Politics & Policy

What Second-Term Agenda?

A State of the Union address with the same old bad ideas.

The lesson from the State of the Union address is this: Barack Obama has no second-term agenda. Oh, sure, he campaigned furiously for the job, starting in about January of 2011. But his campaign almost never outlined his plans for a second term, focusing instead on interest-group payoffs and demonization of his rival. Late in October of 2012, as if recognizing that they’d forgotten to attend to it, the Obama campaign released a 20-page glossy handout called a “blueprint for America’s future.” It featured splashy photos of the president on nearly every page, along with generic promises like “improve education for middle-class jobs.”

The president is like the dog who chased a car and caught it. What does he do now? Faced with the necessity of presenting a program in the State of the Union, Obama couldn’t rely on his “blueprint,” because it was essentially cotton candy. So it appears that he rummaged around in the closet where they keep hoary liberal wish lists. He dusted a few off, renamed them things like “Fix It First,” “Smarter Government,” “Manufacturing Hubs,” and so forth, and rolled them out like parade floats.

#ad#The president gave only the most glancing lip service to the greatest threat facing America — the crushing weight of entitlement spending and debt — and repeated the preposterous claim that his new spending will be free (or “won’t increase deficits by one dime”). For this, he guarantees that he will be remembered as an irresponsible failure.

There were too many bad ideas to rebut in one column, but let’s consider two: the minimum wage and solar power.

“A full-time worker making the minimum wage earns $14,500 a year,” the president said. “Even with the tax relief we’ve put in place, a family with two kids that earns the minimum wage still lives below the poverty line. That’s wrong. Tonight let’s declare that in the wealthiest nation on Earth, no one who works full-time should have to live in poverty, and raise the federal minimum wage to $9 an hour.”

Has Obama not read any economics since his undergraduate days (if then)? As a poverty-fighting measure, you could hardly do worse than to raise the minimum wage. According to 2011 data from the Bureau of Labor Statistics, only .66 percent of all full-time workers in the U.S. earn the minimum wage. The suggestion that many workers are toiling full-time at minimum-wage jobs is flat wrong. Among those being paid an hourly wage, just 5.2 percent earned minimum wage or less. Half of those earning minimum wage are under the age of 25. Even among teenagers who work, 77.2 percent earn more than minimum wage. And among those getting minimum wage, 40 percent come from families with incomes over $61,000.

Still, minimum-wage jobs provide a step onto the first rung of the economic ladder. Workers get experience, references, and cash. Most get raises within the first year. When the minimum wage is increased, some of those jobs are eliminated. Economist Russ Roberts summarizes the literature: “The standard finding is that a 10 percent increase in the minimum wage reduces employment among low-skilled workers from 1 percent to 3 percent.” So, for the sake of the less than 1 percent of full-time workers who earn minimum wage, Mr. Obama would eliminate the jobs of roughly 240,000 people.

The president also returned to one of his favorite hobby horses: subsidizing solar energy. In his 2012 address, he demanded more “clean” energy, declaring, “I will not cede the wind or solar or battery industry to China.” This year, he insisted that “as long as countries like China keep going all-in on clean energy, so must we.”

Must we? The Chinese government, like Obama, confident that it can pick winners, poured stimulus money into the solar industry. The result was huge overcapacity (part of the reason for Solyndra’s demise). According to a European competitor, “massive subsidies and state intervention have stimulated overcapacity more than 20 times total Chinese consumption and close to double total global demand.” In the last two years, shares of Chinese solar companies have fallen by half. Dozens of Chinese solar companies are now on the verge of bankruptcy.

Much the same can be said of Obama’s clean-energy white elephant and his entire makeshift second-term agenda.

Mona Charen is a nationally syndicated columnist. © 2013 Creators Syndicate, Inc.

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