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White House previews State of the Union
Workers at the Pentagon and other Washington federal locations have recently gone on strike to highlight the issue. Liberal members of Congress have urged Mr. Obama to take the step, which could, by some estimates, raise the wages of 2 million workers. Recent reports indicated the president was moving in this direction.
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"As the president suggests, raising the minimum wage would help many poor Americans, but it would destroy jobs. A better strategy would be to junk the wage floor altogether and combine all federal income-support programs - the earned income tax credit, food stamps, Medicaid, Obamacare subsidies for health insurance premiums and the like - into something more coherent like a family allowance for each child."
- Commentary from Economist Peter Morici READ MORE
His increasingly brash use of executive orders to circumvent Congress has raised the ire of some Hill Republicans, but senior administration officials acknowledge Mr. Obama views executive action as a means to influence a debate in Congress by taking action that can shake up political opposition.
The example they often cite was the decision by the Department of Homeland Security to essentially remove the threat of deportation from children born in America to parents who entered the country illegally. This was carried out under the rubric of “prosecutorial discretion.” Mr. Obama followed the policy closely as it was developed at DHS and the White House consulted extensive polling on likely public reaction.
Public acceptance was strong (the White House braced for a public backlash that never came) and senior administration officials believe that prodded the Senate to pass a comprehensive immigration reform bill. .
President Obama, dogged by the bungled rollout of the Affordable Care Act and a slow economic recovery, is declaring war on inequality. An age-old problem made worse by his policies, he offers more opiates - like raising the minimum wage - that fail to address the root causes of vanishing opportunities and falling incomes for most Americans.
Market capitalism has proven a superior system to anything Old World socialists and American liberals can contrive. To the misfortune of utopians seeking both equality and prosperity, the system rewards intelligence and hard work and requires some inequality to accomplish prosperity.
Globalization, promoted through free trade agreements by presidents since John F. Kennedy, has opened vast markets and increased the incomes of the most talented and industrious Americans, while subjecting more ordinary citizens to more intense competition from workers in Asia and elsewhere.
Sadly, foreign markets for products that many Americans make remain largely closed. GM boasts some of the best-selling cars in China, but high tariffs and regulations keep out U.S.-made vehicles. That denies ordinary workers good-paying jobs.
In tandem, domestic policies encourage the monopolization of markets, big paydays for top executives and star performers, and impose higher prices and lower living standards on ordinary Americans.
The Dodd-Frank law has not stopped reckless risk-taking and big paydays on Wall Street, but its regulatory costs have compelled many smaller banks to sell out to big banks. Having a tighter grip on markets, larger banks charge higher fees, pay less interest on savings and reward top executives.
The Federal Communications Commission does not classify cable television providers as utilities and permit regulation of their rates. Monthly fees rise with the rhythmic certainty of the onset of winter and permit huge payouts to the NFL. That makes Peyton Manning richer and subscribers poorer, regardless of whether or not they watch football.
Obamacare and the broader morass of federal and state health care regulations have encouraged the consolidation of hospitals around many major cities, and reduced the number of health insurance companies operating in regional markets. Less competition increases salaries for hospital administrators, insurance company executives and some medical specialties.
Overall, Americans pay 50 percent more for health care than the Germans and the Dutch, who also have private providers and high quality care, and Americans compete less effectively in world markets and earn lower wages for that difference.
As the president suggests, raising the minimum wage would help many poor Americans, but it would destroy jobs. A better strategy would be to junk the wage floor altogether and combine all federal income-support programs - the earned income tax credit, food stamps, Medicaid, Obamacare subsidies for health insurance premiums and the like - into something more coherent like a family allowance for each child. That would level incomes a bit and eliminate a lot of bureaucracy that is slowing businesses, weighing down growth and keeping most Americans from earning bigger paychecks.
However, for such pro-market approaches to work, Republicans would have to accept that in some places markets need help to be effective and fair.
If they want free trade, then they must support agreements that give American workers a better deal. To junk Obamacare, they must come up with a regulatory framework that actually lowers prices and costs. And if we are to rely more on markets and less on regulation to discipline the banks, then it is time to break up the big banks to foster genuine competition.
Obama is surely right about one thing. If Republicans want to change things, then they have to win more elections. That will require more pragmatism and less ideology. Opposing the president, no matter how wrong-headed some of his policies may be, is simply not enough.
Peter Morici is an economist and professor at the Smith School of Business, University of Maryland and a widely published columnist. He tweets @pmorici1
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“The case for executive action has always been two-fold,” said Bruce Reed, former chief of staff to Vice President Joe Biden. “It's a way to make progress when Congress isn't, and just as important, a way to increase pressure on Congress to act. The DREAM action in 2012 is a great example of how an administration can take action the public strongly supports and force the other side to explain why they haven't done the same."
On the economy, even administration loyalists concede Mr. Obama’s bullish take – better growth projections, better employment numbers, a stabilized housing market and lower deficits – will be hard to reconcile with calls for corporate help for the long-term unemployed, a higher minimum wage and an extension of long-term jobless benefits.
As for Mr. Obama’s poll numbers, he’s been in George W. Bush territory since November. What’s interesting is Mr. Obama’s also just as polarizing as Bush – party loyalty and antipathy mirror images between presidents
The president will also confront a rocky midterm political climate as House Democrats have given up hope of reclaiming a majority. To keep a slender majority, Senate Democrats know they will have to rely on the grit and political dexterity of their red state incumbents more than Mr. Obama – meaning White House fund-raising, not speeches matter most for the remainder of this year.
Legislatively, Mr. Obama’s biggest hope is that House Republican leaders maneuver immigration reform through numerous intra-party obstacles and create an opening for action with the Senate this summer. In this, Mr. Obama will continue to find virtue in silence, comprehending that his advocacy only makes matters worse.
“I’m not sure there’s a lot of expectation or energy behind the president and his speech,” said a top Democratic congressional aide. “After five years of being ignored, I don’t think the House Democrats really care a whole lot about what he’s going to say or say he’s going to do. The reality is not much will happen this year because of (midterm) elections.”
Mr. Obama, like presidents before him, also has TV history against him. Ratings for State of the Union speeches decline over the course of a presidency. Obama’s audience, according to Nielsen research, has fallen from 52.3 million in 2009 33.5 million last year.
In sum, House Democrats are dispirited, Senate Democrats need money and their own guile and the president’s biggest potential legislative accomplishment is in the hands of the opposition party.
No wonder the phone and the pen appear so attractive.For two weeks the White House has tried to drum up interest in Tuesday’s speech, twice heralding emails from White House senior adviser Dan Pfeiffer on Mr. Obama’s “themes.” The White House made the highly unusual move Monday of announcing some of the most prominent guests who will sit with first lady Michelle Obama, erasing one of the few genuine moments of drama from the serially over-hyped event.
. Actually, it’s a page out of an Aaron Sorkin West Wing script, complete with Jay Carney playing foil in a virtual “redux” of Jackson’s 1837 decision (his term was winding down) to serve a gargantuan block of cheese to the public.
Trying to derive whatever retroactive cache’ is left from a cherished West Wing episode, the White House on Wednesday will conduct a “virtual” Big Block of Cheese Day in which Americans can live chat with various officials. No cheese will be served, but questions will be answered.
There will also be efforts to deal with the long-term unemployed including a pledge from top U.S companies they will not discriminate against those jobless for six months or more. The pledge grows out of numerous conversations Mr. Obama has had with CEOs and more frequent and focused conversations Treasury Secretary Jack Lew has had with a larger number of CEOs.
It’s worth noting Mr. Obama has signed legislation to assist the jobless, a bill in 2011 that provided tax breaks to companies that hired short-term, long-term and disabled veterans. In 2010, Mr. Obama signed legislation that provided sizable tax breaks – payroll tax reductions to be specific – for companies that hired the unemployed. Those laws had policy and money behind them. That’s more than a corporate pledge announced in a State of the Union address. And the problem, obviously, remains.
The example they often cite was the decision by the Department of Homeland Security to essentially remove the threat of deportation from children born in America to parents who entered the country illegally. This was carried out under the rubric of “prosecutorial discretion.”
Mr. Obama followed the policy closely as it was developed at DHS and the White House consulted extensive polling on likely public reaction.
Currently, he seeks an unconditional increase in the debt ceiling – something Republicans have already said they are unwilling to give him.
On Sunday, two of the president’s top aides fanned out across the Sunday shows to reiterate the president’s recent pledge that he will try to work with Congress, but will also look for opportunities to use his executive authority to carry out his agenda when lawmakers will not.
“I think what we saw last year in 2013 was a Washington that did not deliver for the American people. And the president sees this as a year of action to work with Congress where he can and to bypass Congress where necessary, to lift folks who want to come up into the middle class,” said White House press secretary Jay Carney on ABC’s “This Week” Sunday.
Senior adviser Dan Pfeiffer said on CNN’s “State of the Union” that this approach isn’t “confrontational” and said he hoped Congress would work with the president to pass immigration reform and extend unemployment benefits, which expired on Dec. 28. But, he said, the president “is not going to tell the American people that he’s going to wait for Congress,” and will find ways to move forward on job training, education and manufacturing that don’t require Congressional approval.
Republicans aren’t taking too kindly to Mr. Obama’s promise. Sen. Rand Paul, R-Ky., said it sounds “vaguely like a threat.”
“I think it also has a certain amount of arrogance in the sense that one of the fundamental principles of our country were the checks and balances that it wasn't supposed to be easy to pass legislation. You had to debate and convince people,” Paul said.
As for whether Congress makes it hard for him to accomplish things?
“Welcome to the real world,” Paul said. “It's hard to convince people to get legislation through. It takes consensus. But that's what he needs to be doing, is building consensus and not taking his pen and creating law.”
Senate Minority Leader Mitch McConnell suggested the president approve the Keystone XL pipeline or work on more trade deals – items Republicans would prefer. “We’re anxious to help him create jobs. But we’re not going to go over and endorse more spending, more debt, more taxes and more regulation,” McConnell said on “Fox News Sunday.”
Even if the president were to spend his entire State of the Union address reaching out to Republicans, that will likely be of little help to him in February when Congress must raise the debt ceiling or risk a default on U.S. credit. The GOP looks ready to “attach something significant for the country,” to a debt limit increase such as an approval of the pipeline, McConnell said.
“Any president's request to raise the debt ceiling, whether this one or previous presidents, is a good opportunity to try to do something about the debt. I think the president is taking an unreasonable position to suggest that we ought to treat his request to raise the debt ceiling like some kind of motherhood resolution that everybody says 'aye,' and we don't do anything, when we have the stagnant economy and this massive debt created under his administration,” McConnell said.
What Republicans see as a good opportunity to do something for the country, Democrats view as a “ransom” in exchange for Congress doing its basic duties, Pfeiffer said in a separate appearance on “Fox News Sunday.”
“They have passed what is essentially a debt limit free of ideological riders the last two times. They should do it again and spare the country the drama and economic damage of repeating the move no one wants to see from October,” Pfeiffer said.
Democrats have argued that the backlash against Republican efforts to defund Obamacare, which led to a shutdown of the federal government last October, will have convinced them to stay away from seeking leverage from a crisis once again.“I do not believe that Republican leaders will follow Ted Cruz over the cliff once again. I believe we will pass a clean debt ceiling that makes sense. We don't want to risk the full faith and credit. We can debate all these other issues at a different time and place. But I think they learned their lesson with the government shutdown,” said Sen. Chuck Schumer, D-N.Y. on CBS’ “Face the Nation.” “Not only did Tea Party ratings plummet, but so did Republican Party ratings.”
House Speaker John Boehner, R-Ohio, has said that an unconditional debt-limit increase simply won’t pass the House.
Pfeiffer shied away from specifying whether the president would veto any measure that had non-debt ceiling policies attached.