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State of the Union mixes sound and foolish proposals

By PETER MORICI, UPI Outside View Commentator   |   Jan. 29, 2014 at 7:26 AM   |   Comments

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COLLEGE PARK, Md., Jan. 29 (UPI) -- Promising to address inequality and strengthen the middle class, U.S. President Barack Obama's State of the Union address combined sound and foolish proposals, laced with good old fashioned demagoguery.

Despite nearly five years of economic recovery, the fortunes of working Americans have decidedly worsened. Obama's policies should carry considerable culpability and bear correction.

Instead, he pronounced upward mobility has stalled -- when non-partisan economic studies show that's not true -- and insists the wealthy should pay to balance the accounts.

Thanks to the president's free trade policies, multinational corporations and talented Americans have earned huge income gains selling know-how and services around the globe. Meanwhile, the stuff ordinary Americans make is increasingly shut out of the fastest growing overseas markets.

General Motors boasts some of the best-selling cars in China but high tariffs, regulations and an artificially cheap currency keep out U.S.-made vehicles. Obama refuses to effectively confront protectionism throughout Asia, denying Americans good-paying jobs.

Obamacare is driving up health insurance costs. Along with higher taxes, that curbs domestic purchases, slows economic recovery and destroys jobs. Restrictions on offshore petroleum development, costly new banking and environmental regulations and a shortage of lending by regional banks make it tougher for small businesses to expand and add employees.

No surprise, some 20 million Americans can't find full-time work, and the inflation-adjusted wages of ordinary workers are falling. Factoring in higher state and local taxes, most families are much worse off than five years ago and record numbers of Americans depend on food stamps.

Now Obama wants to double down on failed initiatives. Instead of asking Congress to suspend the mandate that all Americans obtain excessive and expensive health insurance, he is launching an aggressive campaign to persuade young Americans to buy overpriced policies.

Presidential initiatives to build a national network of manufacturing innovation centers, strengthen infrastructure, federal job training and research and development and rapidly expand industrial use of clean natural gas have great merit. Yet, no matter how strong the products and productive their workers, U.S. factories need more customers at home and abroad to succeed, grow and raise wages.

Unfortunately, the president proposes to push forward with new trade agreements in Asia that will further open U.S. markets to foreign competition without getting enforceable enough concessions on discriminatory regulations and currency manipulation that keep out U.S. products and impoverish once-proud U.S. blue-collar workers.

Obama wants Congress to approve a $10.10 an hour minimum wage. That's a 39 percent jump and hardly justified by the 9 percent inflation since the federal floor was set in July 2009.

Such an increase would compel McDonalds to aggressively implement methods to cut employees. Smaller restaurants, whose customers simply cannot afford to pay another $2 for lunch, would close and the same would repeat in other industries.

Comprehensive immigration reform would help. Bringing undocumented workers out of the shadows would raise the wages they command and those of citizens competing with them.

Republicans in Congress want a deal that really secures U.S. borders from another surge of illegal immigrants. However, given Obama's poor record of sticking to his word in budget negotiations, critical members like U.S. Sen. Marco Rubio, R-Fla., are reluctant to trust him.

All this illustrates the central reason for Washington's inaction on crucial issues.

The president dodges responsibility for the failures of his ideologically motivated agenda by asking Congress to tax the "1 percent" for simply exploiting conditions he created.

Americans judge the president by their own deteriorating conditions and Obama's credibility on economic issues is falling precipitously.

Members of Congress simply don't trust the president to address problems as the facts require and keep his word when it counts.

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(Peter Morici is an economist and professor at the Smith School of Business, University of Maryland and a widely published columnist. Follow him on Twitter: @pmorici1)

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(United Press International's "Outside View" commentaries are written by outside contributors who specialize in a variety of important issues. The views expressed do not necessarily reflect those of United Press International. In the interests of creating an open forum, original submissions are invited.)

© 2014 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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