Written by Heritage Foundation
Corporate Tax Reform Needed But Not the Tax Hike
The country desperately needs corporate tax reform because we have the highest corporate tax rate in the developed world. So its good news that President Obama again called for corporate tax reform like he has in the past.
The President has a detailed corporate tax reform plan of his own he released two years ago, although it leaves much to be desired. The most troubling part about President Obama’s plan he reiterated again in his speech tonight: It is a tax hike.
Our high corporate tax rate crushes our business’s ability to compete with their international competitors and drives new investment, and the jobs that investment creates, to other more competitive countries. That is why corporate tax reform should focus intently on reducing the tax rate for both large and small businesses.
But the President’s plan, because it is a tax hike, is more about raising more money for the government to spend than it is about improving the competitiveness of American businesses.
Congress should take up the President’s call for corporate tax reform, but drop the tax hike, lower the rate below the average of our international competitors, and modernize the way we tax our businesses that operate abroad.
If it succeeded in crafting a plan that did all those things it would be a major boon for beleaguered American workers that would see more jobs created and stronger wage growth.
– Curtis Dubay
Let the Market Promote Energy Efficiency
The President mentioned his ambitious fuel efficiency standards as a way to put Americans back to work, save energy and reduce carbon dioxide emissions, and announced he would set standards for trucks.
What the President doesn’t mention is that producers and consumers can determine what type of car Americans drive and we don’t need the federal government taking choices away from car buyers. Whether it is size, comfort, power, or fuel efficiency, Americans choose to buy cars for a wide variety of reasons. When it comes to efficiency regulations for trucks, the trucking industry takes fuel costs into consideration as closely as any other industry in our economy. They plan their routes to the tenth of a mile to ensure they’re minimizing costs. The trucking industry, along with the rest of American families, can maximize efficiency without help from Washington. What the Obama administration needs to understand is that Americans take other considerations into account when making decisions.
– Nicolas Loris
Obama Is The Anti-Opportunity President
Opportunity for All is such an uplifting pro-America theme. But doesn’t this mean school choice. Doesn’t it mean cleaning up the crime and corruption in cities? Doesn’t it mean discouraging fatherless homes? Doesn’t it mean keeping tax rates low and regulations light so people can set out a shingle and start businesses?
Obama has been the anti-opportunity society president.
– Steve Moore
President Obama and Federal Overreach to Redefine Marriage
Tonight President Obama praised his administration’s work to undermine the institution of marriage: “Across the country, we’re partnering with mayors, governors, and state legislatures on issues from homelessness to marriage equality.” But the federal government has no business redefining marriage. People (and their elected representatives), not the President or the courts, should make marriage policy in the states. And they should make policy that reflects the truth about marriage as a union of man and woman, husband and wife, so that children have a mother and a father.
The Obama Administration should instruct all agencies of the federal government to respect states’ authority over marriage and stop redefining marriage for a variety of federal purposes. And government should not violate the rights of those who stand for marriage as the union of a man and a woman.
– Ryan T. Anderson
Obama Grows Regulation, Not Economy
President Obama says upward mobility has stalled. He acknowledges that too many Americans are unemployed. But his prescription is to grow government rather than reduce the government barriers to prosperity.
Case in point is the administration’s Climate Action Plan—a grandiose regulatory scheme to punish conventional fuel use and funnel billions of dollars into renewable energy subsidies. As he did in tonight’s speech, the president routinely touts his environmental agenda as beneficial to economic growth. In reality, the flood of regulations issued by the Environmental Protection Agency and the Department of Energy are inhibiting job creation and investment. For example, the administration’s 2017 standards on automotive greenhouse gas emissions will cost an estimated $10.8 billion annually—and do nothing to mitigate so-called climate change. The new emissions control mandates on electricity generators will cost more than $10 billion a year— and threaten the reliability and affordability of the nation’s energy supply.
Hundreds of other costly edicts are in the pipeline, including dozens more Obamacare dictates and equally onerous Dodd-Frank rules. This president, after all, has consistently exploited executive orders and regulations to control manufacturing, finance, health care, and a slew of what most of us once thought were personal lifestyle choices. Indeed, this president’s accelerated rate of regulatory expansion appears unequaled, with more than $70 billion in new annual regulatory costs added in the first term alone.
Rather than hear about how the president intends to pump his regulatory muscle, the state of the union would be better were he to outline substantive reform of the runaway regulatory process.
– Diane Katz
Obama Tried to Harm, Not Help, Oil and Gas Industries
Astonishing Obama has multiple times taken credit for the oil and gas boom. This is like the rooster taking credit for the sunrise. He and the EPA and Interior have done everything possible to crush this industry. Cap and trade. Energy taxes on oil and gas. And he even admits he wants new regulations on carbon-based energy – oil, gas, and coal.
These are America’s fuels of the future. We get about 2 percent of our energy from wind and solar. These are fringe technologies and Obama’s tens of billions of dollar “investments” in these renewables have led only to Solyndras and crony capitalism.
Only Barack Obama would say climate change is “a fact.” Doesn’t he know that the entire midwest is below zero degrees? Does he really think this frigid winter of evidence of global warming or are we now in another cycle of global cooling? Just wondering.
– Steve Moore
The Energy Boom Is Good, Natural Gas Vehicle Subsidies Are Not
President Obama highlighted the tremendous economic benefits Americans are receiving from the shale oil and shale gas boom in the United States, as he should. The recent surge in oil and gas production has produced lower energy prices, a manufacturing renaissance and unconventional drilling technologies that now support nearly two million jobs.
But the President is wrong to label natural gas a bridge fuel and to urge Congress to help businesses and families switch to natural gas vehicles. If natural gas is a bridge fuel, that bridge appears to be pretty long as we have over a century’s worth at current consumption rates. But it’s not up to President Obama or the federal government to determine how we use natural gas or how long we use it. There are plenty of uses for natural gas and the market and the price of natural gas will determine how the resource is allocated. If natural gas vehicles make economic sense, businesses and families will switch on their own without any help from the taxpayer. Further, the administration should also recognize that state regulators can promote production while protecting our air quality and water resources, as they have effectively done so for decades.
– Nicolas Loris
Increasing Access to Higher Education
Continuing to increase federal subsidies is not the answer to increasing access to higher education. Increasing federal subsidies enables universities to raise tuition. Since 1982, the cost of attending college has increased 439 percent—more than four times the rate of inflation. Increases in college costs exceed increases in health care costs, which have risen more than 250 percent over the same time period. Economist Richard Vedder argues that “some of these financial aid programs have contributed mightily to the explosion in tuition and fees in modern times.”
Increasing federal spending on loans and Pell grants will fail to encourage universities to use resources more efficiently. But perhaps most troublesome of all, increasing federal subsidies for higher education—whether in the form of Pell grants or student loans—shifts the responsibility of paying for college from the student, who directly benefits from college, to the taxpayer. Transferring the burden of student loan financing from university graduates—who earn on average twice that of someone with a high school diploma—to the three-quarters of taxpayers who did not attend college – raises questions of equity.
Policymakers can take an important first step in increasing access to higher education by decoupling federal financing from accreditation. As Heritage has detailed in the past,
“Policymakers are in a unique situation to hasten such reform by supporting the customization of higher education for students. In particular, policymakers should back the decoupling of accreditation from federal financial aid subsidies, a reform that would provide independent entities the opportunity to credential courses and skills.
Such a transformation would likely burst the higher education price bubble, increasing access to course content and customizing students’ learning experiences. In short, costs would decrease and quality would increase—a testament to the power of innovation and competition. Coupled with the end of the current cozy accreditation regime, the continued proliferation of online learning and more accurate measurements of attained skills would offer future college students the prospect of a better education, increased employability, and lower education costs.”
– Lindsey Burke
A Welcome Call to Streamline Transportation Project Reviews
The federal permitting process necessary to get federally-funded transportation and infrastructure projects started, much less across the finish line, is lamented all around for being cumbersome, litigious, and overly bureaucratic. It can take years to move the dial on large, complex projects—and that’s time that the states and local communities that are managing these projects don’t have. That’s time that businesses and commuters who value seamless transportation networks and congestion-free roads and bridges don’t have.
President Obama is right to highlight this challenge in tonight’s speech, and his promise to prioritize reducing red tape is welcome.
To the extent that Obama can reduce bureaucracy and eliminate red tape within the limited powers of the executive branch, he should, marking a positive step forward. Importantly, he should also work with the Congress to implement structural reforms to the federal permitting process, which would help both state and federal resources go further instead of being tied up or squandered on lawsuits and in duplicative reviews among the various federal agencies.
But it’s crucial that the reforms be structural, not superficial. That means reforming the underlying laws, such as National Environmental Policy Act (NEPA), which have vastly expanded in scope and now contribute to the project delays. Ways to do that include narrowing the scope of NEPA reviews to only major environmental issues and mandate strict deadlines for agency review of projects, among others.
It’s past time Congress and the President rolled back the red tape obstructing the timely completion of transportation and infrastructure projects.
And while Obama is at it, perhaps he could give the green light to the Keystone XL Pipeline project—a promising infrastructure project sitting right in front of him.
– Emily Goff
Federal STEM Education Is Not the Answer
Preparing students to enter STEM (science, technology, engineering, and mathematics) fields is important. Policies geared toward increasing student preparedness in STEM fields are best designed at the state and local level, where local leaders are better equipped to administer STEM initiatives most appropriate for their students’ needs and most relevant to their industry opportunities. States should be given the option to opt-out of No Child Left Behind and target dollars toward their top education priorities. If a state wants to prioritize STEM education, it can do so by:
Promoting parental choice in education to ensure students can attend schools that meet their unique learning needs;
Allowing online learning to flourish to give students access to the best STEM teachers in the country;
Allowing for alternative teacher certification to attract mid-career professionals from STEM fields to enter the classroom; and
Linking teacher pay to performance and differentiating pay to reflect the needs of high-demand fields, such as STEM.
Reject Common Core national standards and tests, which do not prepare students for STEM education.
– Lindsey Burke
Government Preschool Plans Don’t Add Up
President Obama’s call for billions in new federal spending on a massive preschool program – a Race to the Top for 4-year-olds – should be approached with caution. Policymakers at every level of government should be aware that the evidence from existing programs raises doubts about their efficacy—not to mention the significant costs to taxpayers.
In December 2012, the Department of Health and Human Services released an evaluation of more than 5,000 children participating in Head Start – the federal government’s (current) largest preschool program – and found that the $8 billion annual program had little to no impact on cognitive, social-emotional, health, or parenting practices of participants. Moreover, in August 2013, Vanderbilt University released an evaluation demonstrating that children who went through Tennessee’s Voluntary Pre-K (TN-VPK) Program actually performed worse on cognitive tasks at the end of first grade than did the control group.
The Obama Administration and those in favor of expanding government preschool programs often state that “high quality” preschool returns seven dollars in for every one dollar “invested.” Yet the seven-to-one return on investment figure appears to be drawn from a nearly half-century-old preschool evaluation conducted with a treatment group containing just five dozen highly at-risk children: the Perry Preschool Project. The type of large-scale government preschool program the Obama Administration seeks is more likely to resemble Head Start than Perry.
– Lindsey Burke
Leadership Needed in U.S. Trade Policy
In his State of the Union Address, the President observed:
One other thing we Americans like – the future – like the sound of it, the idea of it, the hope of it. Where others fear trade and economic growth, we see opportunities for creating new wealth and undreamed-of opportunities for millions in our own land and beyond. Where others seek to throw up barriers, we seek to bring them down; where others take counsel of their fears, we follow our hopes. Yes, we Americans like the future and like making the most of it. Let’s do that now.
The President who said that was Ronald Reagan, and the year was 1988. Reagan believed in a world without trade barriers. In contrast, here’s what President Obama said this about trade in 2014:
We need to work together on tools like bipartisan trade promotion authority to protect our workers, protect our environment, and open new markets to new goods stamped “Made in the USA.” China and Europe aren’t standing on the sidelines. Neither should we.
Certainly, expanding trade is good for workers and the environment. Bipartisan trade promotion authority can be a beneficial tool as long as it is not used to promote global labor and environmental bureaucracies, but instead to promote economic freedom and, to paraphrase President Reagan, “to unite people around the world in a bond of mutually beneficial exchange.”
– Bryan Riley
Congress Should Pass Balanced Patent Reform
Tonight in the State of the Union, the President urged Congress to pass a patent reform bill that “allows businesses to stay focused on innovation, not costly needless legislation.” This goal is something that all Americans can agree upon: Congress should pass balanced patent reform that discourages “patent troll” behavior while respecting strong patent rights. As we have written before, the same means and methods that will work to stop “ambulance chasers” can be used to stop patent trolls However, Congress should not pass a patent reform bill without ensuring that any law respects the critical, constitutionally enshrined system of robust patent rights that undergird American innovation.
– John Malcolm and Andrew Kloster
These Projects Will Add Dimes to the Deficit
Obama’s favorite term is that all these grandiose ideas can be launched “without adding a dime to the deficit.” Isn’t this exactly what he said about Obamacare?
Also, is it really possible that we connect every home and office to wireless internet, extend unemployment benefits to millions of Americans, provide universal pre-K benefits, provide more green energy subsidies, and rebuild infrastructure with federal dollars without raising the deficit by a dime?
Anyone who believes this still believes you can keep your health care if you like it.
– Steve Moore
Federal Contract “Minimum Wage” Hike Likely Unlawful
President Obama announced tonight that he will issue an executive order to raise the “minimum wage” for those working for federal contractors to $10.10 per hour. The federal minimum wage for all covered employees in the private sector is currently $7.25 per hour. This rate is codified in the Fair Labor Standards Act at 29 U.S.C. § 206, and there are a number of similar statutes that govern federal contracts and require that minimum hourly rates be paid. Among these statutes is the Service Contract Act of 1965, which requires that any contract for service work with the federal government (for example, security guards or cafeteria workers at federal buildings) include a provision specifying a minimum wage. This minimum wage shall be “determined by the Secretary [of Labor] or the Secretary’s authorized representative, in accordance with prevailing rates in the locality, or, where a collective-bargaining agreement, in accordance with the rates provided for in the agreement, including prospective wage increases provided for in the agreement as a result of arm’s length negotiations.” 41 U.S.C. §6703. This minimum wage must at least meet the federal minimum wage, which serves as a floor for such contracts. 41 U.S.C. §6704.
In plain English, the Secretary of Labor is required by statute to assess what the prevailing local wage is for a given service, and workers must be paid that wage, the wage set by any applicable collective bargaining agreement, or the established federal minimum wage, whichever is highest. In addition to the fact that he cannot unilaterally change existing contracts with federal contractors, he is also not at liberty to ignore a duly-enacted statute which sets forth the wages that must be paid to federal contractors. The statute directs the Secretary of Labor to determine what the “prevailing rates in the locality” are, not to “determine” that the wage ought to be $10.10 per hour in every locality. Similarly, he is not at liberty to create collective bargaining agreements when they don’t exist, nor can he unilaterally change the established minimum wage that was established by Congress and signed into law by President Bush.
Unfortunately, even though this action may well be unlawful, many contractors will likely bend to federal pressure and agree to abide by contracts that provide for this higher rate so as to avoid losing out on a federal contract. Yet any contractor who is adversely affected by this action would have a good case to take to court. If it stands, though, this would be yet another unlawful unilateral action concocted by the Obama administration.
– Andrew Kloster
Let’s Raise the Earned Income Tax Credit Instead of The Minimum Wage
Raising the earned income tax credit isn’t a bad idea, because it is tied to work. But this should be done INSTEAD of raising the minimum wage, not in addition to it. The idea of EITC was to reduce the need for raising minimum wage so that all of the burden doesn’t fall on employers. The EITC adds about $7,000 a year to minimum wage workers – but Obama and Democrats never mention this.
– Steve Moore
Finish the Math on Energy Subsidies
President Obama has part of the equation when he talked about cutting subsidies to oil companies, but he’s far from solving the problem. Most of the $4 billion in oil subsidies the President referred to are widely available in manufacturing. No energy source or technology, whether that be oil or solar, should get special subsidies or tax favors. Not only do subsidies inherently reward politically connected or favored industries, they waste tax dollars propping up companies and industries that should succeed or fail on their own merits. Congress should end all targeted subsides in the energy sector.
– Katie Tubb
On the 77 Cents Per Dollar Women Earn
President Obama doesn’t think it is right that women earn “77 cents for every dollar a man earns.” Does he plan to force women to study choose different careers against their will? Or to work in more dangerous jobs? The science on this question is settled: women earn less than men, on average, because they make different life choices. Academics and Heritage experts have explained that the wage gap is largely a chimera. The U.S. Department of Labor wrote that, “the raw wage gap continues to be used in misleading ways to advance public policy agendas without fully explaining the reasons behind the gap.” Why would President Obama give women the false impression that employers value them less? Women and men should follow their own dreams, without reference to the government’s goals for aggregate statistics.
– Salim Furth
Challenges in Iraq
President Obama may have withdrawn U.S. troops from Iraq, but the political and security challenges in the country remain. Nearly 9,000 people died in 2013, making it the deadliest year in Iraq in five years. Al-Qaeda is resurging in Iraq, many of the gains in securing the cities of Fallujah and Ramadi have been lost at the hands of Al-Qaeda affiliate—Al-Qaeda in Iraq and Syria (ISIS). Heritage’s James Phillips highlighted the Obama Administration’s neglect by downplaying the “security consequences of its abrupt pullout from Iraq after it bungled negotiations to extend the presence of a small U.S. force to advise, train, and support Iraq’s fledging military.”
– Charlotte Florance
Manufacturing Hubs or Corporate Welfare Handouts?
The President said that “we have the chance, right now, to beat other countries in the race for the next wave of high-tech manufacturing jobs.” He then went on to promote two of his manufacturing hubs in Raleigh and Youngstown and announced that he’ll be launching six more hubs this year. There are two very big points that he’s missing. One, the private sector, in large part to the energy boom, is driving high-tech manufacturing back to the United States and two, companies can make those investments with their own money and concentrate on what they believe is most promising. Taxpayer money should not be granted to large corporations to offset or skew how private sector investments are made.
Businesses should partner with universities and national laboratories if they identify opportunities to do so. But taxpayer money does not and should not be a conduit for those relationships to form. When the federal government distorts those investments by sweetening the pot with taxpayer money to direct funding where they want it to go, it cripples the process of innovation. The more government participates in the market as an investor, the greater its temptation to shape the rules to advance its own interests. Further, because they are not risking their own money, politicians and bureaucrats will bear almost no responsibility for the outcome of the investment. This allows them to take credit when an investment succeeds and deny blame when it fails.
Programs like this also promote cronyism. In this relationship, the politician helps the business gain market advantage, and the successful business helps the politician advance his political agenda. The result is, at best, a brand of cronyism where businesses develop strong relationships with public officials to ensure that public policies support their economic interests. And it keeps those companies politically connected.
Manufacturing hubs will develop without taxpayer handouts if we create a system that allows the private sector to tap into our national labs and universities and utilize the resources to innovate and develop new products rather than having Washington determine what to produce and how to produce it.
– Nicolas Loris
Hollow Promises on Regulatory Reform
President Obama correctly cites the slog of regulatory permitting as an impediment to economic growth. The principal problem is the National Environmental Policy Act (NEPA), which requires federal agencies to assess the potential environmental impacts of proposed government actions, including public works projects, leasing federal lands, regulation, and permitting.
Although crafted with laudable intent in 1969, four decades of experience has exposed fundamental flaws in the NEPA regime, including costly project delays, politicization of even mundane rule-making, and protracted litigation.
Obama claims to be taking actions to streamline NEPA. But absent from his list of purported improvements is any mention of the administration’s insistence that NEPA reviews address whether proposed projects will contribute to global warming.
But there is no credible scientific evidence that positively attaches a specified volume of greenhouse gases (GHG) to environmental impacts. In the absence of any cause/effect nexus, there is no rational purpose to requiring agencies to undertake an analysis of GHG emissions as part of the review process.
If the President is serious about improving the permitting process to promote economic growth, he will eliminate the NEPA’s nonsensical requirement to assess the supposed global warming impacts.
– Diane Katz
Obama’s Dismissive Attitude Toward Europe
President Obama told America: “Our alliance with Europe remains the strongest the world has ever known” — but nobody is buying this. This is an Administration that has shown little interest in fostering closer ties with some of America’s oldest and closes allies in Europe. President Obama’s token sentence in his 6,778 word-long State of the Union speech will be seen as a disappointment in many European capitals.
Many of the issues America’s European allies care about were either ignored or brushed over in his lengthy speech. No mention of this year’s NATO Summit in the UK and half a sentence on U.S.-European free trade. This is not a sign of devotion to trans-Atlantic relations but a sign of disdain.
Look at his track record since taking office: pulling the rug out from underneath Poland and the Czech Republic over missile defense, the failed “reset” policy with Russia, a so-called pivot to Asia which still leaves America’s European allies scratching their heads, the removal of two U.S. Army brigades from Europe, a pathetic U.S. contribution to one of NATO’s most important training exercises since the end of the Cold War.
Alliances take hard work and require attention from all parties involved. Regrettably, the Obama Administration attaches little importance to the transatlantic alliance, and Europe has barely figured in the Administration’s foreign policy. Sadly, tonight’s speech shows that this will not change for the remainder of his second term.
– Luke Coffey
Get Me Rewrite! President Obama Shifts from Inequality to Opportunity
President Obama’s campaign against inequality has suffered in the past few weeks because mounting evidence has worked against the story the President wanted to tell. The former chief economist to Joe Biden released a paper saying that the evidence that inequality harms economic growth isn’t there. Then yet another study came out that says that economic mobility is as good today as it was a few decades ago. The President’s campaign against inequality ended before it really got started. Instead, the President has shifted his theme to opportunity and policies that can boost mobility. Opportunity should be the debate we have in public policy. Unfortunately, the President’s solutions of a higher minimum wage, more government spending and intervention in businesses is the wrong way to boost opportunity and mobility.
– Rea Hederman
Big Government or Limited Government?
“For several years now, this town has been consumed by a rancorous argument over the proper size of the federal government,” said President Obama. “It’s an important debate— one that dates back to our very founding.”
Actually it isn’t. For all their heated disagreements over issues such as the chartering of a national bank, the Framers agreed on the fundamental principles undergirding the Constitution. Most importantly, they agreed that there had to be limits to the powers of government to avoid tyranny. They disagreed about where to draw such limits, but none denied they existed.
The debate we’re now having—and have been having since the birth of Progressivism at the turn of the last century—is over whether there are any limits to the reach, scope and size of the modern administrative state.
Conservative heirs to the Founders believe there are such limits and that the Declaration of Independence and the Constitution testify to the existence of such limits.
By contrast, liberal heirs to the Progressives do not recognize any principled limits to what the government may do. As former liberal Congressman Pete Stark said during the debates over Obamacare: “I think that there are very few constitutional limits that would prevent the federal government from rules that could affect your private life…The federal government, yes, can do most anything in this country.”
Our government, by any conceivable measure, is huge and isn’t about to become small anytime soon. That’s why the rallying cry of conservatives is “limited, constitutional government” and not “small government.”
– David Azerrad
Side-Stepping the Social Security Problem
President Obama made a point to discuss the plight of retirees in tonight’s State of the Union address, but made only one mention of Social Security. He noted that, “A Social Security check often isn’t enough on its own.” If that’s true for today’s retirees, those in the future are really out of luck.
The program is currently running multi-billion dollar deficits and will exhaust its trust fund by 2033, bringing about a 23 percent automatic benefit cut. By the time Millenials—young people currently plagued by a weak job market and higher healthcare premiums—are thinking about retirement, Social Security will be completely insolvent unless reforms are enacted. The President admits that real reform is required to “shore up the promise of Social Security for future generations.” And he has supported common sense, bipartisan initiatives to reform the program in the past, including Chained CPI. But rather than embracing a rare opportunity to kick-start bipartisan change tonight, the President’s speech ignored Social Security’s glaring fiscal problems once again.
– Michael Sargent
America didn’t need 2,000 pages to fix pre-existing condition exclusions.
While pre-existing condition exclusions were a problem before Obamacare, the issue was much smaller than the President routinely portrays it to be. Moreover, Obamacare’s attempt to fix the problem is excessive. It requires an individual mandate tax and a whole slew of other government mandates and regulations. There are more common-sense ways to address it that do not require massive disruptions of coverage for others.
Obamacare hurts Medicare.
President Obama makes the bold claim that his law adds years to Medicare’s finances. In reality, his law cuts Medicare spending by over $700 billion and uses that money to pay for new spending in Obamacare—not to shore up the desperate finances of the Medicare program. The law makes cuts to hospitals, hospices, nursing homes, etc. and the cuts are not targeted at specific instances of waste, fraud, or abuse. In fact, if these draconian spending reductions take effect, the Medicare Trustees project that 15 percent of hospitals will run in the red by 2019.
Furthermore, notably missing from the President’s remarks is any mention of any desperately needed Medicare reform. Even with Obamacare, the hospital insurance trust fund, Medicare Part A, is projected to be bankrupt by 2026 and over the long-term, under the most realistic scenario, the whole program has promised seniors and future seniors $36 trillion worth of benefit promises that it currently does not have the funds to pay for.
There are plenty of bipartisan first steps to Medicare reform that lead to the structural reform Medicare needs. And as Heritage has explained before, “Of all Medicare changes advanced over the past three decades, only premium support—a variant of defined-contribution financing—has inspired bipartisan leadership for comprehensive structural reform.”
– Alyene Senger
Better Alternatives to Obamacare
The President falsely implies that those do not agree with his law have not offered comprehensive alternatives. This assertion is flatly false.
The health care debate should center on the right of persons to make decisions that they think best for themselves and their families. Opposition to the law is, and has been, opposition to coercion, control and the denial of persons the right to get the coverage they want rather than the coverage that federal officials say we must have. The debate should focus on the issues the American people find most important, such as having affordable options and keeping the health plan and the doctor one wants.
– Robert Moffit
Obama on Infrastructure: Cement a Big Federal Role
President Obama wants this year to be “a year of action,” specifically when it comes to reauthorizing both the water resources and surface transportation programs. In his brief mention of infrastructure, he said, “We’ll need Congress to protect more than three million jobs by finishing transportation and waterway bills this summer.”
State and local officials, and the many users of our country’s roads, bridges, ports, and inland waterways, share the President’s goal of having robust infrastructure, so they can do everything from commuting to work to competing for business on a global level.
The trouble is that the President’s command-and-control, Washington-centric approach to both waterway and highway policy is dead wrong. First, his proposal relies on savings from corporate tax reform. But in fact tax reform should be revenue neutral, with any “savings” going to lower rates, not to pay for new spending.
His approach cements power in the hands of federal bureaucrats who are miles and miles away from the consequences of their decisions. It falsely presumes federal stimulus can create highly skilled infrastructure jobs. And it perpetuates the erroneous notion that the states aren’t equipped or capable of making big decisions that affect their transportation and infrastructure systems. Virginia and Texas’ recent successes in constructing public-private partnerships to build capital-intensive transportation projects are just the tip of the evidence that in fact they can.
Indeed, absent from Obama’s speech was any innovative idea or proposal to empower the states to make their own transportation funding and project management decisions, such as those in Rep. Tom Graves (R-GA) and Sen. Mike Lee’s (R-UT) proposal to incrementally hand highway and transit funding and decision-making back over to the states. But bold ideas that reduce power in Washington, in favor of state and local flexibility and control, are crucial to freeing the states to solve traffic congestion and mobility issues on their own, or working with the private sector when it makes sense.
Getting out of the way is—to use Obama’s favorite phrase from last year’s speech—a sure way to let the private sector, not government, create “an America built to last.”
– Emily Goff
That’s Not Your Energy Plan, Mr. President, That’s the Market at Work
President Obama spoke on energy as if he were the offensive coordinator of a football team, saying that he put in place a plan and it worked. Specifically, the President said, “The all-of-the-above energy strategy I announced a few years ago is working.”
Whether it has been this administration or previous administrations, any time Washington concocts an energy strategy, it typically results in wasted taxpayer dollars, inefficiencies, higher energy prices and labor and capital that’s allocated to politically preferred sectors of the economy. Whether it’s the economic and environmental failure of the ethanol mandate (established before the Obama Administration), the billions of taxpayer money dumped into a failed green stimulus, the federal government’s actions meddling of the energy economy does more harm than good.
On the other hand, when the market is left to work, we see the shale oil and shale gas revolution that has created millions of jobs, produced vast energy supplies and helped lower energy bills for American families. America is set to become the world’s top oil producer next year, but that’s because of the market, not the president’s strategy. We still haven’t seen much of America’s federal lands and waters opened for drilling. Despite effective state regulation of hydraulic fracturing, federal regulations are coming down the pipeline. And the looming greenhouse gas regulations for new and existing power plants in the United States will drive up electricity prices for American households and destroy jobs across the country without impacting global temperatures. Let’s not forget, when President Obama was first running for office he promised his cap-and-trade plan would make electricity prices “necessarily skyrocket.” That’s his energy strategy and now he’s going around Congress to implement it.
– Nicolas Loris
Obama Refuses to Admit U.S. Still has Mission in Afghanistan
In his 2014 SOTU address, President Obama emphasized the ending of the war in Afghanistan. Taking credit for bringing home more than 60,000 U.S. troops from Afghanistan in the last two and half years, he announced that, “together with our allies, we will complete our mission there by the end of this year, and America’s longest war will finally be over.”
Certainly the majority of Americans support the U.S. ending combat operations and reducing U.S. involvement in Afghanistan. But it is premature to declare “mission accomplished.” In fact, it would be a monumental mistake for the U.S. to shift attention away from the country, withdrawing all troops and drastically cutting assistance.
The recent increase in al-Qaeda violence in Iraq should serve as a warning that failure to maintain a residual force presence in Afghanistan post-2014 would increase instability throughout South and Central Asia and embolden a vast network of Islamist terrorists with global ambitions.
Renewed instability in Afghanistan would also likely spill over into Pakistan, where terrorist attacks are on the rise and the U.S. intelligence community’s concerns over the safety and security of its nuclear weapons arsenal are growing.
There is a sense of déjà vu in that security talks are close to breaking down with Afghanistan much the same way they did with Iraq two years ago.
Afghan President Karzai is over-playing his hand by refusing to sign the Bilateral Security Agreement (BSA) that would set the parameters for a residual U.S. force presence. If Karzai believes the U.S. is desperate to leave troops in Afghanistan, he is miscalculating. There are plenty of officials in the White House who are ready to go the “zero option” and wipe their hands clean of Afghanistan. Karzai is essentially handing these White House officials a gift.
Iraqi Foreign Minister Hoshyar Zebari advised Karzai in December to sign the BSA, warning him not to be under any illusions that the Americans are desperate to stay in Afghanistan.
While Karzai’s position on the BSA is irresponsible and putting his country’s future at risk, the Obama administration has also sent mixed messages on its commitment to Afghanistan over the last four years.
By proposing Washington either leave 10,000 residual troops or none at all, the U.S. military leadership is signaling its frustration with White House equivocation over the troop numbers issue. U.S. military leaders have been saying for months that the White House should have announced a figure for a residual force long ago to demonstrate U.S. staying power. When it comes to Karzai’s continuous rants against the U.S. and failure to sign the BSA, they say the U.S. should simply ignore him and wait for April’s election to produce a new government.
The American people may want the bulk of U.S. forces to come home, but they also don’t want Afghanistan to again become a hotbed for terrorists bent on attacking the U.S.
As Fred Kagan of the American Enterprise Institute argued in a piece that ran in yesterday’s Wall Street Journal, “Our security remains tied to Afghanistan’s…Withdrawal from Afghanistan, whether financial or military or both, will be a defeat for the U.S. and a victory for al-Qaeda.”
A country where so much is at stake for U.S. interests deserves focused attention and a well-crafted strategy – neither of which the White House is currently providing.
– Lisa Curtis
To Build Opportunity, Strengthen Marriage
Tonight President Obama talked at length on “expand[ing] opportunity for more American families,” and building “ladders of opportunity into the middle class.” However, he failed to talk about one of the greatest threats facing the well-being of American families: the breakdown of marriage.
Today, approximately 40 percent of all children are born outside of marriage. Tragically, these children are more than five times as likely to be poor than their peers from married-parent homes. These children are also less likely to thrive down the road. Eighty percent of all long-term poverty occurs in single-parent homes and over 70 percent of poor families are headed by a single parent.
The breakdown of marriage and the subsequent growth in unwed child-bearing is particularly common in low-income communities but becoming more common in working class America. This trend is threatening the American dream.
As researcher Brad Wilcox notes:
“The disappearance of marriage in Middle America would endanger the American Dream, the emotional and social welfare of children, and the stability of the social fabric in thousands of communities across the country.”
Unfortunately, President Obama continues to remain silent on the issue of marriage and unwed childbearing. Leaders at every level of society need must take efforts to strengthen marriages to ensure more American children have the opportunity to be raised by a married mother and father and thus the greatest opportunity to thrive.
– Rachel Sheffield
How to Tackle The Danger Al-Qaeda Presents
In regards to Al-Qaeda, President Obama in his remarks correctly states, “the fact is, that danger remains.” However the danger is understated as Al-Qaeda is alive and well evidenced by recent attacks in spanning from West Africa to the heart of the Middle East. As the President emphasized, the U.S. should to continue to fight terrorists in Yemen, Somalia, Iraq, and Mali with our partners, but that requires a long-term strategy with a sustained effort and focus on fighting the enemy. We should work through our partners and allies like Israel instead of alienating them.
– Charlotte Florance
Welfare Should Encourage Work
President Obama talked about “helping families pull themselves up through hard work.”
Unfortunately, the vast majority of government anti-poverty programs fail to promote opportunity through work. Work rates among low-income households are low, even in good economic times. Of the federal government’s roughly 80 means-tested welfare programs, very few include any type of work requirement. And thanks to President Obama, the work requirements that did exist are weaker today.
Work requirements not only encourage able-bodied welfare recipients towards self-sufficiency, but they also serve as a gatekeeper, ensuring that welfare assistance is directed to those who truly need it. Work programs also provide services to help individuals with job search and job training.
Americans are a generous people and believe in helping their neighbor. But they also believe that their neighbors should do what they can to help themselves. In fact, the vast majority of Americans support work requirements for welfare.
The 1996 welfare reform inserted work requirements into the largest cash assistance welfare program, transforming it from a one-way handout into a work activation program. Within about five years welfare rolls declined by half, employment rates among low-income individuals increased, and child poverty plummeted.
Instead of weakening work requirements, welfare should be reformed to encourage work for able-bodied adults, encouraging opportunity through work.
– Rachel Sheffield
Obamacare Restricts Choice and Tramples on Religious Freedom
President Obama said this evening that “few things exposed hard-working families to economic hardship more than a broken health care system. …we’re in the process of fixing that.” Yet Obamacare does just the opposite. In addition to the numerous, onerous mandates on employers that are hampering jobs, the health care law is punishing family businesses who create jobs and help grow the economy simply because they operate in accordance with their deeply held beliefs.
Over 300 family businesses, charities, schools, and individuals have sued over the coercive HHS mandate that forces employers to provide coverage of abortion-inducing drugs and devices, contraception, and sterilization – regardless of religious or moral objection. Not complying could mean fines of up to $100 per employee per day.
The Obama Administration, however, has argued that family business owners’ religious freedom stops at the doors of their workplace.
And federal courts aren’t buying the Administration’s faulty arguments. To date, federal judges have granted temporary stays against the mandate in nearly 90 percent of the cases they’ve considered. The Supreme Court will consider the mandate later this spring when they hear arguments in cases brought by the Green family, who own Hobby Lobby arts-and-crafts chain, and the Hahn family, who run Conestoga Wood Specialties.Like much of Obamacare’s implementation, the HHS mandate was created and enforced by unaccountable bureaucrats. Obamacare has given broad authority to unelected administrators to determine what employers must provide, insurance plans must cover, and individuals must purchase.
Americans don’t forfeit protection of their fundamental freedoms just because they go into business to provide for themselves, their families, and employees. Employees, individuals, and all Americans should be able to choose health care that best fits the needs of their families and respects their values. And employers should be able to build and grow job-creating businesses in accordance with their values without threat of government penalties.
– Sarah Torre
Guard Against The Wrong Plan for Fannie and Freddie
President Obama’s State of the Union address mentioned reforming the housing finance market, and that’s a good sign for taxpayers. Given that the President has previously called for ending Fannie Mae and Freddie Mac, taxpayers should be particularly hopeful. But while shutting down the two former GSEs – the companies that taxpayers bailed out with almost $200 billion in 2008 – is the right way to reform the housing market, it has to be done properly.
Unfortunately, legislation in the Obama-friendly Senate takes the wrong approach by replacing the GSEs with a new government entity. For instance, S. 1217, sponsored by Senators Bob Corker (R–TN) and Mark Warner (D–VA), replaces Fannie and Freddie with a new government agency called the Federal Mortgage Insurance Corporation (FMIC). The FMIC would be a Federal regulator and insurer of mortgage backed securities, loosely modeled after the Federal Deposit Insurance Corporation (FDIC).
In its original form, S. 1217 calls for the FMIC to back 90 percent of losses, but this percentage is sure to increase during the legislative process. Either way, taxpayers end up in nearly the same place they are now – responsible for losses in the mortgage market. The President should call on Congress to pass meaningful housing finance reform that shuts down Fannie and Freddie, but that doesn’t replace them with a new version. That’s the type of housing finance reform that will protect taxpayers.
– Norbert Michel
President Obama on Retirement Savings, MyRA
President Obama encouragingly promoted retirement savings among all Americans during his State of the Union. Low-income Americans and those first entering the workforce especially benefit from accounts that feature low or no-fees and which protect savers’ principal. Many such accounts already exist in the private sector.
The President proposed to “direct the Treasury to create a new way for working Americans to start their own retirement savings: MyRA. It’s a new savings bond that encourages folks to build a nest egg. MyRA guarantees a decent return with no risk of losing what you put in.”
Americans can already buy Treasury bonds at their choosing. The MyRA proposal would supposedly include certain features to facilitate savings, perhaps through immediate payroll deductions.
Details matter. A similar proposal featured by AARP in October 2012 calls for a preset limit. Once an account balance reaches a certain threshold, or preset limit, it could be transferred to a private-sector account. This is important as Treasury bonds bring much lower returns over the long-run, than a balanced portfolio—featuring an age-appropriate mix of stocks and bonds—can return.
Workers should not get stuck with only government bonds for long.
– Romina Boccia
Climate Change: The Debate is Not Over
No one is arguing about whether the climate is changing. But there needs to be a discussion about how and why the climate is changing because that is certainly up for debate. More evidence is pointing to the fact that we’re not headed toward catastrophic warming. And while carbon dioxide emissions have steadily increased, global temperatures have plateaued for over a decade and a half. The scientific debate is far from settled.
The President may think the policy debate is settled too. But regardless of what science ultimately shows about the role carbon dioxide plays or doesn’t play in global warming, his administration’s efforts to cut carbon dioxide won’t make a noticeable dent in global temperatures or environmental improvement. What regulations like CAFE standards for cars and new regulations on coal fired electricity do is threaten reliable, inexpensive energy and the jobs and families that depend on it.
The aggregate mortality rate due to extreme weather events around the globe is down 90 percent since the 1920s, even while population has grown from 1.8 billion to 7.1 billion. This incredible improvement is due to the creation of wealth and expanded opportunities for people to improve their quality of life and adapt to change – a consequence of the economic growth fueled by conventional fuels like coal.
– Katie Tubb
Iran and Sanctions
Tonight, President Obama touted the interim nuclear deal with Iran and declared he will veto any new sanctions law against the regime. As Heritage’s James Phillips has written, President Obama fails to recognize that sanctions will be required to force Iran “to make the necessary deeper concessions” to bring Tehran into a final deal. Iran time and time again has reneged on its commitments and the President is naïve to think this round of the interim deal will be any different. Congress is seeking to increase sanctions, which would only be triggered if Iran fails to meet its commitments and would only go into place after the six-month interim period. In the words of the Senate Foreign Relations Committee chairman Robert Menendez the additional sanctions would be an “insurance policy,” an important tool given Tehran’s track record of deception.
– Charlotte Florance
President Obama on the Debt Limit
Of course, President Obama would not miss this opportunity in the national spotlight to bash fiscally conservative members of Congress seeking to rein in spending and debt while asking Congress for yet another blank check.
Referring to attempts at making a down-payment on the massive $17.3 trillion debt by concerned members as “threaten[ing] the full faith and credit of the United States,” the President is gearing up for yet another large increase in the national debt—no strings attached, please.
And why not? The bill will be left behind for one of Obama’s successors to deal with. But ultimately the American taxpayer will be asked to foot today’s excesses.
And there’s plenty of excess epitomized in the nearly 1600-page $1.1 trillion omnibus budget bill which became law recently. Washington could not even be convinced to cut less than 1 percent out of the budget by eliminating just 10 inappropriate and wasteful government programs.
Even more money is spent on entitlement programs and their growth poses the biggest threat to America’s future prosperity. But don’t expect President Obama to “take action” on solving the spending and debt crisis.
During fewer than five years in office, President Obama has managed to increase the debt limit more than any other President in recent history, including George W. Bush over eight years in office.
– Romina Boccia
Obama’s Record on the Deficit, Debt, and Spending
President Obama boasted how fiscally responsible his administration has been, touting “our deficits – cut by more than half.”
Standing on its own, this fact is very misleading about the actual state of the U.S. budget. What the President failed to mention is just how shockingly high the deficit was during his term in office, what the sum of deficits meant for the U.S. public debt, and how the President has actually made the U.S. future spending and debt crisis much worse.
Here’s a more complete picture of President Obama’s record on the deficit, debt, and spending:
During President Obama’s first term in office, the deficit exceeded $1 trillion for four years in a row and reached its highest level as a percentage of GDP since 1946. Only the future holds even worse deficits.
Public debt reached a 50-year high during President Obama’s term in office due to the recession’s effects on revenues and government assistance programs, but also in large part due to massive stimulus spending that failed to create the promised jobs and growth, and the President’s overzealous regulatory agenda which slowed the economic recovery.
President Obama and his allies in Congress expanded federal spending on healthcare with Obamacare, boosting the largest driver of projected spending and debt, and leaving it to a future President to solve an even bigger fiscal mess.
Rather than encourage even more fiscal profligacy by suggesting the fiscal state of the Union is fine and propose yet another round of stimulus measures, the President would do the nation a better service by admitting that the U.S. fiscal situation is much worse than when he first took office and propose a legislative agenda which will help control spending and debt.
– Romina Boccia