Wednesday, January 25, 2012

Annotated State of the Union Address: Part I

I have gone through the State of the Union Address (in italics below) delivered by President Obama and interspersed comments (in blue below). I have deleted some puffery and yadda-yadda-yadda where it seemed appropriate (e.g. how much we will miss Gabby Giffords); put "...." to indicate this. The full text can be found here.

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At stake right now is not who wins the next election – after all, we just had an election. 


Well, this is disingenuous since how we proceed will depend to a great deal on who "wins" the election. Surely if John McCain had won the last election things would be a lot different now in terms of health care and consumer financial protection to name just a few things. What we all should have learned by now is exactly the point that winning or losing election has consequences. Had Gore won in 2000 (or Kerry in 2004) we would have had a different Supreme Court and almost undoubtedly had a very different political campaign since the ridiculous "Citizens United" decision based on "corporations are people" would not have happened. We simply can't afford to have the right wing win elections: IT REALLY MATTERS.



We did that in December. Thanks to the tax cuts we passed, Americans’ paychecks are a little bigger today. Every business can write off the full cost of the new investments they make this year. These steps, taken by Democrats and Republicans, will grow the economy and add to the more than one million private sector jobs created last year.

But we have more work to do. The steps we’ve taken over the last two years may have broken the back of this recession – but to win the future, we’ll need to take on challenges that have been decades in the making.


It's difficult to say that the various investment tax credits and the cut in the FICA tax did much good. There is a huge amount of money that businesses and banks are sitting on, waiting for consumer demand to make investment worthwhile. I think there was a real danger in cutting the FICA tax, and it would have made more sense to accompany that with a raising of the income ceiling of this tax. However, Obama did what he could, so we'll just have to hope that recovery proceeds as quickly as possible. Only Republican ideologues think that taxes and regulations have anything to do with the anemic nature of the recovery: most business say that it's the lack of consumer demand, and most consumers say that job uncertainty and income stagnation leads to their lack of confidence.
 
Many people watching tonight can probably remember a time when finding a good job meant showing up at a nearby factory or a business downtown. You didn’t always need a degree, and your competition was pretty much limited to your neighbors. If you worked hard, chances are you’d have a job for life, with a decent paycheck, good benefits, and the occasional promotion. Maybe you’d even have the pride of seeing your kids work at the same company.



That world has changed. And for many, the change has been painful. I’ve seen it in the shuttered windows of once booming factories, and the vacant storefronts of once busy Main Streets. I’ve heard it in the frustrations of Americans who’ve seen their paychecks dwindle or their jobs disappear – proud men and women who feel like the rules have been changed in the middle of the game.

They’re right. The rules have changed. In a single generation, revolutions in technology have transformed the way we live, work and do business. Steel mills that once needed 1,000 workers can now do the same work with 100. Today, just about any company can set up shop, hire workers, and sell their products wherever there’s an internet connection.

Meanwhile, nations like China and India realized that with some changes of their own, they could compete in this new world. And so they started educating their children earlier and longer, with greater emphasis on math and science. They’re investing in research and new technologies. Just recently, China became home to the world’s largest private solar research facility, and the world’s fastest computer.
 
True, but not completely. In search of bigger profits, businesses abandoned American workers and moved a lot of their operations overseas where there were fewer regulations protecting workers and the environment. In many cases they were able to do this while paying lower taxes in other countries and without penalties from the IRS. There are still many unemployed American workers who are quite well-educated and able to perform the jobs that need to be done -- they just aren't cheap labor.

So yes, the world has changed. The competition for jobs is real. But this shouldn’t discourage us. It should challenge us. Remember – for all the hits we’ve taken these last few years, for all the naysayers predicting our decline, America still has the largest, most prosperous economy in the world. No workers are more productive than ours. No country has more successful companies, or grants more patents to inventors and entrepreneurs. We are home to the world’s best colleges and universities, where more students come to study than any other place on Earth.

While it is very true that we must make our education more rigorous, and students must work harder to master the more difficult subjects that are important in the modern, highly technical world, it is important to recognize as well that one of the reasons we have been so successful is that we have had for over a century an effective and relatively democratic education system. I say "relatively" because we had a very long period of segregation, and even now there remain great disparities; yet, in comparison with the class divisions of Europe that existed until fairly recently, our educational system provided a pretty good opportunity for people of talent to learn skills that enabled them to rise in society. Unfortunately, recent cutbacks in education have hit schools very hard, and the cost of college has risen far faster than middle-class incomes. Republican tax and social policies are making this worse -- cutting Pell grants, for example. A country's intellectual resources, in theory, are proportional to the size of its population -- provided there is equal access to education. Once vouchers that don't pay the costs of instruction and cuts in support for college and university education become the norm, our intellectual resources will be too largely concentrated in the hands of the wealthy and the legacies.

What’s more, we are the first nation to be founded for the sake of an idea – the idea that each of us deserves the chance to shape our own destiny. That is why centuries of pioneers and immigrants have risked everything to come here. It’s why our students don’t just memorize equations, but answer questions like “What do you think of that idea? What would you change about the world? What do you want to be when you grow up?”
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The first step in winning the future is encouraging American innovation.

None of us can predict with certainty what the next big industry will be, or where the new jobs will come from. Thirty years ago, we couldn’t know that something called the Internet would lead to an economic revolution. What we can do – what America does better than anyone – is spark the creativity and imagination of our people. We are the nation that put cars in driveways and computers in offices; the nation of Edison and the Wright brothers; of Google and Facebook. In America, innovation doesn’t just change our lives. It’s how we make a living.
 
It is worth remembering that one of the major contributions of American industry was Henry Ford's realization that he couldn't sell cars unless people could afford to buy them. This meant not just making them cheaply, but also paying his workers a decent wage. Up until recently that was a vital part of the American way, but the incomes of working people hit a plateau decades ago and have remained stagnant, while other expenses (energy, education etc.) have gone up. The ratio of income between the wealthy, owning classes and the working classes has soared in recent years; it is higher than in any other major industrialized country.

Our free enterprise system is what drives innovation. But because it’s not always profitable for companies to invest in basic research, throughout history our government has provided cutting-edge scientists and inventors with the support that they need. That’s what planted the seeds for the Internet. That’s what helped make possible things like computer chips and GPS.

Just think of all the good jobs – from manufacturing to retail – that have come from those breakthroughs.


Not just techy stuff though. Don't forget that taxes pay for infrastructure without which making money would be impossible. This includes building and maintaining the highway system, paying police, firefighters and medical personel, and maintaining public elementary and secondary schools. (This is an important point made recently by Elizabeth Warren in cautioning us not to over-credit the wealthy for their success and their contributions.)

Half a century ago, when the Soviets beat us into space with the launch of a satellite called Sputnik¸ we had no idea how we’d beat them to the moon. The science wasn’t there yet. NASA didn’t even exist. But after investing in better research and education, we didn’t just surpass the Soviets; we unleashed a wave of innovation that created new industries and millions of new jobs.

This is our generation’s Sputnik moment. Two years ago, I said that we needed to reach a level of research and development we haven’t seen since the height of the Space Race. In a few weeks, I will be sending a budget to Congress that helps us meet that goal. We’ll invest in biomedical research, information technology, and especially clean energy technology – an investment that will strengthen our security, protect our planet, and create countless new jobs for our people.


And it's important to point out that this is a very good time to make these investments, when interest rates are historically low, and when the whole country will reap their benefits.
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At the California Institute of Technology, they’re developing a way to turn sunlight and water into fuel for our cars. At Oak Ridge National Laboratory, they’re using supercomputers to get a lot more power out of our nuclear facilities. 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.

We need to get behind this innovation. And to help pay for it, I’m asking Congress to eliminate the billions in taxpayer dollars we currently give to oil companies. I don’t know if you’ve noticed, but they’re doing just fine on their own. So instead of subsidizing yesterday’s energy, let’s invest in tomorrow’s.

Now, clean energy breakthroughs will only translate into clean energy jobs if businesses know there will be a market for what they’re selling. 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. 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 together to make it happen.


At least two of these, nuclear and coal are highly problematic. No one knows what to do with nuclear waste: everyone knows it's unsafe and no one wants it in their "backyard." Clean coal is so difficult and expensive to create that it is virtually and contradiction in terms. In fact, if one includes the costs of safe and ecologically sound production, as well as the cleanup of residues and waste products on the earth, and in the water and air, wind and solar are quite competitive already with oil and perhaps with gas (the safety of "fracking" is not yet determined). Some environmentalists also have to lighten up on hydroelectric, which is clean and already more that competitive with fossil fuels; geothermal and tidal are already factors in some areas.

Maintaining our leadership in research and technology is crucial to America’s success. But if we want to win the future – if we want innovation to produce jobs in America and not overseas – then we also have to win the race to educate our kids.

Think about it. Over the next ten years, nearly half of all new jobs will require education that goes beyond a high school degree. And yet, as many as a quarter of our students aren’t even finishing high school. The quality of our math and science education lags behind many other nations. America has fallen to 9th in the proportion of young people with a college degree. And so the question is whether all of us – as citizens, and as parents – are willing to do what’s necessary to give every child a chance to succeed.

That responsibility begins not in our classrooms, but in our homes and communities. It’s family that first instills the love of learning in a child. Only parents can make sure the TV is turned off and homework gets done. We need to teach our kids that it’s not just the winner of the Super Bowl who deserves to be celebrated, but the winner of the science fair; that success is not a function of fame or PR, but of hard work and discipline.

...
Stuff on Race to the Top omitted.

You see, we know what’s possible for our children when reform isn’t just a top-down mandate, but the work of local teachers and principals; school boards and communities.

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Let’s also remember that after parents, the biggest impact on a child’s success comes from the man or woman at the front of the classroom. In South Korea, teachers are known as “nation builders.” Here in America, it’s time we treated the people who educate our children with the same level of respect. We want to reward good teachers and stop making excuses for bad ones. And over the next ten years, with so many Baby Boomers retiring from our classrooms, we want to prepare 100,000 new teachers in the fields of science, technology, engineering, and math.

In fact, to every young person listening tonight who’s contemplating their career choice: 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.


Exactly one party is blaming our problems on teachers, calling them overpaid and underqualified. This is mostly because most teachers are unionized, and only one party wants to smash unions and set back the labor movement a century. It's the same party whose presidential candidates mock child-labor laws and union wages and contracts. It's the same party that thinks that worker safety and its federal enforcer OSHA are legitimate subjects of ridicule.

Of course, the education race doesn’t end with a high school diploma. To compete, higher education must be within reach of every American. That’s why we’ve ended the unwarranted taxpayer subsidies that went to banks, and used the savings to make college affordable for millions of students. And this year, I ask Congress to go further, and make permanent our tuition tax credit – worth $10,000 for four years of college.

Because people need to be able to train for new jobs and careers in today’s fast-changing economy, we are also revitalizing America’s community colleges.

....
If we take these steps – if we raise expectations for every child, and give them the best possible chance at an education, from the day they’re born until the last job they take – we will reach the goal I set two years ago: by the end of the decade, America will once again have the highest proportion of college graduates in the world.

One last point about education. Today, there are hundreds of thousands of students excelling in our schools who are not American citizens. Some are the children of undocumented workers, who had nothing to do with the actions of their parents. They grew up as Americans and pledge allegiance to our flag, and yet live every day with the threat of deportation. Others come here from abroad to study in our colleges and universities. But as soon as they obtain advanced degrees, we send them back home to compete against us. It makes no sense.

Now, I strongly believe that we should take on, once and for all, the issue of illegal immigration. I am prepared to work with Republicans and Democrats to protect our borders, enforce our laws and address the millions of undocumented workers who are now living in the shadows. I know that debate will be difficult and take time. But tonight, let’s agree to make that effort. And let’s stop expelling talented, responsible young people who can staff our research labs, start new businesses, and further enrich this nation.


In the Republican "debates", several of the candidates -- Romney among them -- when asked to discuss the "Dream Act", kept yacking about people who came here to work illegally and how unfair it is when others came legally. The so-called moderators refused to point out that the proposal was all about little kids who were brought here illegally and who had no idea what was happening to them. It seems typical of what passes for (some) Christians these days to want to punish them for acts committed by parents or relatives. The questioners should have said: "What do you do to a person who was brought here as a little kid, grew up and was educated here, and is now in HS or college and is doing well? Throw him/her out -- perhaps back to a country they never really knew, and whose language they may not speak?" For this lack of compassion alone Mitt Romney shouldn't be elected dog catcher. For Gingrich's recent comments on Romney's position, see this article. Gingrich's history shows him to be, in general, a rather vile person, but in this particular case his position is more humane than Romney's -- though that's not saying much.

The third step in winning the future is rebuilding America. To attract new businesses to our shores, we need the fastest, most reliable ways to move people, goods, and information – from high-speed rail to high-speed internet.

Our infrastructure used to be the best – but our lead has slipped. South Korean homes now have greater internet access than we do. Countries in Europe and Russia invest more in their roads and railways than we do. China is building faster trains and newer airports. Meanwhile, when our own engineers graded our nation’s infrastructure, they gave us a “D.”

We have to do better. America is the nation that built the transcontinental railroad, brought electricity to rural communities, and constructed the interstate highway system. The jobs created by these projects didn’t just come from laying down tracks or pavement. They came from businesses that opened near a town’s new train station or the new off-ramp.

Over the last two years, we have begun rebuilding for the 21st century, a project that has meant thousands of good jobs for the hard-hit construction industry. Tonight, I’m proposing that we redouble these efforts.

We will put more Americans to work repairing crumbling roads and bridges. We will make sure this is fully paid for, attract private investment, and pick projects based on what’s best for the economy, not politicians.

Within 25 years, our goal is to give 80% of Americans access to high-speed rail, which could allow you go places in half the time it takes to travel by car. For some trips, it will be faster than flying – without the pat-down. As we speak, routes in California and the Midwest are already underway.

Within the next five years, we will make it possible for business to deploy the next generation of high-speed wireless coverage to 98% of all Americans. This isn’t just about a faster internet and fewer dropped calls. It’s about connecting every part of America to the digital age. It’s about a rural community in Iowa or Alabama where farmers and small business owners will be able to sell their products all over the world. It’s about a firefighter who can download the design of a burning building onto a handheld device; a student who can take classes with a digital textbook; or a patient who can have face-to-face video chats with her doctor.

All these investments – in innovation, education, and infrastructure – will make America a better place to do business and create jobs. But to help our companies compete, we also have to knock down barriers that stand in the way of their success.


See the article The Dangerous Notion that Dept Doesn't Matter for a businessman's take on the need for investing in infrastructure. (This was mentioned in a previous blog.)


More about the State of the Union Address later.

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