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Wednesday, January 27, 2010

The President's SOTU Speech

As far as SOTU speeches go, this one was largely forgettable and that makes it about the same as all others. Since the stakes were much higher than normal, that makes it a failure for the President.

Let me start with what I liked. I liked the call for capital gains tax cuts. I wish he had given a number but it's still a cut. Meanwhile, the president also seems confused by exactly what a tax cut is. For instance, the president said he cut taxes for those that buy their first home, pay for college, and make their home more energy efficient. Those aren't tax cuts. You don't pay taxes, at least not federal taxes, when you buy a home. A tax credit is not a tax cut. I am all for having people keep as much of their own money as possible. Giving people someone else's money to do a basic task is another matter.

Beyond that, the president continued his more and more annoying tendency of blaming Bush. It's becoming unseemly for the President, in 2010, to still blame the prior administration. Enough already. He blamed the prior administration for the deficits even though deficits were nearly $2 trillion last year and will be near $1.5 trillion this year. The president did propose modest ideas to reign in spending that include freezing discretionary spending and some sort of a commission.

The president made job growth his top priority. That was first and that portion went on for more than ten minutes. The capital gains tax cuts were part of his prescription. That also included small business loans, a jobs bill, and those capital gains tax cuts. Some of the ideas have some merit, however we were told that the $787 billion was supposed to be a jobs bill. If that didn't create jobs, what is this mild jobs bill going to do?

National security didn't occur until an hour in. Bush always lead with national security each and everytime after 9/11. Health care wasn't mentioned until 8:42 Central Time. That was about forty minutes in and that says it all about the chances that health care reform will pass. In fact, it was mentioned after climate change which everyone agrees is dead.

The president went through a laundry list of wishes and goals. Almost none of them will be realized. In fact, it's not entirely clear that any of them will now materialize. For instance, the President spent a great deal of time talking about financial regulation and that has no chance of passing.

The president was defiant and didn't pivot all that much to the middle. That tells me that he has learned very few lessons from the last year. He's largely going to continue to pursue the same agenda he's been pursuing. As such, he's willing to continue to bang his head against the wall and get nothing done. Cap and trade, financial reform, and health care reform have no chance of passing in their current form. The president didn't acknowledge that and instead he pushed the Congress to pass these initiatives. He literally ignored the events of the last year. Instead, he sees these fights as analogous to the epic battles of our nation in the past.

It appears what the president is really saying is that he needs a serious whooping come November to finally send him a message. In fact, that's what he'll get.


Anonymous said...

why wouldn't financial regulation pass? it seems like most are on board with financial regulation... in fact i think you would be hard pressed to find people who don't favor a revised glass-steagall proposal.

both parties have emphasized the need for higher t1 cap ratios, splitting up depositors from prop desks, and greater regulation of credit derivatives world.

mike volpe said...

Well a Glass Steagell update is one thing, but Obama's financial regulation reform has as its centerpiece a Consumer Financial Protection Agency which is something wholly different.

Anonymous said...

ah... thanks for clearing that up. just out of curiosity what do you think would be best?

mike volpe said...

I wrote about how I favor Glass Steagell. I am not necessarily a fan of more regulation since the crisis was caused by a lack of enforcement not a lack of regulation. Fraud wasn't legal and yet it was permitted. That's a lack of enforcement not regulation.

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