Last night’s State of the Union address had a more positive tone than I had originally expected. But it still carried a hypocritical juxtaposition of calling on Americans to come together and adopt reforms that create jobs and lift the burden on businesses, improve our children’s educational opportunities, and achieve energy independence while also touting the divisive rhetoric that drives us against each other and drives us to blame the wrong causes for our current situation.
Much of what President Obama said tonight was true. It is true that mortgages were lent to those who could not afford them. It is true that companies are shipping jobs overseas and at the same time receiving tax breaks. It is true that with the death of Osama Bin Laden and numerous Al Qaeda leaders, America is much safer. And it is true that millions of new jobs have been created since he took office.
The positives may sound good when you phrase them as such. But the grim reality is that the problems America faces are so significant, that the good things that have happened under this administration are eclipsed. While these jobs were being created, millions of jobs were being eliminated. We still have fewer jobs than when the president took office. And whether he likes to admit it or not, his own policies have played a part in this anemic growth.
EPA regulations piled on by this administration have cost us over 5% of our GDP, and that’s just one federal department of many. The Dodd-Frank financial regulation bill will cost $30 billion that we don’t have. The Small Business Administration estimates that the compliance cost of our current regulatory environment is $1.75 trillion per year. President Obama alone cannot be blamed for this, as his predecessors and those in Congress passed many of these regulations prior to 2009.
The president failed to mention that government programs incentivized lending of mortgages to those who could not afford them. Federal laws demanded banks loosen their restrictions or face legal action. The Federal Reserve further incentivized banks to comply by offering them easy credit. They lowered interest rates causing investors to put their money into long term projects and many focused on residential construction.
With his re-appointment of Ben Bernanke to chair the Federal Reserve System, this inflationary policy of unnaturally and artificially low interest rates has continued. The Fed has injected trillions of dollars into our economy under this administration, money which is not backed by matching economic growth or a significant demand for US dollars. This has caused the value of our currency to drop, and commodities such as gasoline have jumped in price as a result of a speculative bubble.
President Obama could have partially alleviated this problem by promoting domestic drilling for oil and the construction of new refineries, while we wait for science to develop inexpensive renewable energy. Instead, he has chosen to stand in the way of domestic oil production, while we continue to send billions of dollars to the Saudi elite, and turn a blind eye as they send that money to violent, theocratic institutions all over the world. He turned down the Keystone oil pipeline which would run from our largest supplier of oil—Canada—to the world’s most high-tech refineries in Houston.
It would have created tens of thousands of new jobs, including many for union workers that support Obama enthusiastically. They have been denied this opportunity in favor of capitulating to a lobby of environmental zealots known for its dishonesty in promoting its agenda.
The president covered a topic that I have focused much of my attention on in recent years: education. While he briefly touted the importance of returning control to local communities and schools, the other solutions he proposed are not only wrong, but they would further damage a K-12 system that is already a miserable failure at meeting the needs of the 21st century economy.
The president proposed forcing students to stay in school until they are 18 and claimed this would improve overall education. With all due respect, this is dead wrong. We have to get out of this ‘everyone gets a trophy’ mentality and realize that some children just will not learn. By forcing them to stay in school they hold back those of our children who have the drive to succeed. It is sad and politically incorrect to mention this, but it is true.
It has been mentioned in the writings of Jim Blockey, a reform school teacher from Las Vegas, I’ve discussed it with Robert Mansfield of Pennsylvania; a man born to a drug-addicted mother who grew up on the streets of Philadelphia with nothing and who rose to success when he returned to school, got his GED and joined the Army where he rose to the rank of Sergeant.I have heard even more examples from my friends who attended failing government schools in the inner cities of Ohio.
Although early childhood education in this country is world class, by the time our children reach high school, students in European countries like Belgium beat us on a number of metrics. Students in Japan, South Korea and Singapore blow us out of the water. China isn’t messing around either. They are targeting their most skilled students and placing them into advanced programs. When those students come to our universities they trounce their American peers in mathematics and natural sciences, and then our broken immigration system forces them to return to China and use the skills that we taught them against us in the global economy. A better system would incentivize and enable them to become Americans, and grow our economy instead.
The Belgians and the Japanese emphasize on the importance of school choice and privatization of education. And the British and the Japanese both emphasize on the important of the individual. Their programs are customized to fit the abilities of each student. In Japan, education is mandatory till around 15 years of age, at which they get their equivalent of our GED. Their upper-tier secondary schools are optional, and yet over 95% of Japanese students continue their education beyond the mandatory requirements. These programs are customized as either vocational education or preparation for university.
And one third of these schools are private!
In Great Britain, when you are 16, you can stay in the system, go to a trade school, or if you are smart enough go straight to college. Some states have adopted similar programs right here in America, where gifted students can achieve associates degrees upon graduating. I propose that we don’t waste their time teaching things they don’t need in the career they want.
We need to take heed to what the Belgians, the British and especially our Japanese friends have done. We shouldn’t mandate education to 18; we should eliminate the high school diploma and require a GED at the end of what is currently 9th grade as they do in Japan. Then make tenth through twelfth grade a customizable and optional program. Let students have choices of vocational programs, college preparatory programs, and if they are skilled enough, let them go straight to college. Provide a system that can ensure our 18 year olds truly are adults by giving them the marketable skills they need to make a living wage instead of mooching off of mom and dad into their twenties.
The status quo is unacceptable! And it fosters this sort of environment. To those who are worried about the students who wouldn’t go to school beyond their GED, they can always take the unskilled labor jobs and then work their way up the ladder or choose to continue their education at a later time in life. What makes such a system work so well is that the market will determine what skills are needed and relevant programs will be supplied.
This one-size-fits-all everyone-needs-to-go-to-college mentality is causing us to fall behind the competition. It is creating an education bubble that will inevitably burst. Many of these college degrees are becoming useless, rendering starting salaries that are not significantly higher than a high school diploma. The focus must be on marketable skills. General education is never a bad thing and should be viewed as a virtue, but it can only go so far.
The best possible system we can provide for our children is a system of individual choice, with a supply of curriculum determined by the market economy’s demand. A system that empowers parents, rewards the best students, and the best teachers, and yes—a system that discourages and reprimands failure.
The president went on to claim that college tuition is too high, and if it continues to rise he will pull subsidies from those universities. He’s right to acknowledge the avarice of our university system: costing its students thousands in waste on unnecessary programs and fees that should either be privately funded or purchased a la carte at the individual level.
Yet, he fails to understand the prime reason why tuition has risen at twice the rate of inflation and four times the wage rate. The federal government’s guarantee of all student loans has given greedy academics and administrators an opportunity that they would not have in a free market. They have constantly jacked up their prices, knowing that the government would credit the money to them no matter what, and the students would get stuck with the bill.
In the state of today’s economy, no one between the ages of 18 and 22 with the exception of military, civil service and a few lucky kids who invested from their teen years would be able to apply for a loan at a bank to pay over $10,000 a year for full-time tuition and living expense financing unless they had either a parent or credit-worthy friend co-sign for them. I know because I borrow primarily from a credit union to finance my education. Without a co-signer I likely would not have been approved, and if I was approved, my interest rate would be over 10%.
But the government federally guarantees many financial options for students who have little to no credit history. This has allowed the universities to set their tuition and fees well above a true market rate. In a free market where the finance was out of pocket or credit-based, they could not do this. Their classrooms would sit empty at those prices, and they would go bankrupt. Ending the federal department of education would quickly slash tuition prices in half, and prices would finally begin to increase in conjunction with wages and inflation.
When my father went to college in the 1970s, you borrowed directly from the school. A full-time summer job was enough to cover a year’s tuition and much of your living expenses at a state university. My father came here a poor immigrant, went to a small private college, and worked part time as a manual laborer. He graduated on time and with two years of debt.
My generation has not been so lucky.
This achievement by my father is the American Dream that we should want for all of our children, and it is morally wrong to deny them the benefits of a free market where they have the power to control their own destinies.
The message of class envy is dividing us and acting against the interests of that dream. Claiming that a job creating class is not paying their fair share when the top 1% of earners pay nearly 40% of the income taxes and the top 10% pay 70% of income taxes is ludicrous. But loopholes favoring one business over another certainly must go.
Our country needs a fairer, flatter tax. We need low rates for all, but we need few to no deductions. Compliance with our current tax laws cost American businesses nearly half a trillion dollars every year. Corporate taxes only make up 9% of our federal revenue yet their punitive nature begs the question: are they really worth it? What if the economic growth that was unleashed as a result of their elimination put so many people back to work, that the income tax revenue increased not only to offset that 9%, but to surpass it?
President Obama mentioned that companies are receiving tax breaks while they offshore jobs, and he mentioned the importance of incentivizing them with tax breaks to bring those jobs back here. There are over one trillion American dollars sitting overseas because investors don’t want it to be taxed by both the foreign country and the United States upon its return. Presidential candidate Ron Paul, former candidate Herman Cain, and myself all support a common sense solution to this problem.
I call upon President Obama to eliminate taxes on all foreign money repatriated into the U.S. economy. Let these corporations and businesspeople know that if they use that money to create American jobs, they can bring it back tax free! This is something that everyone should get behind! One trillion dollars is a lot of money with the potential to create millions of new jobs. If the president and both parties in congress are serious about restoring this economy to greatness, then a bill will be brought up and soon eliminating the repatriation tax, and President Obama will not hesitate to sign it.
There is too much at stake here to play class warfare politics. If government stole the entire net worth of every billionaire on the planet, not just in the U.S., it would total up to $4.5 trillion. Under this administration, the national debt has increased by over $5 trillion . We have debt because we spend too much, not because we tax too little. Both parties are to blame. We cannot afford our so-called entitlement system as is and we cannot afford a foreign policy of being the world’s policeman.
Now that we are out of Iraq President Obama said he wants to take that money, spend half of it to pay down the debt and half to build our own infrastructure. What he failed to mention was that there are no actual savings from the end of the Iraq War. We borrowed and printed money to finance our operations there and continue to do so in Afghanistan. There is no sudden influx of revenue we can use to pay down the debt, there is only a smaller deficit.
The President must realize that this is a Now or Never moment to prevent our country from going the way of many great empires in history, destroying itself under massive debt from an affluent society at home and a thinly spread militarism.
Do not give up on bipartisanship, Mr. President. Despite the differences between you and the Republicans, you can still get started on these things. Take a look at the recommendations of the Erskine-Bowles commission. Find the things in there that you and the Republicans can agree on, and immediately pass them. It will not be the end-all-be-all solution, but it is far better than doing nothing.
We owe it to future generations to actually build them a future. I understand the pressures of an election cycle, Mr. President. But the best way to get reelected is to do right by the American people. Embracing the free-market, ending corporatism, foreign nation building, and unsustainable benefit programs is the only way to save the American Dream.
Thank you, and God Bless America!
Aaron Alghawi is finishing his B.S. in Economics at Texas A&M University; he is a board member and Director of Student Outreach for the Republican Liberty Caucus.
The views expressed here are solely those of the author and do not necessarily reflect official positions of the RLC.