TPA Reacts to the State of the Union

David Williams

February 13, 2013

Tonight was President Obama’s fourth State of The Union (SOTU) address (2009 was technically just a speech before a joint session of Congress, not a State of The Union).  Just as in previous SOTU’s by President Obama, and former President’s, there is quite a lot to digest.  As you can imagine, the Taxpayers Protection Alliance (TPA) listened intently as the President talked more about his spending and taxation plans for the year.  An article in The Hill earlier today gave us a sneak preview of what to expect, “President Obama will use his State of the Union speech Tuesday to turn public opinion against automatic spending cuts and argue that some of the money to replace the cuts should instead come from higher taxes.  He will use the prime-time TV address to argue the economy would be damaged if $85 billion in automatic spending cuts were to go ahead on schedule on March 1, and will seek to set up Republicans to take the blame if they do.”  Well, President Obama kept true to his word.  He railed against the sequester (automatic spending cuts), asked for more revenue, and called for additional spending.  The trifecta of what not to do considering that the nation is $16.5 trillion in debt and the deficit this year will eclipse the $800 billion mark.

Sequester

President Obama said, “In 2011, Congress passed a law saying that if both parties couldn’t agree on a plan to reach our deficit goal, about a trillion dollars’ worth of budget cuts would automatically go into effect this year. These sudden, harsh, arbitrary cuts would jeopardize our military readiness. That’s why Democrats, Republicans, business leaders, and economists have already said that these cuts, known here in Washington as ‘the sequester,’ are a really bad idea.”  The truth is that sequestration came about because both parties agreed to it and the President signed it into law as part of the Budget Control Act of 2011.

The biggest concern for folks has been the effect of sequestration on the Department of Defense.  TPA joined with 7 other groups to urge Congress to allow the sequestration to happen. The wars in Afghanistan and Iraq are ending, and our defense leaders admit the spending boom that more than doubled the Pentagon budget since the wars’ launch a decade ago must end.  Consensus exists among civilian and military experts that DOD can absorb at least sequestration levels of spending cuts while retaining a robust force to meet the nation’s security needs. The bottom line is that sequestration will not weaken our military and should only be the first step in realigning the Pentagon’s priorities.  Reforms such as eliminating outdated, Cold War-era weapons; cutting programs the military doesn’t even want; reforming military health care programs; and closing unneeded bases will not only save taxpayers billions, they will also make our nation stronger by helping safeguard our financial security.

In November 2012, Sen. Tom Coburn of Oklahoma released a report titled, “Department of Everything,” which outlined $68 billion in defense cuts that won’t affect national security. According to Mr. Coburn, there are five areas in the defense budget that “have little to do with national security where taxpayer dollars could be saved and deficits reduced without impacting our national security.” The areas he pointed out were nonmilitary research and development, education, alternative energy, grocery stores, and overhead, support and supply services. All told, these savings would total $68 billion.  In addition to what Mr. Coburn has pointed out, there are three unnecessary programs: the Medium Extended Air Defense System (MEADS), the Evolved Expendable Launch Vehicle (EELV) program, and the Abrams tank upgrade. These should be cut immediately.

More Revenue (Tax Increases)

President Obama wants taxpayers to pay more to the government.  “They know that broad-based economic growth requires a balanced approach to deficit reduction, with spending cuts and revenue…” The feceral government is obsessed with taking more of Americans’ money and it is irresponsible to ask taxpayers for more money when the government has wasted and mismanaged trillions of tax dollars.  Taxes increased on January 1, 2013 and taking more money out of a struggling economy is a bad idea.  If government wants more revenue, it should be done through lower taxes, including a cut in the corporate tax rate, to expand the tax base or asset sales such as selling excess property or spectrum.

Excess federal property is an easy (and smart) way to bring in revenue.  According to a January 2013 press release by Rep. Jason Chaffetz (R-Utah), “Congressmen Jason Chaffetz (R-UT) and Mike Quigley (D-Ill) reintroduced H.R. 328, the Excess Building and Property Disposal Act that cuts wasteful spending on excess federal property which costs taxpayers $1.67 billion annually.  H.R. 328 creates a five-year pilot program that expedites the disposal of the most profitable properties, by removing red tape and increasing transparency through creating an online database for all property owned by the federal government.  Additionally, the bill would permanently modernize the existing disposal process by reducing administrative overhead, creating new agency incentives, and requiring greater accountability from federal agencies.”

Selling spectrum is another no brainer.  According to CTIA, “While spectrum fuels the wireless industry’s ‘virtuous cycle’ of innovation and competition, its impact on the nation’s economy is also significant. Analysts estimate that bringing 500 MHz of spectrum to market will increase U.S. GDP by $166 billion, add at least 350,000 new U.S. jobs, generate an additional $23.4 billion in government revenues and result in a $13.1 billion increase in wireless applications and content sales.”

These are two easy ways to increase revenue without burdening taxpayers.

Spending

This is the most confusing and out-of-touch part of the SOTU.  The American public has shown that they are fed up with excessive federal government spending and are begging for spending cuts, yet President Obama wants more spending.  While pages and pages could be filled with specific spending cuts such as Obamacare, one item in particular that should be discussed is broadband since President Obama singled it out as one of the nation’s infrastructure problems.

The federal government is obsessed with spending money on taxpayer-funded broadband deployment when the private sector has done a superb job providing this service.  The glaring difference between government vs. private sector funded broadband is that the government’s track record has been abysmal.  When Congress passed, and the President signed, the stimulus bill in 2009, $7.2 billion was allocated to expand broadband in the United States. Of that $7.2 billion, Congress included $4.7 billion for the National Telecommunications Information Administration (NTIA) to issue grants under a new Broadband Technology Opportunities Program and $2.5 billion for the Rural Utilities Service (RUS) to expand broadband in the United States.  Now, the President wants more.

An article in The New York Times details some of the short comings of the broadband plan, “Nationally, $594 million in spending has been temporarily or permanently halted, 14 percent of the overall program, and the Commerce Department’s inspector general has raised questions about the program’s ability to adequately monitor spending of the more than 230 grants.  In Illinois, for example, a $12 million broadband grant was sanctioned when a subcontractor was caught routing fiber optic cable through neighborhoods where its project engineers lived. A $39 million grant in Arizona was suspended over questionable expenditures on travel, transactions that appeared to involve conflicts of interest and other unbudgeted activities.  Broadband grants in Alabama and Louisiana, totaling $140 million, were terminated over undocumented expenditures and failure to adhere to construction plans and schedules. Four other grants, worth $42 million, returned the money before even getting off the ground.”

The true drivers of innovation will be the private sector, not the government.  Government needs to first get out of the way of private investment by reducing regulations and conduct more oversight of taxpayer money already spent rather than spending more.

Luckily, most state of the union speeches have become mostly symbolic.  President Bush asked for a renewed space program and to send astronauts back to the moon and then ultimately send a man to Mars.  Presidents before him rattled off their wish lists that never saw the light of day.  The most troubling aspect of tonight’s speech was the clear fact that President Obama is in denial that over spending is truly the problem and focused on more spending and more revenue.  The budget paralysis that has engulfed Washington, D.C. may be the only thing that is holding back a flood of new spending.

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