Reaction Roundup: Heritage Responds To The State Of The Union

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President Obama shakes hands with Speaker of the House John Boehner as he arrives to deliver his State of the Union address on Capitol Hill in Washington Tuesday. Jim Young/Reuters

Heritage members and fans are discussing President Barack Obama’s State of the Unions address at Twitter and Facebook right now. And here are just some of our experts’ immediate reactions to parts of the speech:

Still No Choice in Education

We agree with the president: No Child Left Behind is broken. Unfortunately, the similarities end there. although both sides of the aisle agree that No Child Left Behind is broken, the Obama administration does not believe the federal role in education is fundamentally flawed. They’re still holding onto the hope that after 40 years of failed federal interventions, this time, Washington will get it right.

In his address tonight, President Obama lauded his Race to the Top Program and continued to promote national standards. He also talked extensively about “investing” more in education, a clear indication that he plans to continue Washington’s education spending spree.

But conservatives have a better plan for improving education: The Academic Partnerships Lead Us to Success (A-PLUS) plan. A-PLUS would allow states to opt out of onerous federal programs such as those found within NCLB, and would allow state and local leaders to have more control over education dollars and decision-making.

The president’s speech also lacked any serious discussion of school choice, despite the fact that the highly effective D.C. Opportunity Scholarship Program is on life support in his back yard. By contrast, Speaker John Boehner had parents and children from the D.C. Opportunity Scholarship Program as guests in the Speaker’s Box during the SOTU tonight – a sure sign that he plans to make school choice in the District a priority.
– Lindsey Burke

Obamacare is Still Unconstitutional

Tonight, the President, defending his health care plan, stated “If you have ideas about how to improve this law by making care better or more affordable, I am eager to work with you.” Unfortunately, he did not express any concern regarding the constitutionality of the bill. As Heritage has described here, the health care mandate is both unprecedented, and unconstitutional. A federal court in Virginia has already agreed, declaring the mandate unconstitutional, and a majority of states are challenging the mandate in court in Florida.

The mandate’s constitutional defect is a major problem for Obama’s offer to just modify the existing, ill-conceived bill, because as President Obama’s own Justice Department has argued in court, the mandate is so essential given the other requirements in the law that its elimination would “inexorably drive [the health insurance] market into extinction.” Tinkering around the edges will not fix the problems with this bill. A due respect for the Constitution and public opinion requires that the unprecedented overreaching of the mandate be corrected–and this will require complete repeal.
– Robert Alt

Social Security

The good news was that the speech included a reference to fixing Social Security. Unfortunately, President Obama’s laudable goal of finding a “bipartisan solution to strengthen Social Security for future generations” was either empty rhetoric or showed a serious misunderstanding of what causes that program’s underfunding. His next sentence exempted everything that might improve future generations’ retirement security except raising taxes.

Not only does that make a bipartisan solution almost impossible, but the tax increases that he has discussed in the past don’t fix the problem. For instance, Social Security’s nonpartisan actuaries say that making every dollar or earnings subject to the payroll tax only delays the start of permanent deficits by 8 years from 2016 until 2024. Future retirees can still expect a more than 20 percent cut in their benefits. And those who would pay those higher taxes will see the huge increase in their marginal tax rates drain away dollars that could otherwise have been used to start small businesses.

The President’s approach ignores the recommendations of his own bipartisan commission. It also fails to recognize that Americans are living longer than ever, and that over 80 percent of those who reach retirement age are healthy enough to work a little longer if it means that they can avoid the 20 percent benefit cuts that will come otherwise. If he really wants a bipartisan solution to Social Security’s problems, this speech didn’t show it.
– David John


Throughout the health care debate, the Heritage Foundation offered numerous ideas for how to improve the health care system, including for those who are most in need.

Americans want health care reform, but not the kind enacted under the new health care law. They do not want to turn more power over their health care dollars or personal health care decisions to Washington bureaucrats. And, Congress cannot fix a health care law that is founded on a fundamentally flawed foundation.

Real health care reform is based on consumer-focused, market-based reforms that empower individuals by fixing the tax treatment of health insurance, transforming health care entitlement programs, and letting the states develop reforms that best meet the unique needs of their citizens through portability, choice and competition.

If the President is serious about American’s fiscal future, he would begin by repealing a health care law that adds a trillion dollars in new health care spending, stifles economic growth through a half a trillion in new taxes, burdens future generations with unknown costs, and undermines individual freedom through government mandates and regulations.
– Nina Owcharenko

Subsidies Don’t Create Jobs

In his state of the union address, President Obama dragged out a 50 year-old, cold-war poster child to paper over his proposal for a tried-and-failed energy/jobs policy. The rhetoric for his policy alludes to the Sputnik space race. Unfortunately, the reality promises a sputtering economy. Government bureaucrats and federal mandates are not the motivating force for innovation and job creation.

Last year’s poster children for clean-energy jobs, Solyndra and Evergreen Solar, are this year’s object lessons in the futility of trying to subsidize our way to good, permanent job creation.

Mere months after receiving a $535 million government loan (and after a well-publicized presidential photo op), Solyndra withdrew its initial public offering because it got a sub-par review from an independent auditor. And a year after getting their half-billion dollars, Solyndra closed a factory and got rid of nearly 200 jobs.

After much hyped state subsidies of up to $76 million and after millions of dollars of federal subsidies Evergreen Solar is now shutting its factory in Massachusetts, laying off 700 workers, and moving production to China.

If a company needs a subsidy to hire a worker, that worker will be out on the street when the subsidy expires. Private enterprise provides energy, creates jobs, and develops innovative technology. It does so because private enterprise only succeeds when the energy, jobs, and technology provide value that exceeds the cost. That’s how we get good, durable jobs.
– David Kreutzer

The State of the Family

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This evening’s State of the Union address was notably devoid of discussion of one of the issues that could be fairly characterized as “decades in the making,” the phrase President Obama used to introduce a litany of problems facing the country. Evidence continues to accumulate that the persistence of problems like poverty and welfare dependency is strongly associated with the rise in the number of children born out of wedlock.

To a striking degree, the challenges of the federal budget are linked to and aggravated by the fracturing in family budgets brought on by the failure of families to form and government policies that neglect the best adhesive to repair that fracturing – the bonds of marriage. The state of American families went unmentioned tonight but it is vital that this conversation, and its implications for the State of the Union, happen with a new urgency at the national level.
– Chuck Donovan

Preserving Peace

The President said tonight that the nation must always remember that the Americans who have borne the greatest burden in this struggle to be free are the men and women in uniform. President Obama was right to say that the country is united in support of those who serve and their families. As a result, he also rightly said that we must provide them the equipment that they need, care and benefits they’ve earned, and more.

The challenge in meeting this task of providing our all-volunteer force all the tools they need to succeed now and for the next 20 years is that the U.S. is slipping in this area, as well. The traditional margins of U.S. technological military superiority are declining across the board. These long-held “margins” are ingredients in U.S. military supremacy that have ensured that our forces are never in a fair fight. Indeed, during a recent trip to China, the Secretary of Defense said that the Chinese “clearly have potential to put some of our capabilities at risk.”

Let us truly recall the lessons of history in reversing the trend of trying to seek a peace dividend when none exists. A decade of conflict and two decades of underinvestment have left the U.S. military too small and inadequately equipped to do everything being asked of these men and women. In July 2010, a bipartisan commission warned of a coming “train wreck” if Congress does not act quickly to rebuild and modernize the U.S. military. There is no quick or easy fix. Meeting the military’s full modernization requirements

American Founders understood that “the surest means of avoiding war is to be prepared for it in peace.” As Thomas Paine warned, it would not be enough to “expect to reap the blessings of freedom.” Americans would have to “undergo the fatigues of supporting it.” Supporting freedom and defending the nation still requires public spending on the nation’s defense forces in both times of war and peace. As President George Washington asserted in his First Annual Message, delivered in 1790, the “most effectual means of preserving peace” is “to be prepared for war.” Congress and the President should recommit tonight to rebuilding America’s military and giving the best to those who serve.
– Mackenzie Eaglen

Tax Agenda Falls Short

President Obama acknowledged the two biggest tax issues holding back the economy and hampering our competitiveness: our inefficient individual income tax code and our high corporate tax rate. His desired remedies, however, fall short of what is needed.

The individual income tax code needs fundamental reform. It has become cluttered with too many credits, deductions, and exemptions that slow economic growth. The president did not lay out his vision for tax reform. For tax reform to become a reality leadership at the presidential level is vital. President Obama’s lack of thorough attention to the issue does not bold well for success in the near future.

The president revisited his old hobby horse: eliminating tax cuts for the top 2 percent of income earners. This was an odd inclusion in the speech since just a few weeks ago he signed a 2 year extension of those very tax cuts. And if tax reform does become a reality, the 2001/2003 tax cuts would be a non-issue.

On the corporate tax front the president was better but far from perfect. He rightly called for the rate to come down but only if Congress closes “loopholes” to offset the cost. Many of the provisions that are commonly referred to as loopholes are in fact justifiable deductions that help lessen the blow of the corporate tax systems’ other shortcomings like the taxation of income earned in foreign countries and the lack of ability for companies to immediately deduct the cost of capital investment. Getting rid of them will temper any benefit derived from a lower rate. The few loopholes that do exist would fall well short of making up the revenue from a rate cut. Spending should be cut to make sure the rate reduction does not add to the deficit.

The best tax recommendation the president made was the elimination of 1099 reporting requirements that are part of the healthcare law. These requirements will cripple small businesses should they ever go into effect.

The worst tax idea was the elimination of so-called subsidies for oil companies. These tax breaks allow oil companies to expense a portion of the huge upfront costs they incur for developing new oil sources. The specific provisions would not be necessary if the tax code rightly allowed all businesses to expense their capital investments. Taking them away from oil companies will increase the cost of oil for all Americans and be a step in the wrong direction for the tax code.
-Curtis Dubay

Denial on Deficits

On one vital point the nation has almost without exception reached a consensus when it comes to entitlement spending — current policy is unaffordable and unsustainable. President Obama acknowledged this clearly when he announced the creation of the National Commission on Fiscal Responsibility and Reform and again when he received the Commission’s final report. The preamble to the report concluded:

After all the talk about debt and deficits, it is long past time for America’s leaders to put up or shut up. The era of debt denial is over, and there can be no turning back.

To the existing consensus regarding the need to act, the need for “America’s leaders to put up or shut up,” as the Commission put it, can now be added a second point of broad agreement – the President’s policies as outlined in his State of the Union Address regarding Social Security, Medicare, and Medicaid, the programs that have the nation on course to a “crushing debt burden”, continue the era of debt denial unabated, unabashedly, even proudly.

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The President in short has turned his back on his own Commission, on his vows of leadership, and on future generations. On these issues it will now be up to the Congress to take up the mantle of leadership the President has found too heavy to bear.
-JD Foster

American Leadership

In the opening section of his address, the President referred to the need to “sustain the leadership that has made America not just a place on a map, but a light to the world.” Those are certainly words that conservatives can endorse and respect, just as they will agree with his statement that America is “the first nation that was founded for the sake of an idea.” As Matthew Spalding has stated, the American creed “is set forth most clearly in the Declaration of Independence, … a timeless statement of inherent rights, the proper purposes of government, and the limits on political authority.”

Unfortunately, this was not the creed that the President proclaimed in his speech. Instead of recognizing that the Founders wanted to limit the role of the federal government, the President continued on in the vein that has marked American politics for too many years: arguing that the needs of tomorrow demand more spending — the President now calls them “investments” — on programs that have already failed.

Laudably, the President called on Congress to pass the free trade area with South Korea; regrettably, he accompanied it with a reiteration of his promise to “only sign deals that keep faith with American workers, and promote American jobs,” a pledge that, in the case of the agreement with South Korea, meant months of delay and special favors to organized labor in the U.S. automotive sector.

Laudably, the President twice noted the need for American leadership in the world. He even went so far as to claim that “American leadership has been renewed and America’s standing has been restored.”

The source of this restoration, though, remained mysterious. In Iraq, the President noted, the war is ending — thanks to the surge strategy that the President opposed. America continues to disrupt Islamist plots — made by an enemy the President was unwilling even to name, in a war that, as the still-open Guantanamo prison testifies, has required him to rethink his presumptions.

In Afghanistan, the President reiterated the U.S. determination to win — and coupled it with a promise that “we will begin to bring our troops home” in July 2011. The New START treaty and the “reset” with Russia made predictable appearances — but nothing was heard about the fact that Russia is an autocracy that attacks, threatens, and subverts its neighbors, while at the same time it murders and imprisons opponents at home.

In the realm of foreign affairs, the only surprises came at the end of the President’s remarks, when he expressed solidarity with Southern Sudan, and explicitly said that “the United States of America stands with the people of Tunisia, and supports the democratic aspirations of all people.” Where is that support in Russia? In Iran? In China?

As Marion Smith wrote in his essay on American leadership, “George Washington recommended a foreign policy of independence and strength, a policy that would allow America to ‘choose peace or war, as our interest, guided by justice, shall counsel.’ ” What was missing from
the President’s address was any sense that both U.S. interests and our sense of justice ought not to be engaged only in the Tunisias of the world. The President’s emphasis on the value of American’s alliances was welcome. Too bad it was not balanced by a recognition that the U.S. also faces hostile regimes.

In an echo of President George W. Bush’s call in 2002 for “a balance of power that favors freedom” — a phrase much mocked at the time — President Obama called for “a world that favors peace and prosperity.”

Until the President accepts that prosperity flows from freedom, and that we will not advance the cause of peace by speaking only in abstractions about oppression in “some countries” and ignoring the flaws in the world’s multilateral institutions, all of us are not likely to move closer to that goal.
– Ted Bromund

President’s Budget Proposals Don’t Match the Rhetoric

President Obama asserted that “a critical step in winning the future is to make sure we aren’t buried under a mountain of debt.” Yet he failed to offer any proposals that would significantly rein in escalating spending and deficits.

The President’s proposed freeze of non-security discretionary spending would essentially lock in the 25 percent expansion these programs have received since 2007. Yet paring back deficits requires actually reducing runaway spending, starting with the House Republican plan to cut this spending back to 2008 or even 2006 levels.

Furthermore, only 12 percent of the federal budget would be affected by the President’s freeze proposal. Social Security, Medicare, and Medicaid costs are truly driving long-term deficits upward. Yet the President ignored nearly all entitlement reforms proposed by his own commission, and even stated opposition to any change in future Social Security benefits. Additionally, the President again defended his budget-busting trillion-dollar health care program.

Finally, President Obama sought to rehabilitate the reputation of runaway spending by renaming it “investment.” While investment indeed drives economic growth, politicians have proven to be poor investors. Federal K-12 education spending has grown 219 percent faster than inflation over the past decade, yet student test scores have stagnated. Thirty years of federal energy spending has failed to significantly improve the alternative energy market. And massive increases in federal transportation spending have been diverted into earmarks, bike paths, and museums, or allocated to budget-busting transit programs that governors do not want. If President Obama truly wants to encourage investment, he should focus on reducing the budget deficit – which is crowding out private investment – and should reduce barriers to productive private sector investments.
-Brian Riedl

1 Million Electric Cars Should Reach the Market When They’re Ready

In his address President Obama emphasized 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.”

How much more research and incentives do electric cards need? We taxpayers have handed out billions for advanced battery vehicle manufacturing. We taxpayers foot the bill (from $2,500–$7,500, depending on the battery capacity) for every electric vehicle purchase. And we taxpayers help pay for the tens of millions of dollars the Department of Energy spends to study increased battery storage. Even so, the demand for electric vehicles is low because electric cars are prohibitively costly even with the lavish handouts.

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One survey found that the number of consumers interested in buying a hybrid vehicle dropped from 61 percent to 30 percent when they learned they would pay an additional $5,000 compared to a comparable vehicle with a traditional internal combustion engine (ICE) Only 17 percent of those surveyed showed interest in buying a battery electric vehicle (BEV), and that number decreased to 5 percent when told a BEV would cost an additional $15,000 compared to the closest ICE-powered vehicle. Even after counting the gasoline savings you would reap from buying an electric vehicle, electric cars are still a bad investment. A good sign for the viability of electric vehicles is when they won’t need the handouts from taxpayers.

President Obama also said in his address, “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.”

The same is true with our vehicle fleet in the U.S. No one will know what it will look like 30 years from now, or even 4 years from now. So why is the government trying to dictate that market when it knows it can’t?
-Nick Loris

Free Enterprise vs Big Government

President Obama, in his speech tonight, rightfully identified the issue of competitiveness as a key for reviving the economy, and innovation as a vital ingredient in achieving that competitiveness. America can, as he said, out innovate the rest of the world. But his prescription for sparking that innovation and making America again a world leader is badly off-target. His model is Sputnik, and he prescribes economic NASAs as the solution. Washington would set the rules, define the parameters of the challenge. This is not the way the today’s economy works.

American entrepreneurs do not need grants from Washington in order to compete, they don’t need incentives from bureaucrats in order to compete. The Steve Jobs’ of the future are not applying for federal grants, or federal “challenges.” What they need is for Washington to get out of their way — to tax them less, regulate them less, and leave them alone. Yet, there was nothing in his remarks that provided hope that these burdens would be lifted anytime soon, save for a short reference to regulatory reform, and even that was hedged with defense of regulation. Until the need to free enterprise — rather than guide it — is addressed — the entrepreneurial spirit of Americans will remain leashed, and all the NASAs in the world will not improve our competitiveness
-James Gattuso

Energy “Investment”

In his State of the Union speech, President Obama pointed to the government investments that led to such commercial successes as the Internet, computer chips, and GPS (interestingly, he left out Tang). The implication is that more tax payer support would bring the same sort of innovation to the energy sector. This supposition is misleading.

The government programs that led to the Internet, computer chips, and GPS were not programs to develop technologies to meet a commercial demand. They were each the result of defense-related programs that were created to meet national security requirements. People like former Secretary of Energy and Defense, Dr. James Schlesinger argued tirelessly for investment in GPS not because it would help him to find the nearest burrito bar but because he (and not many others at the time) understood the national security value of such a system. It was not until after the first Gulf War (when Americans witnessed the accuracy with which GPS could guide a vehicle to its destination) that entrepreneurs gained access to GPS signals. It was they that that commercialized that technology, not the federal government. In essence, the federal government invested to develop capabilities that did not exist and were needed for specific government activities. Entrepreneurs gained access to that basic work and commercialized it.

This is an entirely different model from what the President is suggesting the United States take to develop new energy technologies. Not only does he want the federal government to choose which energy sources Americans can access, but he believes that the government is best prepared to oversee the entire business development process. He does not want to support research and development, but he wants to drive commercialization, and to define the market.

That is not the right approach for the United States. We are a country abundant with natural resources and as the President correctly pointed out, “Our free enterprise system is what drives innovations.” Mr. President, you had me at “innovation.” Too bad you lost me after that.
-Jack Spencer

Obama’a Sputnik Moment

“This is our generation’s Sputnik moment,” declared President Obama in the State of the Union address. If he believes that, he probably should have studied his history and how President Eisenhower responded to Russia’s satellite launch—because Ike would not have endorsed anything like Obama’s prescription. In the wake of sputnik hysteria the Gaither commission argued for an astronomical increase in spending to “catch-up” with the Soviets. Eisenhower knew that writing checks that the nation can’t cash is no way to make America more innovative. Ike declared you do not win a competition by “by bankrupting yourself…”

President Eisenhower’s reluctance to throw government and money at every problem was rooted in his distrust of Big Government. “Eisenhower was deeply concerned about the growth of the federal government and the systematic loss of state and local autonomy,” writes Martin Medhurst, an expert on Ike’s rhetoric. “He was concerned about a government that spent more than it took in. …”

Eisenhower also understood that getting spending under control was about getting Washington’s priorities right. Ike did not want to needlessly throw money at anything, even defense(“[G]ood management dictates that we resist overspending as resolutely as we oppose under-spending, Ike declared), but he clearly understood that soundly funding defense had to be his first priority. Obama’s call of simply calling for not-cutting security spending is not enough – defense modernization is already underfunded and defense spending too inefficient – Obama needs to buck up defense even as he needs to do much, much more to reign in other government spending.

We did not hear that kind of commitment during the State of the Union address. Nor did we hear a president who is willing to get tough with all of America’s competitors in the same way Ike would. Instead, the Obama Doctrine is still alive and well.

The State of the Union address was a pale shadow of what the nation should expect from presidents who are responsible for providing for the common defense.
-James Carafano

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