President Obama laid out his vision for “winning the future” in last night’s State of the Union address, focusing on four steps to build a more prosperous America: encouraging innovation, investing in education and clean energy, rebuilding the nation’s crumbling infrastructure, and reducing the national debt. The speech was a departure from past addresses in that it did not offer a laundry list of new proposals or initiatives, nor did it go to great lengths to highlight the accomplishments of the administration or defend its record. Rather, Obama offered more aspirational goals that could win bipartisan support in Congress and made overtures to the new Republican majority on such issues as instituting a domestic spending freeze, lowering the corporate tax rate, and addressing malpractice reform.
REDUCING SPENDING: Obama proposed freezing “annual domestic spending for the next five years” to “reduce the deficit by more than $400 billion over the next decade,” but warned that going after discretionary spending would not be enough. To significantly reduce spending, Congress will also have to target entitlements — reduce Medicare and Medicaid spending and find a “bipartisan solution to strengthen Social Security.” Obama did not endorse his deficit reduction commission’s proposal to “raise the retirement age, and otherwise reduce Social Securi ty benefits.” The President said that Congress must do more to control health care spending without undoing the new health law, endorsed the GOP proposal to fix the nation’s malpractice system, and called for greater simplification of the tax code, noting that many corporations “are hit with one of the highest corporate tax rates in the world.” Democrats and Republicans, Obama said, should “[g]et rid of the loopholes. Level the playing field. And use the savings to lower the corporate tax rate for the first time in 25 years — without adding to our deficit.” That line played well with Republicans, as did Obama’s pledge to veto legislation that contained earmarks.
INVESTING IN AMERICA: But the President also warned that the reductions in spending should not come at the expense of “our most vulnerable citizens” or “gutting our investments in innovation and education.” That, he said, “is like lightening an overloaded airplane by removing its engine. It may feel like you’re flying high at first, but it won’t take long before you’ll feel the impact.” Obama argued that this “is our generation’s Sputnik moment” and called on the nation to invest in the promise of renewable energy by eliminating “the billions in taxpayer dollars we currently give to oil companies” and channeling those dollars into the “clean energy breakthroughs” of tomorrow. “So tonight, I challenge you to join me in setting a new goal: by 2035, 80% of America’s electricity will come from clean energy sources,” Obama said. “Some folks want wind and solar. Others want nuclear, clean coal, and natural gas. To meet this goal, we will need them all — and I urge Democrats and Republicans to work togeth er to make it happen.” He argued that with more research and incentives, “we can break our dependence on oil with biofuels, and become the first country to have 1 million electric vehicles on the road by 2015.” This would “reduc[e] oil consumption by 785 million barrels by 2030,” he predicted. This stands in sharp contrast to the Republican Study Committee, whose plan undermines American competitiveness by chopping away at key programs designed to leverage private investment in clean energy solutions for tomorrow. Obama also called on Congress to invest in the nation’s crumbling infrastructure and estimated that through targeted investments, 80 percent of Americans will have access “to high-speed rail, which could allow you to go places in half the time it takes to travel by car.” Obama also stressed the need to improve America’s education system by strengthening his signature Race To The To p initiative, which rewards states that develop the “most innovative plans to improve teacher quality and student achievement.” “Here in America, it’s time we treated the people who educate our children with the same level of respect,” Obama said, before adding, “if you want to make a difference in the life of our nation; if you want to make a difference in the life of a child — become a teacher. Your country needs you.” Obama also called on Congress to pass the DREAM Act, which provides young undocumented immigrants who were brought to the U.S. by their parents a path to legalization, and urged members to develop a bipartisan immigration reform bill that would “enforce our laws and address the millions of undocumented workers who are now living in the shadows.”
FOREIGN POLICY: Obama devoted only a small portion of the address to fo reign policy, noting that 100,000 American troops have left Iraq, “combat patrols have ended; violence has come down; and a new government has been formed.” Looking to Afghanistan, Obama said that fewer Afghans are now “under the control of the insurgency,” reiterated that American troops will begin coming home this July, but warned that “the Afghan government will need to deliver better governance” to sustain the progress already made. Significantly, the President didn’t define what he meant by “transition” in Afghanistan or lay the groundwork for the American people if the administration wants to pursue a political settlement with the Taliban, as they recently indicated in their strategic review. Obama also didn’t articulate a clear set of expectations for the Karzai government and its international partners.
A SHARP CONTRAST: Still, the address proved far more substantive than the Republican rebuttal offered by Rep. Paul Ryan (WI). Ryan eschewed any discussion of foreign policy and instead focused on reducing the deficit and cutting spending. Ryan is known as the GOP’s numbers guy in the House, and last year laid out what he calls a “Roadmap” to fiscal health — almost the antithesis of what Obama is proposing. “We are at a moment, where if government’s growth is left unchecked and unchallenged, America’s best century will be considered our past century,” Ryan said, warning that “[t]his is a future in which we will transform our social safety net into a hammock, which lulls able-bodied people into lives of complacency and dependency.” But, Ryan’s so-called “new course” would cut Social Security benefits by roughly 16 percent for the average new retiree in 2050 and 28 percent in 2080 from price indexing alone. He would also “eliminate traditional Medicare, most of Medicaid, and all of the Children’s Health Insurance Program” by creating a private voucher system that wouldn’t keep up with the cost of health care. By 2080, under Ryan’s plan, the Medicare program w ould be reduced by nearly 80 percent below its projected size under current policies. During an appearance on Bloomberg’s Charlie Rose last night, CAPAF President and CEO John Podesta described the cuts as “slash and burn,” noting that we haven’t “seen that in the U.S. since Sherman’s march to the sea.” Finally, this “new course” would increase taxes on middle-class families earning between $50,000 and $75,000 a year by $900 on average (their average tax rate jump to 19.1 percent from 17.7 percent), while at the same time, “Millionaires would see their average tax rate drop to 12.8%, less than half of what they would pay relative to current policy.”
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