The 2011 SOTU: A Report Card (Not a Very Good Grade)

It's hard to 'grade' a President's State of the Union (SOTU) speech, and some would say it's inappropriate to do so, without the insights that only the President himself has. But the sad state of our economy today -- and the specificity of President Obama's campaign promises across the entirety of issues -- justify a rigorous examination of his new promises last week.

The opening theme of the 2011 SOTU, and the theme the President carried forward the next day to Democratic insiders, was his insistence that the nation has at long last emerged from economic crisis. He said: "Two years after the worst recession most of us have ever known, the stock market has come roaring back. Corporate profits are up. The economy is growing again. And after two years of job losses, we've added private-sector jobs for 12 straight months -- more than 1 million in all."

The reality, however, is that when Barack Obama gave his first report to Congress in February 2009, a SOTU of sorts albeit not an official one, the number of real unemployed American workers was 25.8 million. Twelve months later, in January 2010, when he gave his first official SOTU, the number of unemployed American's had skyrocketed to 30.2 million. And today, in January 2011, the number of unemployed Americans is still 29.6 million. In other words, we have 3.8 million more unemployed Americans today than on Inauguration Day, and only 600,000 fewer than at the end of last year. And at least 10 million of our unemployed have been out of work for a half year or longer.

Immediately upon the Inauguration, the President's economic team persuaded him that when GDP was again growing, he could declare the Recession officially over. This despite the fact that "GDP growth" ceased to be a meaningful measure of economic vitality more than a decade ago. Rather than belaboring this argument, let me just say that the only measure that matters is real employment, and right now we are mired in a jobless recovery. We need to acknowledge this fact, and not, through rose colored glasses, try to prove in the SOTU something otherwise to those 30 million unemployed workers and to the 90% of employed workers who've had stagnant wages for the more than twenty years.

Incidentally, Mr. President, stock market performance is just as big a head-fake and occasional 'false positive' as is GDP growth. When the price of oil goes up or Goldman Sachs has another great quarter from gouging its customers, the DJIA goes up -- yet there is certainly no benefit to the unemployed workers in Dayton or Flint or Buffalo or...

The unemployed worker advocacy group UCubed listened to the 2011 SOTU and opined that the President was, and I quote, "telling the unemployed and underemployed to remain in limbo -- without jobs, without relief, without hope -- until long after his term ends." For workers whose benefits are exhausted and for the 62% of the jobless who never qualified for unemployment benefits at all, UCubed feels that "President Barack Obama had neither kind words nor new policies, and in fact, spoke as if they did not exist." Many of us agree with UCubed.

David Sanger of the New York Times made note of the fact that "as several of the President's own aides concede, Mr. Obama failed to rally the country behind his strategy for combating the most marked economic crisis since the Great Depression." Sanger's colleague at the Times, David Herszenhorn, observed that while the President comfortably took credit for the "more than one million private sector jobs" created last year, private employment is still substantially below -- in fact, 7.1 million jobs below! -- what it was at the start of the Great Recession in December 2007. Herszenhorn also observed that in the President's call for attracting private investment, there were no specifics regarding how these public-private partnerships should work.

No one doubts now that the economy will be the primary driver of the choices voters make in 2012, as the Times writes, but no one doubted the primacy of the economy in 2009 or 2010 or last week either. I feel like Bill Murray in the movie "Groundhog Day" -- the alarm goes off and I hear the very same things I've heard for more than 24 months.

A great political activist friend of mine wrote me the night of the SOTU, and titled her very short email "Huh?" She wrote: "Attract businesses to our shores? How about keeping the ones we have from leaving?" And she signed off by writing: "He talked jobs last year -- think he means it this year?"

In the 2011 SOTU, the President 'challenged Americans to set aside their partisan differences and come together around a common goal of outcompeting other nations in a rapidly shifting global economy' (Sheryl Gay Stolberg, NY Times). Mr. Obama couldn't be better focused in posing this challenge or more right in noting that "the rules have changed."

Yet the President often seems confused by the challenge of melding the government's long-term strategy of selective investment and deficit reduction (which are often in conflict) with short-term efforts to get the country working again. It's this apparent confusion which led him to agree to extend tax cuts for the wealthy, even though in 2008 he passionately declared them to be unwise and budget-busting -- and in the process he broke a very important promise to his 'base'.

In his 2010 SOTU, Mr. Obama said: "Jobs must be our Number 1 focus in 2010, and that's why I'm calling for a new jobs bill tonight...People are out of work. They're hurting. They need our help. And I want a jobs bill on my desk without delay."

So, what actually happened in 2010?

As reported by USA Today, Congress passed just three small job bills: $18 billion in March 2010 to give companies a tax break for hiring unemployed workers; $26 billion in August to help save the jobs of teachers and state government workers; and $30 billion in September in loans and other tax incentives for small businesses.

The problem I still have with the "jobs" portions of the 2011 SOTU is that while we know well how to create millions of new jobs, through targeted investing, trade reform and otherwise, none of this was laid out in the SOTU in ways that give assurance that we will ever see concrete results. Specifically, there was no mention of three significant policies and their associated programs that can turn goals into outcomes, let alone a commitment to fervently pursue these sorts of proven job-creating efforts. These three policies are "Buy American", a National Infrastructure Bank, and trade reform that results in fair free trade not just free trade.

We didn't even hear word one about "Buy American" or about a National Infrastructure Bank, and as for trade, Lori Wallach, Director of Public Citizen's Global Trade Watch, said it best:

  • "It was beyond surreal to hear President Obama talk about the priority of creating U.S. jobs while saying nothing about fixing our China trade debacle. It was just as surreal to hear him call on Congress to pass a NAFTA-style trade agreement with Korea that the government's own studies show will increase our trade deficit by13.9 billion over the next seven years...and that is projected to cost another 159,000 U.S. jobs.
  • "After campaigning on the need to reform America's job-killing trade policy, it is stunning for President Obama to call for more of the same trade policies as if these has not resulted in a huge American trade deficit with 5.1 million American manufacturing jobs lost and 43,000 factories closed since we started the damaging experiment with the current trade model in the mid 1990s."
  • The Korea Free Trade Agreement (or FTA) is one of the strangest administration fixations since NAFTA under Clinton, and how it was decided that the President would devote so much of his SOTU to it is worth a blog or two of its own. Paul Krugman is emphatic that this FTA will not create jobs. Obviously, the President disagrees.

    But while the President 'over dwelled' on Korea trade, he virtually ignored our abysmal trade relations with China, wherein fully 90% of the cost advantage between a product manufactured in China and its counterpart in the U.S. arises from other than cheap labor. American manufacturers, and in turn American workers, are being swamped every day by a combination of illegal subsidies -- e.g., undervalued currency, grants, low-interest loans and free land -- and environmental abuses (and thus advantages). Paul Krugman wrote in a recent column that countervailing duties on Chinese exports which attacked these illegal actions would be "job-creating". Obviously, the President preferred to ignore this fact in his most important speech of the year.

    A further concern with the 2011 SOTU is that the President offered no substantive changes to Medicaid, Medicare and other entitlements, and said only that we need to reduce their costs. And as regards Social Security, while it was very important to hear Mr. Obama's commitment to not "subjecting Americans' guaranteed retirement income to the whims of the stock market", we heard nothing at all about solutions -- such as means testing of benefits and/or substantially raising the cap on contributions -- which could once and forever fairly bring balance and stability to FDR's most important and enduring legacy.

    In wrapping all of this up, it is increasingly apparent that "Obamanomics", which is now two years old, is just a synthesis of Clinton-Rubin-Summers neoliberalism: namely, we can let "old" industries go and concentrate instead on the professional jobs of the future and the "green collar economy". In his July 14, 2010 speech announcing his Graduation Initiative, President Obama outlined precisely his neoliberal understanding -- or misunderstanding -- of the economy and economic history. And so it's no surprise that on the eve of SOTU 2011 he would name General Electric CEO Jeff Immelt to head the new Council on Jobs and Competitiveness, a move intended to show the country that the President is really serious about dealing with the nation's economic woes through the free market system.

    Yet as Charles Gasparino, a conservative columnist for the News Corp-owned "Fox Business News" and the New York Post, writes, "Immelt's selection underscores the inherent flaw in Obamanomics -- it favors the crony capitalists at the banks and large corporations that feed off government bailouts and contracts." Mr. Immelt is a very good guy, as I know firsthand; he's also, however, according to Mr. Gasparino, a registered Republican who voted for John McCain in 2008 and a staunch free-marketeer. His selection on the eve of the SOTU as the President's 'go-to guy' on jobs and competitiveness is, as Gasparino writes, "hardly the cure for the joblessness and other economic problems facing the country."

    Finally, there is education, which for the administration, in three SOTUs in a row, is clearly the dominant 'cure-all' for all things ailing our economy: when public school education is fixed, then job losses will cease and everything will be just fine. The reality is that we have a very, very sick educational system which requires attention from all levels of government -- federal, state and municipal -- and which will take another decade or more to remedy. Until then, we as a nation have to be much more sensitive to the tragedies of offshored jobs and chronic unemployment and underemployment, and much more outspoken in the annual SOTU. Way back in late 2006, the columnist David Sirota wrote that "we cannot simply educate our way out of the problems associated with a globalization policy whereby our economy is regulated exclusively to enhance multinational corporate profits -- and not to enhance ordinary people's lives."

    Right on, Mr. Sirota, as our kids would say.

    Leo Hindery, Jr. is Chairman of the US Economy/Smart Globalization Initiative at the New America Foundation and a member of the Council on Foreign Relations. Currently an investor in media companies, he is the former CEO of Tele-Communications, Inc. (TCI), Liberty Media and their successor AT&T Broadband. He also serves on the Board of the Huffington Post Investigative Fund.