Here's what's worth talking about in the President's speech, which you can read here. The White House policy primer is here.
- A $9 minimum wage by 2015? It's
not a coincidence that Alan Krueger, the president's top economic
adviser, is the author of important research on the effects of minimum
wage on employment. The proposal would raise the federal
minimum wage to $9 an hour in 2015 from $7.25, and also lift the lower
minimum wage on tipped employees. It will also index the minimum wage to
inflation, an idea borrowed from Obama's erstwhile competitor,
Republican presidential candidate Mitt Romney. The White House notes
that at the current rate, "a full-time minimum wage worker makes $14,500
a year. Even with the tax relief that every parent receives for a
child, a family of four with one full-time worker earning the minimum
wage is living below the poverty line." The US has one of the lowest minimum wages, as a share of median earnings, among developed countries.
- Universal pre-school education.
Education experts see big gains in better education for young children,
so Obama proposes working with Congress to "provide all low- and
moderate-income 4-year-old children with high-quality preschool, while
also expanding these programs to reach hundreds of thousands of
additional middle class children, and incentivizing full-day
kindergarten policies." That could be an expensive, and therefore hard,
push in the current Congress, but an important debate: Early education
is another key area where the US falls behind other advanced economies.
A secret order for fighting hackers. Obama revealed an executive order designed to fight hackers
that have plagued the public and private sector alike. As well as
protecting public infrastructure, the order mandates the government to
work with the private sector to create a framework to share data about
cyberthreats, a process that will be watched closely to see how much the
government intervenes in company and consumer privacy online.
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- Launching European Union free trade talks. The
president will begin negotiating a free trade deal with
Europe--important for businesses, but a complex task that could end up
being finished by his successor, like the trade deals with Colombia,
Panama and South Korea that were started by George W. Bush and
implemented by Obama.
- Holding colleges accountable. The
president proposes that colleges "receive federal student aid based on
performance and results." Such a rule will terrify the private education
industry, which has long lobbied vociferously against such proposals,
but also worry major universities, since there's no clear way to measure
educational attainment. The White House will start with a College
Scorecard that would allow prospective students to compare different
- Cap and trade. The president
urged Congress to recognize that climate change is real and devastating.
If Congress doesn't act on a "market-based solution to climate
change"--a program to cap emissions and trade allowances, or a carbon
tax--the White House will use its executive powers to take action, likely
by regulating power plant emissions. The president also proposed
doubling energy generation from wind, solar and geothermal sources by
2020 by making energy tax credits permanent.
- End the war in Afghanistan to pay for infrastructure? The
president announced that the Afghan war will end within the
year--although your definition of "end" may vary--and that the savings
will go to finance $50 billion in immediate spending for bridges and
other urgently needed upgrades. There is also a plan for public-private
partnerships to invest in "business infrastructure" like power grids and
oil and gas pipelines. While Congress has been reluctant to authorize
spending on new infrastructure, this defense cut accounting trick might
loosen the purse strings.
- Tax and welfare reform. You've
heard this deal before during fiscal debates, but it's still on the
table: "$900 billion more in spending cuts and entitlement reforms and
$600 billion in additional revenue, relative to the fiscal deal, to be
achieved through tax reform that closed loopholes for the wealthy and
reformed corporate taxes to strengthen America's competitiveness." This
would stabilize the debt over the next decade, but Republicans don't
want to use savings from tax reform to lower the deficit; they'd like to
use them to lower tax rates.
- Corporate tax reform, too. Obama wants to go after untaxed corporate profits by
putting in place an offshoring tax that would force companies to pay
taxes on earnings they keep abroad, while also making permanent the
R&D tax credit, lowering rates on manufacturers, and lowering the
overall rate by closing other loopholes. This is a lift.
- Anti-poverty efforts. Along
with programs to support jobs for low-income youth and community
redevelopment, there's also a plan to remove the financial deterrents to
marriage, an approach liberals ridiculed during the George W. Bush
- Gun control. We've talked about this too. Though
his talk about families "ripped apart by guns" was possibly the most
stirring part of his speech, the president's proposals are already on