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Jan 27 2014

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State of the Union – 2014

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An alarming disconnect in reality....

An alarming disconnect in reality….

To properly understand Washington, citizens outside the Beltway must dispense with idealized notions of power and governance and see DC and its people for what they are – a tribe. And like most tribes, there is a strict social hierarchy, supported by – and enforced through – rituals and traditions, which transcend political party, all in the service of celebrating the group and validating its leaders; all to the apparent but unstated exclusion of everyone else.

Which brings us to the State of the Union (SOTU) – 2014.

Article II Section 3 of the Constitution states that the President, “…shall from time to time give to the Congress Information of the State of the Union, and recommend to their Consideration such Measures as he shall judge necessary and expedient…”  Over 200 years later, a practical, pro forma responsibility to communicate objectives has morphed into a spectacle that has taken on the trappings of a totem for the DC tribe, which keenly anticipates, breathlessly analyzes and intensely discusses the presidential speech before Congress; infusing the event with meaning completely out of proportion to its actual importance, either in Washington proper, or among the citizenry.

Indeed, can anyone remember a consequential SOTU without resorting to Google?

The larger truth is that  the SOTU has become an empty exercise. The pageantry has become a substitute for consequence. The applause an imperfect surrogate for unity of purpose.

Perhaps in the days before cable TV, the Internet and social media, the SOTU served a useful function as a consequential communications channel from Chief Executive to public. But today, when the President regularly decamps to late night TV and the Jon Stewart show, the presidency itself suffers from over exposure, not a lack of citizen engagement. If anything, the presidency and the President are smaller – and more ignorable- today as a result. It is light without heat.  Thusly, the modern incarnation of the SOTU has all the impact of a Super Bowl pre-game show; incredibly important – until it isn’t; a time-filler for expectations that are quickly forgotten when the real game gets underway.

But while the SOTU has vastly diminishing returns to the people at large (ratings have declined every year of the Obama presidency), it still has an outsized importance to the tribal infrastructure in DC. The degree to which the SOTU has become a unique and disquietingly disconnected “insider’s game,” showcasing what Washington believes is important rather than what the country at large identifies as priorities, will be on full display tomorrow night.

Over the weekend, the President’s minions deployed to the major news shows, laying out the President’s likely intentions and proposals for the SOTU. We learn that POTUS will seize upon “income inequality” as a central theme for the year, calling for an increased minimum wage among other income redistribution proposals. There will be a plug for comprehensive immigration reform which conservatives see as code for “amnesty,” as well as a renewed call for emergency unemployment benefits. And in discussing a “year of action” the President will propose new efforts to use Executive power unilaterally to implement his proposals when Congress refuses to move on his agenda.

For the tribe, this is mother’s milk; it’s a speech about political proposals designed to influence the midterms. It is about the dynamics of power in the capital, not about policy or good governance, no matter how emphatically the President and Democrats claim to the contrary.

Consider, the notion of income inequality and government’s “vital” role in solving it is an article of faith to the progressive base, as are the necessity for additional unemployment benefits. Politically, there’s little hope of keeping the Senate in Democratic hands if the base isn’t charged up.  Immigration also animates the Democratic base while also usefully dividing Republicans, and is a handy plug to shore up POTUS’ alarmingly low ratings among Latinos over the last several months. Unilateral Executive action not only invigorates Obama’s leadership with gravitas, it also paints the GOP as an unflattering “do nothing” bunch.

The perfect midterm script. Will any of it – if translated into law – have any tangible impact on working Americans?

Who cares! The GOP needs a net +6 to take back the Senate in November. That is what POTUS’ speech is trying to blunt. If 2014 is a bad year for Democrats, the Obama agenda – already on life support from self inflicted wounds – will be all but dead. Action will turn to 2016.

But what of America and the challenges of its citizens, far away from tribal intrigue?

Consider just this one comparison:

Year Civilian   Non-Institutional   Pop. Civilian   Labor Force
2009  235,035,000  154,447,000
2013  246,745,000  154,937,000
  +11,700,000 +        490,000

Since President Obama took office in 2009, the US non-institutional, civilian population has increased by nearly 12 million. At the same time, the civilian labor force has barely budged, an incredible view of employment stagnation.

91 million Americans are no longer in the labor force  a record high representing slightly more than 1 in 3 citizens. When the Bureau of Labor Statistics (BLS) calculates the unemployment rate, it does not factor in these people – officially they don’t’ exist. That is how you can have the worst labor force participation rate since  1978.  (before women entered the job market in truly significant numbers) and still have an official unemployment rate of only  6.7%.

POTUS will likely discuss unemployment in the context of expired unemployment benefits, no doubt balancing the faux “substantial progress” he has made with work left to be done.  But even in the best case, renewed benefits will be no more than a temporary Band-Aid on what has emerged as a profound sociological divide during Obama’s presidency – a phenomenon that has destroyed or crippled livelihoods, and signals the creation of multiple “lost” generations  at the same time (Millennials, Xer’s and late-stage Boomers) whose eroded or undeveloped skill set threaten the future productivity of the nation, and the increased social cost of lost opportunity.

That central fact will go unmentioned amid much happy talk.

Consider other Obama metrics

In the 19 quarters since January 2009, the economy has grown at the measly average of 1.8 percent. If you count only the 17 quarters after the economy returned to growth in QII 2009, the average growth rate is only 2.4%, well below historical, post-recession norms and not enough to keep up with population growth.

The impact of below par growth can be measured in other, alarming statistics.

As of December 2013, 47.8 million Americans were  on food stamps. That is an astonishing  increase of 16.1 million (more than 50 percent) since December 2008, yet the Great Recession officially ended in QII of 2009.

In addition, a record 8.9 million Americans are now receiving Social Security Disability (SSD) payments, as desperate citizens, unable to find work – and with unemployment benefits exhausted – wedge into a program that was never designed to accommodate anyone but those legitimately unable to work.  The explosion of new recipients is so large that the trust fund which supports SSD is projected to go bankrupt in 2016.  There is currently no plan in place to cope with the surge or its consequences.

Will any of this make the SOTU?

Unlikely.

And of course there is health care.

Obamacare has been nothing short of an unmitigated and continually cascading disaster. Millions of individuals have lost their previously existing insurance. Small businesses and corporations will face the same fate this year, creating uncertainty, dislocation and jarring cost/benefit realities that will ripple through the economy.

Those who have persisted in getting through the dysfunctional front end of healthcare.gov find policies with more limited coverage and physician availability, higher premiums and higher deductibles; a hidden redistribution scheme where the young and healthy pay for the poor and sick by the forced purchasing of coverages they don’t need and will never use.

90 days after its rollout, Obamacare has become the poster child in government’s best intentions run amok. “Adverse selection” – where the sickest and poorest make up the biggest cohort of new enrollees -has radically changed the cost assumptions of Obamacare.  The mass enrollment of so many in Medicaid for instance – far from a triumph – is a fiscal catastrophe in the making  as first the federal government, and then the states, will have to find the cash to pay for so many additional bodies.

In the exchanges proper, the majority of those who have signed up for coverage are actually those who had insurance previously; not the uninsured for whom the program was ostensibly designed.

In addition, based on data released thus far (and the Administration guards its Affordable Care Act data better that intelligence secrets)  Obamacare has failed to attract either the estimated total number of enrollees or the right demographic mix to justify current policy pricing by insurers.

To balance out the old and sick, Obamacare needed a 40 percent enrollment from those 18-35, the young and healthy.  Right now, that cohort represents just 25 percent. A plurality of enrollees are actually older and  less healthy participants. Without the right mix of bodies, insurance companies will have no choice but to raise rates and deductibles/exclusions to balance the risk pool, heaping more costs, restrictions and uncertainties on those Americans least able to afford it.

In the meantime, doctors and other healthcare providers chafe as they are dropped by insurance carriers, while businesses cut hours to stay below Obamacare’s mandatory minimums for coverage, forcing more Americans into multiple, part-time work – with its impact on growth and productivity.

For its serial failures and unintended impacts, Obamacare ranks as one of the worst public policy decisions in modern American history.

Don’t expect a lot from the President on this either.

So what are the American people actually concerned with?

According to a Quinnipiac poll from early January, 62 percent of Americans believed that the two biggest issues facing the nation were the economy and the budget deficit. Expect POTUS to give lip service to both before moving on to his more important central points.

Health care came in 3rd at 16 percent – a topic that the President will  provide, at best, a minor, highly sanitized narrative of cherry-picked success. Immigration?  Only 5 percent of Americans think it’s a priority, yet it is a key piece of the President’s 2014 agenda.

A greater disconnect between leaders and governed is hard to envision, but that will not stop the networks and their media flacks who will trumpet the new agenda for its wisdom and timely consequence.

A word here about the Fourth Estate. The unquestioned fidelity of mainstream media outlets to this Obama policy “pivot” is as banal as it is appalling. A bias-free media is not possible, but is it too much to ask that journalists at least hold President Obama to the same standard that they held President Bush? Under those circumstances, would media elites (charter members of the tribe, by the way) allow a Bush administration to pivot to a completely new agenda after a year of scandal, embarrassment and incompetence that defines POTUS’ 2013 and reverberates still?

It is a sad commentary on the state of our public discourse.

So, tomorrow, official Washington gathers to essentially revel at its own brilliance and self-importance, while the nation at large suffers the legacy of broken promises and broken policy.

Tomorrow, do yourself a favor.

Just turn the TV off and count the days until the Election, the only day when the power of Washington is at the mercy of the people.

 

 

 

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