When President Obama gives his State of the Union address tonight, he will almost assuredly claim that the union is strong. He will likely invoke the many positive characteristics of the American national character and might even recognize a guest in the gallery who possesses an inspirational story.
This will be good television, but it will also largely be beside the point. By commending the president to “give to Congress information on the state of the union,” Article II of the Constitution seeks from the chief executive not general platitudes about the nation, but rather a concrete evaluation of the efficacy of government policies.
By this measure, Mr. Obama will not be able to invoke, with any degree of credibility, what George Washington called “the favorable prospects which continue to distinguish our public affairs.”
Indeed, the malaise which afflicts American political and economic life has not been cured by Mr. Obama’s policies but has been prolonged and exacerbated by them. On issue after issue, Mr. Obama has embraced measures that have hindered growth in the economy and have expanded the size and scope of an ever more unaccountable federal bureaucracy.
Two of the main headwinds burdening the economy represent two of the signature measures of Mr. Obama’s first term: the Obamacare health law and the Dodd-Frank financial “reform” law.
The economy is still a long way from full employment, yet Obamacare creates perverse incentives for businesses to stay below the 50 employee threshold (which triggers Obamacare’s costly mandates) and to keep workers below 30 hours per week ( thus qualifying them as “part-time,” not counted as part of the 50 employee requirement). The law also creates incentives for businesses that are subject to Obamacare’s mandates to drop health coverage for their employees and to pay a fine to the government, which will lead to millions of Americans being placed into government-subsided exchanges at great cost to the taxpayer.
Moreover, due to its structure, the law has not reduced health insurance premiums by 50 percent, as Mr. Obama promised. Instead, it has made (and will continue to make) health insurance more expensive.
Dodd-Frank was supposed to cure the problem of taxpayer bailouts of large financial institutions, but it has effectively institutionalized the concept of “too big to fail.” The law’s implicit taxpayer guarantee confers upon big, politically preferred institutions a subsidy in the form of reduced funding costs. What is more, the regulatory avalanche unleashed by Dodd-Frank is so prodigious that it will require 24 million man hours to achieve regulatory compliance; by comparison, the construction of the Panama Canal needed 20 million man hours. The continuation of “too big to fail” and the regulatory overload reduce market competition and economic efficiency and tilt the playing field against small institutions, such as community banks, thereby creating a poor credit market for small businesses and budding entrepreneurs.
The enactment of Obamacare and Dodd-Frank ushered in a dramatic expansion of the power and scope of the federal bureaucracy. The so-called Consumer Finance Protection Bureau (CFPB) created by Dodd-Frank possesses broad powers and is (unconstitutionally) insulated from traditional checks and balances: Congress cannot reduce its funding, the president cannot remove the agency head, and the courts have very little ability to exercise judicial review of CFPB actions. Absent a court decision striking it down as unconstitutional, the CFPB is free to engage in central planning regarding a whole host of financial issues, ranging from mortgage lending to credit cards. The board’s decisions will almost assuredly make finance more costly for businesses and consumers alike.
Add to this the unprecedented amount of de facto legislative authority delegated to HHS Secretary Kathleen Sebelius via Obamacare and the aggressive expansion of the Environmental Protection Agency (EPA) by administrative fiat, and the result is a bureaucracy insulated from popular accountability yet capable of exerting a vast influence over American society.
The Constitution also provides that the president shall “recommend to their consideration such measures as he shall judge necessary and expedient.” In his address, Mr. Obama has the opportunity to offer new policies that can help lay a foundation for economic growth, a fiscally sustainable future and a government that is more accountable to the people.
Judging from his second inaugural address, this is not likely the road Mr. Obama will take. After all, in his speech he made scant mention of the national debt, implicitly accepted the current economy as the new normal, and even argued that the nation does not have to choose between spending on entitlements and on other domestic programs. Mr. Obama’s speech was an ode to big-government progressivism, focusing on the imperative of “collective action,” wealth redistribution and state-centered green energy programs. This is perhaps not surprising coming from a man who once endorsed raising taxes on capital gains, even if the increase led to less revenue raised by the government because of “fairness.”
If he would be willing to drop his ideological posture, Mr. Obama would see that policies designed to enhance economic growth and U.S. economic competitiveness will be embraced by pro-growth Republicans. Reduction in the business tax rate will make the United States more competitive internationally. Tax reform that lowers rates while removing clutter from the tax code will improve the nation’s economic efficiency by reducing compliance costs. Support for increased energy production in North America, especially from shale gas and oil and from the approval of the Keystone XL pipeline, will help the economy as well as the nation’s national security.
Finally, Mr. Obama should commit to submitting a plan for a budget that balances within 10 years. If he truly believes that the nation does not need to make choices regarding spending programs, then he should enumerate the massive tax increases – on top of the $600 billion in tax increases from the “fiscal cliff” deal and the $1 trillion in tax increases from Obamacare – that he believes will produce a balanced budget.
Mr. Obama should not fool himself into believing he has a mandate for his first term policies and for continued taxing and spending. After all, his re-election was built not on championing his first term achievements, but on spending millions of dollars assassinating the character of his Republican opponent and perfecting a campaign effort that maximized turnout among low-information voters. Mr. Obama won in spite of his first term agenda, not because of it.
Given the stagnating economy and the nation’s fiscal imbalances, a little humility might be in order during his Tuesday night address.
Rep. Ron DeSantis is a Florida Republican.