Posted by: SWL | January 24, 2012

State of the Union: Obama Ignores Poor, Slams Rich, Plays to Middle Class

In the Republican response to the State of the Union address, Indiana’s governor Mitch Daniels said it is important for the loyal opposition to cite positions and actions from the other side that can be agreed with. In that spirit, I will give a brief summary of the proposals from President Obama’s speech that I think will be good for the US, followed by those I think would be mistakes. (A more detailed analysis of some of the President’s plans will be posted in the coming days.)

President Obama’s initial praise of our military, especially Seal Team Six, was great. After that it took a while to find something I could agree with, but I did find three items.
* Expanding areas where offshore oil drilling is allowed would provide high paying jobs and eventually lower US fuel prices.
* Banning insider trading by members of Congress is a no-brainer. Mr. Obama also wants to prohibit those in Congress from owning the stock of companies involved in industries Congress regulates. This prohibition already exists for other federal employees. (For instance, here in northern Nevada’s gold mining country, a federal geologist whose job is to regulate the mines cannot own stock in gold mining companies. Such stocks in a mutual fund are allowed because the employee has no control over the buying and selling of shares within the fund.)
* A veterans job corps could be a good idea. The federal government already gives preference to vets applying for federal employment. But this would likely be another federal bureaucracy full of red tape.

Proposals from the President that sound good but have flaws:
* A new trade enforcement agency. You cannot just tell other countries or businesses that their idea of “playing fair”, as Mr. Obama calls it, is not the same as ours. Tariffs are the way to level the playing field, but the US has eliminated most of those.
* Cutting federal funding for colleges and universities that do not keep tuition costs down. Who decides what efforts to contain costs are enough? Is all funding cut or just a percentage? Doesn’t this increase the likelihood that school will need to raise tuition and fees even more?
* Consolidating government agencies. There will be fewer agencies, but those left are bigger – and bigger bureaucracy is usually less responsive. A better way to eliminate redundancy would be to use the Government Accounting Office report from March 2011 which listed all agencies that have similar programs. (As examples, the federal government has 82 programs in 10 agencies dealing with teacher quality and 56 different programs in 20 agencies dealing with financial literacy.) Congress needs to legislate who is responsible for what, instead of allowing agencies to take on whatever additional tasks they choose.

I absolutely disagree with some of the President’s statements:
* Extending the payroll tax holiday. Each worker averages only $40-50 per month extra in their paycheck, but the Social Security system (funded by that tax) loses $11 billion a year. Workers will probably lose more than $40-50 of benefits each month when they retire if this holiday continues.
* Allowing illegal immigrant children/youth a special path to citizenship. The President used the word “fair” often in the speech, but apparently thinks it only applies to taxes. But it is not fair to allow these kids to become citizens sooner/more easily than foreign nationals who seek that honor through legal channels.
* I am tired of hearing that Warren Buffet pays a lower tax rate than his secretary. This is the difference between earned income and interest/dividend income. The same subject has come up in the Republican race, comparing the rate Mitt Romney pays on his income which comes 100% from investments versus the rate paid on ordinary income Newt Gingrich earned as a consultant. Financial planners tell us to look for growth and income in our retirement investments. The goal is that one day we will have invested enough to live off the investment income. Whoever invests chooses to give up some spending now to reap the benefits in the future. (And the person who invests has already paid tax on the money when it was initially earned.)
* The President paraphrased a quote from Abraham Lincoln, saying, “Government should do for people only what they cannot do better by themselves, and no more.” Aside from the fact that Mr. Obama cannot seem to use a quote accurately (see * below), the problem here is that if he believes it, his policies do not reflect it. As Governor Daniels said in his response, the President’s view is that Americans cannot be trusted to choose the right insurance, the right mortgage or even the right light bulbs for themselves. The administration needs to spend less time worrying about our personal spending habits, and start worrying about their own addiction to overspending the taxpayers’ money.

(* It was difficult finding the actual Lincoln quote. The most cited version was, “You cannot help men permanently by doing for them what they could and should do for themselves.” This quote actually seems to be from the 1916 writings of Rev. William Boetcker, although it is often attributed to Lincoln. (

A Washington Examiner blogger wrote about President Obama paraphrasing this quote differently in another speech, only they used an “original” version which they claim comes from notes Lincoln wrote in 1854:

“The legitimate object of government is to do for a community of people whatever they need to have done, but cannot do at all, or cannot so well do, for themselves, in their separate and individual capacities. In all that the people can individually do as well for themselves, government ought not to interfere.”

Read the entire quote in context at



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