest in anything beyond lip service to med mal reform.

: Race to the Top – this relatively inexpensive program program, $4 billion, is in fact a good program aimed at encouraging reform in state educational systems. It deserves full support from both sides of the aisle.

: Earmarks – Obama announced that he won't sign any bills with earmarks in them – weeks after the House promised not to send him any bills with earmarks. This was like watching the movie Dragonslayer, where at the end of the flick, the King walks up to the recently slain dragon, puts his sword through it, and has himself proclaimed "King Casiodorus, Dragonslayer." What a tool.

: A Reorganization and streamlining of our regulatory agencies – On the surface, this sounds like a very good idea. But I suspect there will be an infinite number of devils in the details.

Okay, now on to the ridiculous assertions and other low points of the speech:

I. Innovation -

Obama called for “innovation,” using the symbolism of a “Sputnik moment,” the point when America turned its attention to manned space flight and a lunar landing. He then stated that government spending was a necessity for innovation and made clear that his main concern was funding his radical green agenda:

"This is our generation's Sputnik moment."

The irony here is amazing. Our efforts at manned space flight did pay a lot of dividends for America – velcro, teflon, robotics, scanning technology, and scratch resistant lenses to name just a few. Yet Obama, who now calls for a “Sputnik moment,” is the man who killed off our manned space program so that he could spend more money on Obamacare – no doubt to increase innovations in socialism.

Our free enterprise system is what drives innovation. But because it's not always profitable for companies to invest in basic research, throughout history our government has provided cutting-edge scientists and inventors with the support that they need . . .

Apparently our corporations are incapable of conducting research and coming up with ideas without government intervention and massive infusions of our tax dollars. One, Obama wants to pick winners and losers in our economy – he fully embraces crony capitalism. Two, the proposition that our scientists and businesses cannot innovate without government subsidies and direction is simply too ludicrous to seriously entertain. Perhaps Obama should do some research on the issue over his I-pad, or make a call to the patent office on his cell phone.

In a few weeks, I will be sending a budget to Congress that helps us meet that goal. We'll invest in biomedical research, information technology, and especially clean energy technology . . .

Already, we are seeing the promise of renewable energy. Robert and Gary Allen are brothers who run a small Michigan roofing company. After September 11th, they volunteered their best roofers to help repair the Pentagon. But half of their factory went unused, and the recession hit them hard.

Today, with the help of a government loan, that empty space is being used to manufacture solar shingles that are being sold all across the country. In Robert's words, "We reinvented ourselves."

The left destroyed our housing industry – and with it, many of the businesses involved in that industry. Yet Obama has the audacity to hold out two failed roofing manufacturers as shining icons of our new economy. These would be green entrepeneurs had the sense to take some of the massive government subsidies Obama is passing out like candy to open up a solar panel manufacturing plant. Solar power, which provides less than 1% of our energy needs and is not price competitive, is a massive boondoggle. Heavily subsidized solar power has nearly bankrupted Spain and is having negative impacts throughout every other economy in Europe. And the day the subsidies for solar power end in the U.S. is the day Robert and Gary Allen declare bankruptcy and close up shop.

With more research and incentives, we can break our dependence on oil with biofuels, and become the first country to have 1 million electric vehicles on the road by 2015.

One, electric cars are not going to lessen our dependence on fossil fuels. The electricity to run them has to be generated by . . . hint, its not unicorn excreta. Two, a major concern with electric cars is the destabilizing impact large numbers of these vehicles would have on our energy grid.

Biofuels are another major boondoggle (well, but see here). None have proven cost-effective at scale and, in the case of ethanol, Obama has us pitting fuel against food. Over a fourth of are farmland is now given over to producing fuel that is inefficient, expensive, ecologically worse for the environment than fossil fuels, and driving food prices to world records. It is insanity. And that is what Obama wants more of?

[J]oin me in setting a new goal: by 2035, 80% of America's electricity will come from clean energy sources. Some folks want wind and solar. Others want nuclear, clean coal, and natural gas. . . .

Is this guy nuts? We should be embracing nuclear power for the future of our electrical needs, but we haven't broken ground on a new nuclear plant in decades – and Obama insured that we wouldn't be doing it at any point in the future when he closed off our only nuclear waste repository. Clean coal is both untested and looks to be far too expensive. Wind and solar are absolute pipe dreams. The bottom line is that, if we are getting 80% of our electricity from “clean energy sources” by 2035, our nation will be broke and half of our nation will be blacked out.

And as predicted, Obama is continuing his brutal war on our domestic oil production:

We need to get behind this innovation. And to help pay for it, I'm asking Congress to eliminate the billions in taxpayer dollars we currently give to oil companies. I don't know if you've noticed, but they're doing just fine on their own. So instead of subsidizing yesterday's energy, let's invest in tomorrow's.

Regardless of Obama's radical green dreams, we aren't getting off oil at any point in the near future. Obama's policies will only make oil and gas prohibitively expensive in America and make us ever more dependent on foreign oil. In the not too distant future, that will prove catastrophic for our economy.

II. Education:

I said Obama would make a pitch for sending even more money into the black hole of public education, and lo and behold . . .

over the next ten years . . . we want to prepare 100,000 new teachers in the fields of science, technology, engineering, and math.

We desperately need better teachers in each of these areas. But the answer is not to hire more teachers – as I pointed our here, we know empirically that neither more teachers nor more per pupil spending have improved the quality of our science and math education. We need people competent in their fields and who perform well as teachers. To get there, we need to end the stranglehold of teachers unions on our public school system. Obama studiously ignored that point.

Obama's call for more teachers is nothing more than a push to further strengthen teachers unions and, thus, the Democratic Party. Expect this issue to be demagogued to the fullest over the coming months.

III. Illegal Aliens – Obama made a one paragraph pitch for amnesty. It was a shout out to the Hispanic Caucus.

IV. Infrastructure:

Over the last two years, we have begun rebuilding for the 21st century, a project that has meant thousands of good jobs for the hard-hit construction industry. Tonight, I'm proposing that we redouble these efforts.

Yeah, let's do that again since it worked so well in 2009 to help our economy. This is just Obama wanting to do more Keynesian spending without mentioning the word "stimulus."

V. Deficit Reduction:

Obama is a magician at deficit reduction - all misdirection and illusion. His points and proposals were one joke after another. Obama did as predicted, pointing to his regulatory review and Obamacare's fairy tale CBO numbers as "proof" that he is focused on deficit reduction.

Beyond that, Obama added a promise to freeze current discretionary spending – 7% of our spending – at current levels for five years in order to save $400 billion. Given that he increased discretionary spending by an incredible 20% over the past two years, that is like an alcoholic saying he won't pay for another drink after he just stocked a 5 year supply of rum.

Our deficit is over $14 trillion and is on a trajectory to hit a crisis number of $20 trillion in less than a decade. What we need is deficit reduction. What Obama offers instead is a slightly slower march to Armageddon. Not exactly a profile in leadership.

Obama did manage to work in a criticism of the right's proposal to save $2.5 trillion by actually reducing discretionary spending:

“let's make sure that we're not doing it on the backs of our most vulnerable citizens.”

Let there be no doubt of the new Democratic meme – any and all cuts proposed by the right will hurt the poor and/or the children.

That is just so insane. What poor people need are decent jobs, low fuel prices, low food prices and reasonable housing costs. EVERYTHING this administration is doing is falling heaviest on the poor. We are hemorrhaging good jobs, fuel and food are going through the roof, and housing is a mess. Obama and the left are the enemies of the poor. They give a little with the left hand and take away twice as much with the right.

VI. Entitlements:

Medicare, Medicaid and Obamacare

In the only prediction I got wrong, Obama did mention entitlement spending and the need to reform entitlements. He mentioned the need to make savings in Medicare and Medicaid, then segued into a claim that Obamacare would reduce the deficit. What he didn't say was that every bit of savings he just made in Medicare and Medicaid is being pumped into Obamacare. It was a shell game, just like the Obamacare CBO numbers.

Entitlements: Social Security

We should also find a bipartisan solution to strengthen Social Security for future generations. And we must do it without putting at risk current retirees, the most vulnerable, or people with disabilities; without slashing benefits for future generations; and without subjecting Americans' guaranteed retirement income to the whims of the stock market.

Someone explain to me how, under those conditions, any reform to Social Security is possible.

Charles Krauthammer, in his post-speech analysis, noted that Obama paid only lip service to entitlement reform, thus indicating that Obama would not initiate any effort at entitlement reform over the next two years and that any attempt by the right to do so would be demagogued. Bottom line, Obama has no intention of doing anything to reduce our deficit and is daring the right to even make an attempt.


VII: Foreign Policy:

Obama's comments on foreign policy seemed like they were appendix to his speech. We face real foreign policy challenges, but you wouldn't get any of that from the SOTU speech. Are we in the Afghan war to win it? Obama gave no answer. He did not address the problem of nuclear proliferation. The Middle East is on fire. Lebanon just became a satellite state of Iran. Iraq may yet become a satellite state of Iran. China is arming at an alarming rate to challenge us militarily. And what about Wikileaks and the greatest assault on our state secrets in the history of our nation? If you expected Obama to substantively address any of that, you were sorely mistaken. Obama considers foreign policy a mere annoyance. He sees himself as Clement Attlee, not Winston Churchill.

Conclusion: Two years ago, the general consensus was that Obama, if elected, would serve out Jimmy Carter's second term. That was overly optimistic. Obama makes the disastrous Carter seem a paragon of Presidential prudence and competence in comparison. 2012 can't get here fast enough.

Update: Patterico makes a great point:

Obama said . . . in the speech . . .:

The bipartisan Fiscal Commission I created last year made this crystal clear. I don’t agree with all their proposals, but they made important progress. And their conclusion is that the only way to tackle our deficit is to cut excessive spending wherever we find it – in domestic spending, defense spending, health care spending, and spending through tax breaks and loopholes.

(emphasis added).

You got that? When you are allowed to keep your money, that is considered “spending” by the Federal Government. Because in reality all of the fruits of your labor belong to us, the government.

Is it wrong to say it almost the attitude of a master toward his slaves? . . .

Also see the AP, that surprisingly has a passable fact check of SOTU: "The ledger did not appear to be adding up Tuesday night when President Barack Obama urged more spending on one hand and a spending freeze on the other."