The economy figured prominently in President Obama’s State of the Union address Tuesday night—the first one since his re-election. He called for increasing the minimum wage to $9 by 2015 from $7.25 currently, tax reform that rewards businesses for creating jobs in America and discourages them from moving jobs overseas, and trade partnerships with the European Union and growing economies in Asia.
He said, “nothing” he was proposing should increase the deficit “by a single dime” –but didn’t provide details--and said cutting the deficit must be part of the agenda but "deficit reduction alone is not an economic plan.”
To that end President Obama proposed eliminating tax loopholes and deductions for wealthier Americans and reducing Medicare costs through smaller subsidies to prescription drug companies, higher premiums for wealthy seniors and government payments based on quality of care rather than frequency of tests done. “The biggest driver of our long-term debt is the rising cost of health care for an aging population,” Obama said.
Republicans rejected much of the president’s economic proposals which also included investments in new manufacturing technologies, repairing crumbling infrastructure and refinancing help for homeowners.
Delivering the party’s official response to the State of the Union, Florida Senator Marco Rubio said, “The tax increases and the deficit spending” the president proposed would “hurt middle class families. It will cost them their raises…their benefits.and may even cost some of them their jobs.”
Former CBO Director Douglas Holtz-Eakin who advised the McCain presidential campaign in 2008 tells The Daily Ticker that there’s “no money” for the president’s plans “because entitlement spending is crowding out everything.”
Holtz-Eakin, who now heads the American Action Forum, a center-right think tank in Washington, says the president needs to address the country’s “enormous debt problems that are hampering the economy right now.”
Holtz-Eakin says, “Every dollar of debt has to be somehow repaid and serviced. If you’re not willing to do spending cuts—which the president has clearly taken off the table—that means that every dollar of debt is a promise to raise taxes by a dollar in the future or not raise those taxes and have a financial crisis. I can’t give you a more anti-growth policy than [that].”
Holtz-Eakin dismissed the president’s proposal to raise the minimum wage as a political play to attract Democratic votes in the 2014 midterm elections. “What the president would very much like is to hang out this shiny bauble… so that he can say to his base and voters, ‘Republicans don’t like poor people. They are against the minimum wage.'” Holtz-Eakin says if the president was serious about this proposal he would draft legislation and send it to the congress—“something he just does not do.”
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