The $9 minimum wage and 11 other big ideas in Obama’s State of the Union
Here’s what’s worth talking about in the President’s speech, which you can read here; a policy primer is here.
A $9 minimum wage by 2015? It’s not a coincidence that Alan Krueger, the president’s top economic adviser, is the author of important research on the effects of minimum wage on employment. The proposal would raise the federal minimum wage to $9 an hour in 2015 from $7.25, and also lift the lower minimum wage on tipped employees. It will also index the minimum wage to inflation, an idea borrowed from Obama’s erstwhile competitor, Republican presidential candidate Mitt Romney. The White House notes that at the current rate, “a full-time minimum wage worker makes $14,500 a year. Even with the tax relief that every parent receives for a child, a family of four with one full-time worker earning the minimum wage is living below the poverty line.” The US has one of the lowest minimum wages, as a share of median earnings, among developed countries.
Universal pre-school education. Education experts see big gains in better education for young children, so Obama proposes working with Congress to “provide all low- and moderate-income 4-year-old children with high-quality preschool, while also expanding these programs to reach hundreds of thousands of additional middle class children, and incentivizing full-day kindergarten policies.” That could be an expensive, and therefore hard, push in the current Congress, but an important debate: Early education is another key area where the US falls behind other advanced economies.
A secret order for fighting hackers. Obama revealed an executive order designed to fight hackers that have plagued the public and private sector alike. As well as protecting public infrastructure, the order mandates the government to work with the private sector to create a framework to share data about cyberthreats, a process that will be watched closely to see how much the government intervenes in company and consumer privacy online.
Launching European Union free trade talks. The president will begin negotiating a free trade deal with Europe—important for businesses, but a complex task that could end up being finished by his successor, like the trade deals with Colombia, Panama and South Korea that were started by George W. Bush and implemented by Obama.
Holding colleges accountable. The president proposes that colleges ”receive federal student aid based on performance and results.” Such a rule will terrify the private education industry, which has long lobbied vociferously against such proposals, but also worry major universities, since there’s no clear way to measure educational attainment. The White House will start with a College Scorecard that would allow prospective students to compare different institutions.
Cap and trade. The president urged Congress to recognize that climate change is real and devastating. If Congress doesn’t act on a “market-based solution to climate change”—a program to cap emissions and trade allowances, or a carbon tax—the White House will use its executive powers to take action, likely by regulating power plant emissions. The president also proposed doubling energy generation from wind, solar and geothermal sources by 2020 by making energy tax credits permanent.
End the war in Afghanistan to pay for infrastructure? The president announced that the Afghan war will end within the year—although your definition of “end” may vary—and that the savings will go to finance $50 billion in immediate spending for bridges and other urgently needed upgrades. There is also a plan for public-private partnerships to invest in “business infrastructure” like power grids and oil and gas pipelines. While Congress has been reluctant to authorize spending on new infrastructure, this defense cut accounting trick might loosen the purse strings.
Tax and welfare reform. You’ve heard this deal before during fiscal debates, but it’s still on the table: “$900 billion more in spending cuts and entitlement reforms and $600 billion in additional revenue, relative to the fiscal deal, to be achieved through tax reform that closed loopholes for the wealthy and reformed corporate taxes to strengthen America’s competitiveness.” This would stabilize the debt over the next decade, but Republicans don’t want to use savings from tax reform to lower the deficit; they’d like to use them to lower tax rates.
Corporate tax reform, too. Obama wants to go after untaxed corporate profits by putting in place an offshoring tax that would force companies to pay taxes on earnings they keep abroad, while also making permanent the R&D tax credit, lowering rates on manufacturers, and lowering the overall rate by closing other loopholes. This is a lift.
Anti-poverty efforts. Along with programs to support jobs for low-income youth and community redevelopment, there’s also a plan to remove the financial deterrents to marriage, an approach liberals ridiculed during the George W. Bush administration.
Immigration reform. We’ve talked about this before.
Gun control. We’ve talked about this too. Though his talk about families “ripped apart by guns” was possibly the most stirring part of his speech, the president’s proposals are already on the table.
SEE ALSO: The Republican response to the State of the Union, delivered by Florida Senator Marco Rubio.
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