Per tradition, President Obama will stand before Congress Tuesday night and speak on his grand vision for America. But the most important thing about Obama’s State of the Union speech may be what the president doesn’t say.
If Obama were being perfectly honest, he’d explain to a nationwide audience that Washington politicians mostly plan to sit on their hands in 2014, with posturing for political advantage in the November elections far more important than helping strengthen the U.S. economy. That's why Obama will reportedly be more aggressive in using executive authority to pursue pet projects, in lieu of authorization from Congress.
Voters, for their part, also have a dwindling appetite for government solutions to economic problems. It’s not even clear there’s much Washington could do if it wanted to. “My fellow Americans,” Obama might say if administered truth serum, “this year, you’re on your own.”
He won’t say that, of course, and the press has been dutifully reporting all the new initiatives the president’s aides have been leaking to them. But the U.S. economy has now decisively shifted from crisis mode — in which the feds pump out emergency funds to make up for cutbacks in spending elsewhere, as with the big 2009 stimulus program — into recovery mode, with spending in other sectors bouncing back. State revenues, for instance, are approaching new record highs, as the Wall Street Journal recently reported, allowing governors to propose tax cuts, new spending on education and other moves typically categorized as “stimulus.”
Fewer red flags
Many forecasters also think 2014 could be the year business spending picks up for good, since CEOs see fewer red flags such as debt bombs in Europe or fiscal cliffs in Washington (provided the current scare over economic instability in emerging nations such as Turkey and Argentina subsides). The housing recovery also seems firmly underway, after a six-year bust, which means ordinary people buying homes should contribute to economic growth, as it should be. All this means there’s simply less need for the kinds of federal programs Obama is fond of.
Less need for federal programs seems to be translating into less public support for them. The best example may be the federal extension of unemployment benefits, a temporary program that began in 2008 and was renewed 11 times before expiring at the end of 2013. Renewing it for 2014 is a top priority of Democrats, who so far have failed to muster enough political leverage to persuade Republicans to support it, as they did before. Meanwhile, 1.3 million people whose benefits got cut off at the start of the year seem to be fading from the national political agenda.
Other Obama ideas for boosting the economy could end up in the same cul-de-sac. Here’s a quick rundown of a few Obama economic priorities and why there’s likely to be little action on them anytime soon:
Economic mobility. Obama clearly knows his audience when he hits the hustings to talk about income inequality and the difficulties some families face getting ahead. But coming up with government solutions to those problems is tricky, especially since some economists feel economic opportunity isn't as limited these days as certain politicians make it sound. Obama’s proposed action items — more funding for high-quality preschool, more stimulus programs to help the needy, more job training programs and so on — aren’t terribly controversial, but with Congressional Republicans firmly fixated on reducing deficit spending, Obama’s unlikely to get any fresh funds for these traditional stimulus ideas.
A minimum wage increase. Obama called for this last year, and nothing happened — at the federal level. But 13 states raised their minimum wage this year, with at least 20 others considering doing so. Obama now supports a Senate bill that would raise the minimum wage nationwide from $7.25 to $10.10. But it’s not clear that bill can pass the Democrat-controlled Senate, let alone the Republican-controlled House.
Jobs programs. Obama is a big fan of federally sponsored job-training programs and other efforts to help workers get the right skills for the jobs that are available. There are a few small-bore things Obama can do without Congressional approval but they have to be things that require no new funding and can be financed out of existing budgets. Without the power of the purse behind new programs, results will be very limited.
Corporate tax reform. Obama agrees with Republicans on the need to lower the corporate tax rate to make it more attractive to do business in the United States. But as part of a deal, Obama would probably insist on closing many tax loopholes that have high-powered defenders, and perhaps even directing federal money toward favored job programs. The tit-for-tat makes it far less likely anything will happen and lets Republicans blame Obama for the status quo. And if the economy really does pick up steam in 2014, there will be even less urgency to pursue corporate tax reform.
Immigration reform. This is one issue that might see some action in Washington this year, since both parties want to be seen as friendly to Hispanics come the November midterms. While updated immigration policies would help some businesses, however, they probably wouldn’t have a major impact on the economy.
Skepticism toward Obama’s programs isn’t the same as disparagement; with a willing legislature, Obama ideas such as expanded preschool and targeted job training might provide a meaningful economic boost. But the president may be peddling false hope by providing the usual laundry list of great things the government would do for people, if only Republicans would go along with his plans.
It would be more realistic and perhaps more honest for Obama to warn Americans the air is coming out of federal programs and they ought to look elsewhere for help if they need it. The federal government has had a powerful impact on the economy during the past five years, but the economy doesn’t need Washington’s intervention quite so much any more. That should be a good-news story, not something the president sweeps under the rug.
Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.
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