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What You Should and Probably Won’t Hear in SOTU

by John on 01/20/2015

I will be live blogging the SOTU tonight. Join me here. Snark and facts are required.

Some thoughts ahead of time: we have a good idea what President Obama will deliver tonight. Primarily, he is calling for higher taxes on the rich. Most polls say the majority of Americans agree with him. The minority, however, are the wealthy who are smaller in number but larger in dollars.

It will probably boil down to these two choices: class warfare or economic reality? The Democrats will yell “it’s only fair” while the Republicans will shout “socialism” and “income redistribution.” Both are myopic in pursuit of financial and political gains. My advice: ignore them or take them a part with facts.

Here’s reality:

  • Tax revenues are up thanks to the economy (lower oil prices) but down in comparison to years past.
  • All of us don’t pay enough taxes for the government services we want namely a social safety net and national security. If anything, we are seeing that terrorism (thanks to the Charlie Hebdo killings) has little effect on our economy, but will be a big expense for our safety.
  • Revenues could be much higher except for the massive amount of givebacks to special interests from both sides of the aisle. We are a nation loaded with takers and alleged victims that usually keep us from addressing real needs.
  • The argument of small government is a silly one; as is the argument for big government. No one mentions “efficient government”. Peter Zeihan is the author of The Accidental Super Power, a great book I am now reading. He is a self-proclaimed libertarian, but he admits, based on his lengthy research, that he and others like him will be giving back more wealth and assets to the government to keep our country strong and solvent for the future. He is a so-called small government person who looks at the problem with open eyes.
  • Income inequality is real. It is happening around the world. Denying it is silly. It’s happened before and we did something about it. The Progressive Era led by Republican (a RINO today?) Teddy Roosevelt is a prime example. Reducing taxes to the wealthy has not created more jobs, it has just created more wealth for a few. But is income inequality entirely caused by the greedy rich? No. The key factors are: new technology creating new winners of highly educated workers around the world; aging populations in developed countries forcing more money to go to safety nets and not investment in the future.

I tend to side with the lower and middle class in these arguments. I am not saying right-winger thinkers are wrong.

For instance, the percentage of schoolchildren on federally subsidized breakfast and lunch is nearly 66%. Think about it. For every 3 kids in school the government pays the meals for 2 of them.

There is something wrong here. Sure, some families could be “on the take enjoying a free ride.” But since I have seen this in person while working with the non-profit Blessings in a Backpack, I tend to believe there are larger amounts of families who want to work, want more access to the American dream, and not be tethered to the taxpayers’ benevolence.

Here’s what needs to be done but probably won’t be heard tonight:

  • Tax Reform
  • Medicare Reform
  • Infrastructure Investment
  • Worker Retraining

You might hear some faint mentions, but here’s why none of these needed reforms won’t happen immediately — or if at all.

Tax reform would eliminate costly givebacks and deductions that reduce taxable revenues. We would get a better idea of how much revenue we need to fund the government. It might actually reduce the amount of taxes most businesses or individuals pay.

But neither party will have any of that:

  • Special interests fund the political campaigns for Democrats and Republicans. Proof: it is now 2015 and donors are lining up for the presidential elections nearly two years away.
  • President Obama and Speaker Boehner had a chance to create a so-called Grand Bargain on tax reform, entitlement reform, and investment in the future and they walked away from it in 2010. The reason: if big time donors cannot deduct their campaign donations they pay more in taxes and get less bang for their bribery buck.
  • Then in December during the lame-duck session, the Republican Congress passed larger amounts special interests could donate to political campaigns.

The analogies are easy: fox watching the hen house; and we live in a version of China, Iran, and Russia. We should demand a stop to this. Instead, we line up with whatever side we think we should root for. If we are real Americans, we will think for ourselves and not be persuaded by lawmakers who take bribes from special interests.

Let’s look at the dismissal by our leaders of Medicare reform. Fixes such as higher premiums and taxes along with raising the eligibility age need to be discussed. Instead, we hear that Medicare is solvent until 2030. That’s supposed to make us feel better. But this so-called fact ignores these realities:

  • Has anybody noticed it is currently 2015? And do we realize that most people now in their 50s will live another 40 to 50 years to the year 2050?
  • Believing Medicare is alright is based on a recent reduction or leveling of healthcare costs because of the Affordable Care Act. Do you really think that will stay constant when the senior population will boom over the next 40 years?
  • Seniors vote in droves in all elections. Those numbers of votes drown out the reality of these numbers. American seniors have only paid in about 1/3 of the Medicare benefits they will use in their lifetime. That means younger taxpayers over the next 30 years will be paying the majority of medical bills for old farts — like me.
  • Proof that both parties play to the senior voters. President Obama was criticized by Republicans for moving money from Medicare into the Affordable Care Act while Congressman Paul Ryan was lambasted by Democrats for his proposal to turn Medicare into a voucher system. I can’t vouch for either proposal but at least they had the guts to offer it. However, the response to both ideas shows the power of seniors to protect their interests.

Infrastructure reform won’t happen because Republicans will see this as a give-back to unions. Maybe so. But we need to repair our roads and bridges and upgrade our internet connections to help create new disruptive businesses.

Retraining American workers probably won’t happen right away because it looks way too costly. The President’s proposal to fund the first two years of Community College is a good one – on paper. We need to get young people skills – whether in the trades or in computer technology. Too often you hear companies offering jobs but no one qualified to fulfill them. However, if anything gets bi-partisan support, it is this one. Already the GOP is beginning to talk about helping the middle class achieve the American Dream.

I leave you with some hope.

We are still the greatest country in the world based on our natural resources and our ingenuity and innovation. We eventually turn out alright. The problem is our political leaders, now looking for their own wealth, usually hold us back and they are the last to join us.

I know you will see that tonight.

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