The State of the Union address by president Obama was filled with the usual platitudes and the laundry list of proposals present in every such address by a president. What interested me, however, were the few glimpses that Obama provided into what he is really talking about.
First, Obama spoke of the upcoming sequester. On March 1, the federal budget will be cut by about 100 billion dollars per year over the next decade unless Congress can agree on an alternative method for closing the budget deficit. For the first time, Obama suggested an alternative. It was still vague, the hallmark of every Obama budget proposal since he first took office. Nevertheless, we now know the components which Obama sees as the alternative to sequestration. Obama's proposal has two parts. The first part is to change Medicare by reducing "subsidies" to drug companies, asking wealthy seniors to pay more, and changing the way that doctors and hospitals are reimbursed. The second part is to fund all the rest by raising taxes and calling it tax reform.
Let's talk first about the Medicare portion of Obama's plan. Asking wealthy seniors for more is another way of saying that taxes on seniors will go up. Not all will be affected, but it is a tax increase nevertheless. Ending subsidies to drug companies is something that will be hard to do since there are no federal subsidies to drug companies. I assume that Obama was actually speaking about negotiating the prices that Medicare pays for drugs. Right now, the law protects the drug companies so that they can get the same prices from Medicare that they get from other large purchasers of their products. This lets the drug companies earn sufficient sums to cover the incredibly huge costs incurred for the development of new therapies and drugs. Cutting prices here will just mean the development of fewer drugs. That will mean fewer jobs and poorer health care. Then there is the Obama proposal to change the way that the doctors and hospitals get paid. This one is almost laughable. Many years ago, Congress passed a law that modified the payments to medical providers from Medicare. Since that time, Congress has passed each year a bill called the "doc fix" which delays enforcement of that statute for another year. Since the first enactment of the new payment procedure many hundreds of billions of dollars have been spent which were supposedly saved when the new payment procedure was first passed. Any Obama plan would likely never go into effect either. It would just sound like something had been done only to have it undone as the years passed.
The tax "reform" plan by Obama is just another tax increase. It is not real reform. Real reform of the tax code would work to increase incentives for investment and work; the changes of which Obama speaks would do the contrary. This idea is a total non-starter.
So Obama's ideas on sequester really boil down to tax increases for the most part, coupled with damaging the pharmaceutical industry and pretending to cut payments to medical providers. Instead of the old epithet of "tax and spend", the Obama plan is better described as "tax and fraud".
Obama also spoke about a number of other proposals. All of those that deal with the economy boil down to just one idea: increase government spending. Obama wants more spending on manufacturing hubs, whatever they are. He wants more spending on research. He wants more spending on education. So after not having any realistic ideas for cutting the budget deficit, Obama want to spend more to make the deficit problem worse.
Then there is the nonsense about climate change. Obama spoke about weather events, but he ignored the most important facts. According to the data, the temperature of the atmosphere measured around the globe has not risen during the last twelve years. These are measurements that are not affected by locating weather stations in cities that retain heat. These are measurements that are taken repeatedly every day. In other words, science shows that there has been no warming over the last twelve years. All the rest is politics and not science.
Obama also spoke about energy and all the great production of oil and gas being achieved in the USA. Really? In the areas where the federal government can assert control of production, Obama has managed in four years to cut production of oil and gas by about 15%. The entire increase in American energy output has happened on private lands despite Obama, not because of him.
On the whole, the State of the Union was a lost opportunity by Obama. It was just another campaign speech. That is too bad. Oh well, there is always next year.
First, Obama spoke of the upcoming sequester. On March 1, the federal budget will be cut by about 100 billion dollars per year over the next decade unless Congress can agree on an alternative method for closing the budget deficit. For the first time, Obama suggested an alternative. It was still vague, the hallmark of every Obama budget proposal since he first took office. Nevertheless, we now know the components which Obama sees as the alternative to sequestration. Obama's proposal has two parts. The first part is to change Medicare by reducing "subsidies" to drug companies, asking wealthy seniors to pay more, and changing the way that doctors and hospitals are reimbursed. The second part is to fund all the rest by raising taxes and calling it tax reform.
Let's talk first about the Medicare portion of Obama's plan. Asking wealthy seniors for more is another way of saying that taxes on seniors will go up. Not all will be affected, but it is a tax increase nevertheless. Ending subsidies to drug companies is something that will be hard to do since there are no federal subsidies to drug companies. I assume that Obama was actually speaking about negotiating the prices that Medicare pays for drugs. Right now, the law protects the drug companies so that they can get the same prices from Medicare that they get from other large purchasers of their products. This lets the drug companies earn sufficient sums to cover the incredibly huge costs incurred for the development of new therapies and drugs. Cutting prices here will just mean the development of fewer drugs. That will mean fewer jobs and poorer health care. Then there is the Obama proposal to change the way that the doctors and hospitals get paid. This one is almost laughable. Many years ago, Congress passed a law that modified the payments to medical providers from Medicare. Since that time, Congress has passed each year a bill called the "doc fix" which delays enforcement of that statute for another year. Since the first enactment of the new payment procedure many hundreds of billions of dollars have been spent which were supposedly saved when the new payment procedure was first passed. Any Obama plan would likely never go into effect either. It would just sound like something had been done only to have it undone as the years passed.
The tax "reform" plan by Obama is just another tax increase. It is not real reform. Real reform of the tax code would work to increase incentives for investment and work; the changes of which Obama speaks would do the contrary. This idea is a total non-starter.
So Obama's ideas on sequester really boil down to tax increases for the most part, coupled with damaging the pharmaceutical industry and pretending to cut payments to medical providers. Instead of the old epithet of "tax and spend", the Obama plan is better described as "tax and fraud".
Obama also spoke about a number of other proposals. All of those that deal with the economy boil down to just one idea: increase government spending. Obama wants more spending on manufacturing hubs, whatever they are. He wants more spending on research. He wants more spending on education. So after not having any realistic ideas for cutting the budget deficit, Obama want to spend more to make the deficit problem worse.
Then there is the nonsense about climate change. Obama spoke about weather events, but he ignored the most important facts. According to the data, the temperature of the atmosphere measured around the globe has not risen during the last twelve years. These are measurements that are not affected by locating weather stations in cities that retain heat. These are measurements that are taken repeatedly every day. In other words, science shows that there has been no warming over the last twelve years. All the rest is politics and not science.
Obama also spoke about energy and all the great production of oil and gas being achieved in the USA. Really? In the areas where the federal government can assert control of production, Obama has managed in four years to cut production of oil and gas by about 15%. The entire increase in American energy output has happened on private lands despite Obama, not because of him.
On the whole, the State of the Union was a lost opportunity by Obama. It was just another campaign speech. That is too bad. Oh well, there is always next year.
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