If Americans have learned anything this year, it is that government often fails to deliver on the promises it makes and that its intervention into the economy can have serious negative consequences. Indeed, while the economy is recovering slowly, many have been left behind by a weak labor market. This has happened in spite of the many promises made by the administration about the powerful positive effects we would see from its stimulus spending and various interventions into the job market.
As a result of people giving up on looking for work, the labor force participation is at the lowest point since 1978. The share of employed in the economy has been strangely flat. And many of the lucky Americans who have found a job since the recovery started are underemployed. And while the official unemployment rate has dropped significantly in the last few years, a broader measure of unemployment has reached 13.1 percent.
Americans have also witnessed the utter debacle of the Obamacare rollout and heard the subsequent news that many people were losing their health insurance because of the new law. In addition, as many of the people who have had no choice but to buy insurance on the health care exchange would soon find out, their new coverage comes with a higher premium, higher deductible and more out-of-pocket spending.
Unfortunately, we know that there is more bad news coming our way because of other pending Obamacare requirements, in particular for small businesses.
But on the eve of another state of the Union address, we can expect no apologies or act of contrition from President Obama. In fact, if anything we can expect him to stand firm and resolute on moving forward with his signature law.
We can also expect more of the same: proposals to grow the size of government, calls for more intervention into people’s lives and more promises that the same old failed policies will deliver different results this time around.
For instance, the president is expected to call for an increase of the minimum wage to about $10 per hour. But there is a substantial body of research finding that increasing the minimum wage can have an adverse impact on the employment of those we are trying to help. He will also ask for an extension of federal unemployment benefits that expired last month without a proposal to pay for it. Ignoring much of the recent debate and academic research about the state of poverty in America and income mobility, he will likely renew his call for more soak-the-rich policies to address non-existing issues, rather than focus on finding solutions to improve even further the lives of those Americans at the bottom of the income distribution.
We can also expect the usual call for increasing spending in infrastructure, education, job training, green energy and other presidential pet projects in the name of the stimulating the economy. Never mind that every president has tried these prescriptions with no evidence that they ever work.
What we won’t hear about on Tuesday night, however, is a solution to reform the drivers of our future debt: Social Security, Medicare, Medicaid and Obamacare. The spending on these programs is set to explode in about 10 years, consuming an ever-growing share of the budget. But no one seems to care. And yet, the cost to the country will be steep. For instance, younger Americans and future generations will have to pay for this expansion in the form of higher taxes, slower growth and higher unemployment, while older Americans may face unexpected reductions in their benefits without having been able to plan for it.
Finally, to push and promote his agenda, the president is expected to muscle out Congress by heavily relying upon executive orders. However, muscling through bad policies is not only reminiscent of the abuses of powers of which he accused Republicans when he was a senator, but it also won’t help the economy or alleviate the burden of Obamacare and other entitlement programs.
Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.