Gary North’s Reality Check
“It is said that if you know your enemies and know yourself, you will not be imperiled in a hundred battles; if you do not know your enemies but do know yourself, you will win one and lose one; if you do not know your enemies nor yourself, you will be imperiled in every single battle.” — Sun Tzu
Step one: know your enemy.
The President’s State of the Union address was long: 11 pages, single-spaced.
It was standard stuff: a laundry list of Keynesian programs, few of which will get by the House of Representatives. It was an exercise in futility. Fortunately.
He began his laundry list with economic inequality, as a good Progressive always does. “But we gather here knowing that there are millions of Americans whose hard work and dedication have not yet been rewarded. Our economy is adding jobs — but too many people still can’t find full-time employment. Corporate profits have skyrocketed to all-time highs — but for more than a decade, wages and incomes have barely budged.”
He appealed to the middle class, as every politician does. “It is our generation’s task, then, to reignite the true engine of America’s economic growth — a rising, thriving middle class. (Applause.)” This is where the votes are. Then came bipartisan platitudes:
It is our unfinished task to restore the basic bargain that built this country — the idea that if you work hard and meet your responsibilities, you can get ahead, no matter where you come from, no matter what you look like, or who you love. It is our unfinished task to make sure that this government works on behalf of the many, and not just the few; that it encourages free enterprise, rewards individual initiative, and opens the doors of opportunity to every child across this great nation. (Applause.)
Nothing Communist here. Why people say he is a Communist baffles me. He is a Keynesian. They all are.
The American people don’t expect government to solve every problem. They don’t expect those of us in this chamber to agree on every issue. But they do expect us to put the nation’s interests before party. (Applause.) They do expect us to forge reasonable compromise where we can. For they know that America moves forward only when we do so together, and that the responsibility of improving this union remains the task of us all.
This is Sam Rayburn’s politics: “Go along to get along.”
He talked about the federal deficit. He lied. He said they have reduced the deficit. “Over the last few years, both parties have worked together to reduce the deficit by more than $2.5 trillion — mostly through spending cuts, but also by raising tax rates on the wealthiest 1 percent of Americans.” Reduce the deficit? It runs $1 trillion a year. Nobody has done anything to reduce it. As for spending cuts, both parties are trying to get out of the sequestration cuts that will hit in March.
“As a result, we are more than halfway towards the goal of $4 trillion in deficit reduction that economists say we need to stabilize our finances.” At $1 trillion a year, the crisis is inevitable.
But he wants out of the 2011 deal.
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. They’d devastate priorities like education, and energy, and medical research. They would certainly slow our recovery, and cost us hundreds of thousands of jobs. 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.
It’s deficits today, deficits forever. It’s kick the can.
He correctly identified the #1 problem: Medicare.
Yes, the biggest driver of our long-term debt is the rising cost of health care for an aging population. And those of us who care deeply about programs like Medicare must embrace the need for modest reforms — otherwise, our retirement programs will crowd out the investments we need for our children, and jeopardize the promise of a secure retirement for future generations.
The solution? Tax the rich . . . the universal solution for Democrats.
But we can’t ask senior citizens and working families to shoulder the entire burden of deficit reduction while asking nothing more from the wealthiest and the most powerful. (Applause.) We won’t grow the middle class simply by shifting the cost of health care or college onto families that are already struggling, or by forcing communities to lay off more teachers and more cops and more firefighters. Most Americans — Democrats, Republicans, and independents — understand that we can’t just cut our way to prosperity. They know that broad-based economic growth requires a balanced approach to deficit reduction, with spending cuts and revenue, and with everybody doing their fair share. And that’s the approach I offer tonight.
He says he will go with Simpson-Bowles. Really? Why now? Why not when it was proposed in 2010? Why did he oppose it? Why did the Democrats in Congress oppose it?
On Medicare, I’m prepared to enact reforms that will achieve the same amount of health care savings by the beginning of the next decade as the reforms proposed by the bipartisan Simpson-Bowles commission. (Applause.)
Meanwhile, stick it to the rich!
Already, the Affordable Care Act is helping to slow the growth of health care costs. (Applause.) And the reforms I’m proposing go even further. We’ll reduce taxpayer subsidies to prescription drug companies and ask more from the wealthiest seniors. (Applause.) We’ll bring down costs by changing the way our government pays for Medicare, because our medical bills shouldn’t be based on the number of tests ordered or days spent in the hospital; they should be based on the quality of care that our seniors receive. (Applause.) And I am open to additional reforms from both parties, so long as they don’t violate the guarantee of a secure retirement. Our government shouldn’t make promises we cannot keep — but we must keep the promises we’ve already made. (Applause.)
And how will this be done? The system is a gigantic squid. Why now? What’s new?
To hit the rest of our deficit reduction target, we should do what leaders in both parties have already suggested, and save hundreds of billions of dollars by getting rid of tax loopholes and deductions for the well-off and the well-connected. After all, why would we choose to make deeper cuts to education and Medicare just to protect special interest tax breaks? How is that fair? Why is it that deficit reduction is a big emergency justifying making cuts in Social Security benefits but not closing some loopholes? How does that promote growth? (Applause.)
In short, raise taxes.
The real deficit is $222 trillion. He never mentioned that. They never do.
Then he returned to that old favorite, a simplified tax code.
Now is our best chance for bipartisan, comprehensive tax reform that encourages job creation and helps bring down the deficit. (Applause.) We can get this done. The American people deserve a tax code that helps small businesses spend less time filling out complicated forms, and more time expanding and hiring — a tax code that ensures billionaires with high-powered accountants can’t work the system and pay a lower rate than their hardworking secretaries; a tax code that lowers incentives to move jobs overseas, and lowers tax rates for businesses and manufacturers that are creating jobs right here in the United States of America. That’s what tax reform can deliver. That’s what we can do together. (Applause.)
We have waited since 1913.
He called for bipartisanship. That means “do it my way.”
(For the rest of my analysis of his State of the Union Address, click the link.)