On unemployment, Obama's small ball won't cut it

Reuters

President Obama delivers the State of the Union Address January 28, 2014.

Article Highlights

  • Shouldn’t the president promise to award contracts based on which firm will do the best job for the least cost to the taxpayer?

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  • The president called on Congress to extend unemployment benefits, and Congress should heed the president’s call. But other than that, and the aforementioned pledge, the president barely mentioned our unemployment crisis.

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When asked which of four phrases best describes how they feel about the remainder of President Obama’s second term, a combined 59 percent of Americans say they are “pessimistic and worried” or “uncertain and wondering,” versus only 40 percent who say they are “optimistic and confident” or “satisfied and hopeful.”

As we heard many, many times in recent days, the president hopes to turn those numbers around using his pen and his phone.

With his pen he will sign executive orders, including one that requires all workers on new federal government contracts to be paid at least $10.10 per hour — a nearly 40 percent increase above the current federal minimum wage, and a bad idea. (Shouldn’t the president promise to award contracts based on which firm will do the best job for the least cost to the taxpayer? Who do you think will be on the hook for that 40 percent increase in costs?)

With his phone, he will try to urge others to advance his goals. “I’ve been asking CEOs to give more long-term unemployed workers a fair shot at that new job and a new chance to support their families,” the president said in his State of the Union address, referring to the pledge he is urging businesses to make not to discriminate against the long-term unemployed.

This is playing small ball. It would be okay if we weren’t facing big problems. But we are.

The president called on Congress to extend unemployment benefits, and Congress should heed the president’s call. But other than that, and the aforementioned pledge, the president barely mentioned our unemployment crisis. Given that it is arguably our country’s most serious and immediate social and economic problem, the fact that the president continues to avoid it is deeply troubling.

The president was on the mark about some things, of course, including the Earned Income Tax Credit. He announced that he agreed “with Republicans like Senator Rubio that it doesn’t do enough for single workers who don’t have kids.”

“So let’s work together to strengthen the credit, reward work, and help more Americans get ahead,” he said.

And pairing corporate tax reform with infrastructure spending, as he also suggested, may not be a bad idea, depending of course on the composition of the spending.

On immigration, the president’s relative silence may have communicated more than what he said on many other topics — he dedicated just one paragraph to immigration. Some pure speculation: Perhaps he thinks Congress might actually pass something on the issue, and he wants to say as little as possible to avoid inflaming partisan fever?

All in all, I was underwhelmed by the ambition of the speech — and given my low expectations, that is saying something.

In June 2008, Mr. Obama accepted the Democratic Party’s nomination for president. In his acceptance speech, he said that “generations from now, we will be able to look back and tell our children that this was the moment when we began to provide care for the sick and good jobs to the jobless; this was the moment when the rise of the oceans began to slow and our planet began to heal.”

Consider the staggering distance between slowing the rise of the oceans and a higher minimum wage for federal contract workers.

Promise, meet reality.

— Michael R. Strain is a resident scholar at the American Enterprise Institute.

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About the Author

 

Michael R.
Strain
  • Michael R. Strain is a resident scholar at the American Enterprise Institute, where he studies labor economics, public finance, and applied microeconomics. His research has been published in peer-reviewed academic journals and in the policy journals Tax Notes and National Affairs. Dr. Strain also writes frequently for popular audiences on topics including labor market policy, jobs, minimum wages, federal tax and budget policy, and the Affordable Care Act, among others.  His essays and op-eds have been published by National Review, The New York Times, The Weekly Standard, The Atlantic, Forbes, Bloomberg View, and a variety of other outlets. He is frequently interviewed by major media outlets, and speaks often on college campuses. Before joining AEI he worked on the research team of the Longitudinal Employer-Household Dynamics program and was the manager of the New York Census Research Data Center, both at the U.S. Census Bureau.  Dr. Strain began his career in the macroeconomics research group of the Federal Reserve Bank of New York.  He is a graduate of Marquette University, and holds an M.A. from New York University and a Ph.D. from Cornell.


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