Notes on SOTU

“Mr. Speaker, Mr. Vice President, Members of Congress, distinguished guests, and fellow Americans” – President Obama, traditional opening of the state of the union address

Despite my best intentions, I didn’t get to watch the SOTU last night (3 kids and pretty much the whole house is sick). Fortunately, in the information age I can get a text of the speech online. Here are some thoughts.

“Our Sputnik Moment” – the president likened the current need for clean energy innovation to the Soviet’s launch of Sputnik, which put us squarely in 2nd place of the space race. It’s a nice analogy for any president to use – it demonstrates American resolve in the face of a technological challenge; and we won. Not sure it fits though. First, who are we racing for clean energy? There is no evil empire trying to out-develop us. Second, why are we racing for clean energy? If it is in response to something like “peak oil” or as a national security measure, then fine. If it is to save the environment, well, I say the global warming skeptics currently hold the stronger hand (as the other side has clearly corrupted itself), and “clean” motivation is of little concern. Either way, the former argument is still a decent one – it is a national security question, for the most part.

“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.”

OK, this is a bit revisionist and misleading. Plenty of private firms invest in basic research – because it is profitable. Yes, the government had a hand in plenty of breakthroughs. These were not always out of benevolence though – the government was actually fighting a technological battle to maintain our peace and safety through the cold war in the face of a determined communist adversary. To claim a reasonable role for government in R&D in the absence of an actual direct purpose (like defense) is suspect, to say the least.

On school performance, the president added:

“That’s why instead of just pouring money into a system that’s not working, we launched a competition called Race to the Top. To all fifty states, we said, ‘If you show us the most innovative plans to improve teacher quality and student achievement, we’ll show you the money.'”

Wow, you had me with the first part. It doesn’t make any sense to pour more money into a failed system. So, the plan apparently is to pour the same amount of money into the failed system, and then give more money to schools that show us improvement in performance. Wait, no, not actual improvement, but a plan for improvement. Great. That ought to work out well.

Of course, the cruel irony is that government funding has both increased the cost of education and decreased the quality. Don’t worry America, we’ll try more of the same, but this time it will work.

High Speed Rail. Yeah, yeah. This is a liberal dream for a long time. America ain’t Europe though, and this isn’t exactly economical. When has that mattered to a president though?

Doubling our Exports. He’s used this rhetoric before. There is absolutely no plan to do any such thing. Protectionism won’t do it; other countries will respond in kind. The only way to even make a scratch is to get rid of government regulation. Obama indicates he plans a “review” of regulations. Forgive me if I’m a cynic, these guys love regulating.

The path to doubling exports is to make our goods cheaper. The only way to do that is to reduce costs. This, of course, means businesses will move to low tax states and, more importantly, right-to-work states. Not sure this is what Obama had in mind, but it is the way to improve exports.

One wonders if there is any political downside to this rhetoric. Will anybody call Obama on this in 2012 when exports have not significantly improved, much less doubled?

Freeze Annual Spending. OK, kudos for even putting this in the speech. There’s little credibility with Obama on the issue, of course, after the spending blowout of his first two years. But, still, it made the speech. Of course, he means a freeze in discretionary spending, but it’s the non-discretionary entitlements that are killing us.

Social Security. “To put us on solid ground, we should also find a bipartisan solution to strengthen Social Security for future generations. And we must do it without putting at risk current retirees, the most vulnerable, or people with disabilities; without slashing benefits for future generations; and without subjecting Americans’ guaranteed retirement income to the whims of the stock market.” [emphasis added].

I find this one interesting. This is exactly the point I’ve made a number of times about 401(k) plans. The laws allow people to save for their own retirement, but are extremely restrictive in investment choices … subjecting American’s retirement income to the whims of the stock market.

There was much more in the speech, perhaps I’ll have time to comment later. For now, I’m off to shovel snow, and then to work. Hope everybody has a great day.




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