Committee for a Responsible Federal Budget

State of the Union: What We Heard

Jan 29, 2014

Yesterday, President Obama addressed the nation in his sixth State of the Union address. Unsurprisingly, the main focus of his speech was not on our country's fiscal issues and national debt, but instead on restoring opportunity and equality to all Americans. However, we were still disappointed the President spent so little time discussing the major fiscal issues facing the country such as growing entitlements and reforming an outdated tax code.

Our partner Fix the Debt enumerated several suggestions for what they wanted to hear during the State of the Union address. Specifically, they called for the president to: remind the public that our debt problems are not yet solved; present ideas to make entitlement programs more sustainable; call for comprehensive tax reform to encourage growth and competitiveness; offer ideas for how to pay for new proposals; and explain the important connection between jobs, economic mobility, competitiveness, and the debt.

 We - and Fix the Debt - were disappointed with the lack of focus on the national debt and fiscal issues.

“The declining deficit and the President’s lack of focus on the nation’s fiscal situation has lulled many into a false sense of security, but the fact remains that the debt is at historically high levels and is slated to continue to grow unsustainably later this decade,” said Maya MacGuineas, head of the Campaign to Fix the Debt.

Indeed, the President did not mention the national debt once during his 65-minute address. He did, however, state that deficits have been cut by more than half in recent years, which we discuss here. Most notably, the President did not address at all two of Fix the Debt's suggestions: "present ideas to make entitlement programs more sustainable," and "offer ideas for how to pay for new proposals." And while he touched on tax reform, the President did not offer any new ideas or serious proposals.

Encouragingly, President Obama said that "we can still do more to invest in this country's future while bringing down our deficit in a balanced way." We agree with a balanced approach of deficit reduction, focusing on both entitlement and tax reform, but wish the President had laid out more of an agenda on how to tackle these items.

The President did touch on tax reform briefly: he called for an expansion of the Earned Income Tax Credit, for an end to tax breaks for fossil fuels, and for business tax reform that reduces the incentive to move business overseas. President Obama went on to say that tax reform should be used to raise revenue, and the revenue should be used to pay for new investments, instead of going toward deficit reduction.

CRFB and Fix the Debt President Maya MacGuineas responded:

"Rationalizing our spending and dealing with the longer-term debt problems would help free up the space for the kind of investments in infrastructure, education, and worker training that President Obama called for tonight; investments that could help add jobs and promote economic mobility. What we need though is a comprehensive economic growth strategy that includes smart investments and reforms partnered with measures to get the long-term debt under control--otherwise the looming debt will continue to threaten our future prosperity.

Every day that we fail to deal with the long-term drivers of the debt – including out-of-control entitlement spending and trillions of dollars of tax loopholes – is a day lost in making these changes in a smart and thoughtful way that would help grow the economy. While it may be politically convenient for politicians to try to avoid facing real budgetary tradeoffs, failing to do so puts at risk the economy and our citizenry. Tonight the President missed an important opportunity to get the process of confronting these issues underway."