State of the Union Obamanomics: Between Problems, Politics, and Prosperity
Pres. Barack Obama seems to have high hopes for the US economy and the US consumer, but does the marketplace have other ideas?
Pres. Obama took on a more populist tone in his State of the Union speech Tuesday night. Obama attempted to reassure the American people that the US economy will regain its footing despite a Zeitgeist of pessimism and societal malaise. On the topic of restoring the US economy, Obama said, "We can do this. I know we can, because we've done it before." In trying to spur economic optimism in the markets and greater society, Obama said that "General Motors is back on top as the world's number one automaker." The president later added, "[t]onight, the American auto industry is back."
Among possible economic reforms, Obama discussed tax reforms that would seek to benefit companies that keep workers in the US. Obama: "[M]y message is simple. It's time to stop rewarding businesses that ship jobs overseas, and start rewarding companies that create jobs right here in America." The president also discussed easing the ability for companies to sell American products abroad, including the establishment of a Trade Enforcement Unit "that will be charged with investigating unfair trading practices in countries like China."
In terms of promoting job growth, Obama also discussed reforms to training programs and higher education in order to better prepare citizens for the global economy of tomorrow. On the topics of illegal immigration and investing in human capital via training and education, Obama said that "an economy built to last is one where we encourage the talent and ingenuity of every person in this country".
To say the least, Obama's speech included populist ideas and plans that may appeal to average Americans. Even so, at a time when many Americans are struggling and feel that the political process isn't working, how likely are Obama's proposed reforms? Daniel Halper of the neoconservative magazine Weekly Standard on Wednesday discussed how many of the lines from the president's speech were used before in previous speeches to Congress. Halper concluded his comparisons in that "[t]he good news is that after a couple years these sorts of speeches begin to write themselves."
That being the case, in the State of the Union address, Obama sought to quell ideological differences in Washington by using examples related to the killing of Osama bin Laden. Obama: "[O]ur destiny is stitched together like those fifty stars and those thirteen stripes. No one built this country on their own. This Nation is great because we built it together. This Nation is great because we worked as a team. This Nation is great because we get each other's backs." Where some may interpret Obama's words as being "class warfare", Obama explained that "asking a billionaire to pay at least as much as his secretary in taxes" is "common sense" to most Americans.
The markets do not appear to be responding all that positively to the president's speech; the Dow Jones Industrial Average was down near 60 points earlier and is currently relatively unchanged for the day. General Motors (NYSE: GM), "the world's number one automaker" according to Obama, is currently down around 36 cents (1.45 percent) for the day. It would appear that the markets are not as hopeful and optimistic as Pres. Obama. Of course, with the Eurozone, high unemployment in the US, and struggling American consumers, the markets have good reason to not be optimistic.
Conservative-leaning CNSNews.com's Christopher Goins discussed on Jan. 20, 2012 that the price of gasoline has risen 83 percent since Obama took office. Even further, the price of ground beef has risen 24 percent; the price of bacon has risen 22 percent. Goins continued, "Whole wheat bread prices from January 2009 to December 2011 increased about five percent (5.02 percent) from $1.97 to $2.07. (The inflation rate in December 2011 was 3.0 percent.)" That being the case, one could counter that Obama came into office in the midst of the Great Recession and cannot be held completely responsible for price increases in the marketplace.
Commenting on the president's speech, the Associated Press' Calvin Woodward wrote, "It was a wish list, not a to-do list." Woodward argued that Obama is pushing "plans that flopped before." In this way, given that Obama's hands are "so tied by political realities", many of the president's policy goals seem unlikely. In light of Woodward's sentiments and others', though some may find inspiration in Obama's speech, such policy goals may not translate into reality. One might go so far as to say that Obama's words and actions are starting to appear inconsistent and look like a change in course. Along these lines, NBC's Garrett Haake reported Wednesday that in response to the State of the Union address, Mitt Romney slammed Obama as "speaking in Fantasyland" and "detached from reality." Romney: "As I watched the president speak I was reminded of his trip to Florida just a week or so ago when he spoke in Fantasyland, because he was speaking in Fantasyland again last night." Romney continued, "This is a President who talks about deregulation, even as he regulates. He talks about lowering taxes, even as [he] raises them. He talks about developing all of our energy resources, even as he tries to shut them down, coal in particular."
NBC's Brian Williams hit the nail on the head in his introduction to the State of the Union address Tuesday night in commenting on how the country is divided and the planet is trying to deal with significant global issues. And even as we wake up the day after the State of the Union address, we're still left with a divided country and a planet trying to deal with significant global issues. As many struggling Americans desire change in the economy and politics, things do not seem to change. In the aftermath of the president's speech, it would appear that ideological entrenchment and gridlock in Washington will remain for the course of 2012. Even so, hope can be a powerful commodity. (Gallup polls show Pres. Obama currently beating both Republican contenders Mitt Romney and Newt Gingrich individually by a two-point margin in the November general election.) And though Obama's State of the Union address may have exuded a strong sense of hope and optimism for the nation going forward, at the end of the day, the bottom line is that you can't eat hope and optimism.
(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.