Obama’s State of the Union Address 2013

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barackobamaflickruserjamesomalleyMEDIA ROOTS — Obama delivered his 2013 State of the Union Address this week. And his banal Address is unsurprising, in the sense it’s largely a continuation of policy trajectories we’ve seen during his previous term, which, in turn, have largely been a continuation of Bush policies. But for Obama’s fans, who tend to hear what they want, he, doubtless, talked a good game. But let’s take a look at what he really said (and didn‘t say).

Obama made some promises Tuesday night, some similar to past unfulfilled promises, such as jobs, economic growth, and immigration reform, for example. 

Obama discussed the federal budget and the economy, climate change, housing, education, immigration, women’s rights, the minimum wage, and the so-called Global War on Terror (which economist Dr. Michel Chossudosvky refers to as the GWOT). Obama’s speech may be described as a ‘laundry list’ speech, which seemed to touch on every single issue conceivable, but largely superficially, along the lines of vague generalities. 

Obama also discussed nuclear proliferation and “cyberattacks,” but not the kind which boosts user fees for anti-virus software, nor did Obama mention the cyberattacks against innocent citizens by his administration’s warrantless wiretapping and worsening domestic surveillance state. Obama definitely did not mention, Fukushima, nor Hiroshima, nor Nagasaki, nor Harrisburg, nor Chernobyl, nor US/NATO nuclear proliferation.

Obama did touch upon trade in the Asia-Pacific Rim and the EU, as well, before mentioning voting reform and gun violence. But Obama did not mention his violent drone strikes, nor his targeted assassinations of US citizens, nor the the Pentagon’s targeting of China, nor Obama’s geopolitical pivot, as Dr. Chossudovsky and others inform us.

Zheng Yongnian, Global Research:

 “First of all, the U.S. Asia strategy has changed and even interrupted the process of mutual adaptation of China and other Asian countries. Although the Obama administration has only voiced the strategy in its political rhetoric, the shift is enough to amplify Asian countries’ expectations for U.S. support. Thinking that the U.S. will invest huge resources to confront China as it did against the Soviet Union during the Cold War, these countries, especially the ones which have maritime boundary disputes with China, have chosen to side with the U.S. Although China’s response to the U.S. strategy has been largely defensive, it is still enough to prevent its relations with these countries from developing further.

“Secondly, the U.S. pivot has shifted the priority in Asia from economic policy to strategic policy. This has occurred, in part, due to U.S. perception of its own strengths. After the onset of the financial crisis, U.S. economic dominance weakened, but its military remains the most powerful in the world. During the Cold War period, economic and military presence had the same weight in the U.S.’s foreign policy. But with its pivot, the U.S. is re-introducing strategic competition into Asia. This change has forced China to begin to move its focus from the economy to military strategy.”

Yet, Obama’s 2013 State of the Union Address was almost identical to his first three State of the Union Addresses. There have been lofty goals, but once we cut through all of the promises, hopes, and urging Congress to do this or that task, the actual policies are scant with minimal effect on existing conditions of unemployment, recession, and expanding militarism.

Dan Kervick, New Economic Perspectives, predicted a banal address:

“It is also likely that a host of deep and disturbing systemic problems will be ignored entirely in Obama’s speech.  Addressing these deeper problems, and even mentioning them in public, is very difficult in a Washington environment steeped in a culture of corruption, high-powered lobbying by vested interests, and elite indifference to the problems and aspirations of ordinary people.  But the problems don’t disappear just because the politicians are too embarrassed or aloof to discuss them.”

Republican Senator Marco Rubio was elected to deliver the Republican Party response. In keeping with the political barriers to entry of our de facto two-party dictatorship, alternative political parties, such as the Peace & Freedom Party and Green Party, were not given the same platforms to offer their analysis or perspectives.

Rubio’s response to Obama’s Address, predictably, spoke against government intervention, if not against government, generally, and asserted “free enterprise economy is the source of our middle class prosperity.” Rubio conveyed an Ayn Randian, Virtue of Selfishness, every-man-for-himself, pull-yourself-up-by-the-bootstraps ideology.

Rubio also accused Obama of being opposed to free enterprise:

“[Obama] believes it’s the cause of our problems, that the economic downturn happened because our government didn’t tax enough, spend enough and control enough. And, therefore, as you heard tonight, his solution to virtually every problem we face is for Washington to tax more, borrow more and spend more.”

Okay, we get the general idea: Obama’s, supposedly, more into social spending since he’s perceived as a socialist.  Yet, Rubio’s statements distorted the way the monetary system operates. Rubio presented logical fallacies, from which Obama also suffered, in comparing the federal budget to a household budget, because the US doesn’t borrow dollars, as it’s the sovereign currency issuer of the US dollar, routinely makes good on its bonds, and is facing no “solvency risk.” (See W. Mosler, S. Kelton, L.R. Wray, M. Forstater, et al.)

Deadly Innocent Fraud #1:

“The federal government must raise funds through taxation or borrowing in order to spend. In other words, government spending is limited by its ability to tax or borrow.


“Federal government spending is in no case operationally constrained by revenues, meaning that there is no ‘solvency risk.’ In other words, the federal government can always make any and all payments in its own currency, no matter how large the deficit is, or how few taxes it collects.” —Warren Mosler, Seven Deadly Innocent Frauds of Economic Policy (Also see L. Randall Wray, Ph.D., Modern Money Theory.)

Rubio went on to blame government for the housing crisis:

“This idea—that our problems were caused by a government that was too small—it’s just not true. In fact, a major cause of our recent downturn was a housing crisis created by reckless government policies.”

Rubio did not specify which “reckless government policies” led to the housing crisis. But we know fraud and deregulation were major factors, as was easily falsified appraisals, which incentivised banks and lenders to inflate housing prices to profit from higher loans. (See Catherine Austin Fitts, William K. Black, et al.)

Obama scolded the nation to pay “our [government] bills on time and always uphold the full faith and credit of the United States of America.” The implication here served to further the deficit dove position regarding deficit spending. Yet, one is hard-pressed to think when the U.S. federal government has ever had difficulty paying its bills on time.  Clearly, whenever a U.S. federal obligation is due, it’s routinely paid with interest, like clockwork.  As Warren Mosler reminds us:

Federal government checks don’t bounce:

“Right now, China is holding some $2 trillion of U.S. Treasury securities. So what do we do when they mature and it’s time to pay China back? We remove those dollars from their savings account at the Fed and add them to their checking account at the Fed, and wait for them to say what, if anything, they might want to do next.

“This is what happens when all U.S. government debt comes due, which happens continuously. The Fed removes dollars from savings accounts and adds dollars to checking accounts on its books. When people buy Treasury securities, the Fed removes dollars from their checking accounts and adds them to their savings accounts. So what’s all the fuss?

“It’s all a tragic misunderstanding.

“China knows we don’t need them for ‘financing our deficits’ and is playing us for fools. Today, that includes Geithner, Clinton, Obama, Summers and the rest of the administration. It also includes Congress and the media.”  —Warren Mosler, Seven Deadly Innocent Frauds of Economic Policy

Obama also invoked the fallacy of US debt:

“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.”

“Deadly Innocent Fraud #2:

“With government deficits, we are leaving our debt burden to our children.


“Collectively, in real terms, there is no such burden possible. Debt or no debt, our children get to consume whatever they can produce.”    —Warren Mosler, Seven Deadly Innocent Frauds of Economic Policy

Now, as in the past, Obama has invoked the US debt fallacy by perpetuating the misperception the US federal budget is like a household budget:

“Now, the final critical step in winning the future is to make sure we aren’t buried under a mountain of debt.

“We are living with a legacy of deficit spending that began almost a decade ago. And in the wake of the financial crisis, some of that was necessary to keep credit flowing, save jobs, and put money in people’s pockets.

“But now that the worst of the recession is over, we have to confront the fact that our government spends more than it takes in. That is not sustainable. Every day, families sacrifice to live within their means. They deserve a government that does the same.” —Obama, 2011 SOTU

Obama has consistently delivered a Paul Krugman-style neoclassical (or “theoclassical,” to quote Prof. Black) economic perspective of a deficit dove. The last two sentences in that statement reflect, upon Obama’s part, either, deception or ignorance of the reality of how the USA’s modern, post-1971, post-Gold-Standard, monetary system operates, with the US being a sovereign currency issuer, which doesn’t borrow dollars from China or anywhere else.  As Dr. Stephanie Kelton, Chair of the Economics Department at the University of Missouri-Kansas City, articulates, the US can spend without fiscal constraints, whilst the economy is operating under capacity. The only economic constraints are real resource constraints, or self-imposed political constraints, which is precisely what Obama prescribed in 2011: 

“So tonight, I am proposing that starting this year, we freeze annual domestic spending for the next five years. Now, this would reduce the deficit by more than $400 billion over the next decade, and will bring discretionary spending to the lowest share of our economy since Dwight Eisenhower was President.

“This freeze will require painful cuts. Already, we’ve frozen the salaries of hardworking federal employees for the next two years. I’ve proposed cuts to things I care deeply about, like community action programs. The Secretary of Defense has also agreed to cut tens of billions of dollars in spending that he and his generals believe our military can do without.”

Obama didn’t put the minimal cuts to military spending into perspective by reminding us current military spending is on the order of about a trillion dollars per year.

Notably, Obama and Rubio didn’t disagree on US militarism (or imperialism). And both agreed on continued exploitation of petrochemicals, dirty fuels, “balancing” the federal budget, and deeper social spending cuts.

And further cuts to social spending is what Obama prescribed in this year’s Address.

Indeed, Obama insisted so-called “deficit cuts” aren’t enough, as an economic growth strategy is also needed to “attract more jobs to our shores,” “equip” workers, and yield prosperity. Although, one is hard-pressed to imagine what manufacturers other than high tech industry, which do not employ the working-class majority, would prefer to pay US minimum wages, rather than pennies on the dollar abroad.

Obama padded his promises of economic growth by boasting about his JOBS bill. Yet, experts, such as University of Missouri-Kansas City Professor William K. Black, a former regulator, have described the criminogenic dimensions of Obama’s JOBS Act. Prof. Black is a leading expert on control fraud, whereby trusted elite institutions, who wield powerful business and economic controls, get away with fraud precisely because they are so trusted and unregulated.

Expert white-collar criminologist, Dr. Black, says Obama’s JOBS Act allows erosions of important financial regulations resulting from an international race-to-the-bottom dynamic where US financial regulators lower their standards to compete with foreign capital markets. Here’s how Dr. Black describes Obama’s JOBS Act:

“The JOBS Act is something only a financial scavenger could love. It will create a fraud-friendly and fraud-enhancing environment. It will add to the unprecedented level of financial fraud by our most elite CEOs that has devastated the U.S. and European economies and cost over 20 million people their jobs. Financial fraud is a prime jobs killer.  […]

“This bill will kill millions of jobs because financial frauds are weapons of mass financial destruction. It will start an international fraud-friendly deregulation race to the bottom and will become the basis for further criminogenic U.S. Congressional actions.”

We recall Obama’s 2011 State of the Union Address:

“To reduce barriers to growth and investment, I’ve ordered a review of government regulations. When we find rules that put an unnecessary burden on businesses, we will fix them.”

Obama emphasised prioritising further deregulation of firms, despite the rampant unchecked criminogenic environment among business and banking elites, which experts, such as Dr. Black, have warned about. Indeed, Dr. Black has explained how Obama’s financial reform bill won’t prevent another economic crisis, leaving us with the same fundamental systemic issues. The same failings, or, as Dr. Black puts it, “betrayal,” apply to Obama’s health care reform. 

What’s striking is Obama is presenting a humanising face on inhumane policies of regressive social spending cuts and allowing only scant and passing mention of minimal DOD cuts.  Military spending now accounts for the single-biggest piece of the federal budget pie.  As the old adage goes, a nation cannot have guns and butter

And, clearly, Obama has chosen guns.

Written by Felipe Messina for Media Roots


Image by flickr user jamesomalley

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