After the opening preliminaries to thank us, shoutout the audience and squash partisan politics, he delved into some heavy positive (verifiable) and normative (opinion) economic information on Innovation that was broad in scope but riddled with detail.
President Obama rightly noted that technological advances have forever changed how we live, (look for) work, and play. While it's false that America is the largest and most productive economy (as based on Gross Domestic Product data, which is generally accepted in this country), it is true that the economy has escaped the snares of the recession and we are in the upswing of a recovery phase. This is the area of the business cycle that follows a downturn in economic activity. America is now progressing towards a new peak, led by corporate profits, net exports and (hopefully) employment. In the graphic below, "Real Output" is another name for the Gross Domestic Product.
Next, he considered our technological capacity to the education initiatives of boom economies such as India and Japan. While advances in gadgets and digital medium has largely contributed to U.S. economic growth over the last thirty years, India and China invested in their children, resulting in a smarter, more effective labor force. Consider the implications if America were to follow suit, coupled with our technology. Obama called for a reinvention of our energy policy to spearhead U.S. economic growth into the future. His vision is to develop the most able researchers and the most green policies on the planet. Think solar- or water-powered automobiles in the next decade. Not just more jobs, but more high-paying jobs. By 2035, he challenges the country to get 85% of its energy from renewable sources such as those just mentioned.
And speaking of education: it is positive information that investing in education is a predictor of the economic performance of a nation; we are more productive, live longer and engage in less crime. Race to the Top is an Executive-level initiative that provides monetary rewards for ideas to improve student achievement and teacher quality at the state level. Thrifty ECONtrepreneurs will dually be on the lookout for the now-permanent Tuition Tax Credits. A tax credit is an amount you are allowed to subtract from what you owe in taxes. So if you spend money on a student's expenses, you may qualify for the American Opportunity or the Lifetime Learning Tax Credit; incentives to consider the long-term implications of what higher education can do for you.
The President then went in on the ongoing debate on illegal immigration and demanded that we suffer the uncomfortable dialogue on national etiquette and policies to protect America's labor force and best economic interests, the nation of origin of the employee nonwithstanding. He normatively opined that kicking out the undocumented young intellegensia could result in vacant university seats or a decline in small business formation.
Infrastructure in the 2011 address now refers to both physical and digital innovations: American needs to improve both its interstates and information highways. Obama repeated a plea to push forward with plans to build a high-speed transportation system to compliment the high-speed internet which now transverses our country's citified and rural terrain. Public transportation investments can go a long way towards extending job mobility and business growth on the homefront.
The last point was a tricky one: to lower the corporate tax rate without adding to the deficit. How? Doubling exports by 2014, parterning with India, China and South Korea to add to the domestic workforce, enforcing our trade agreements (especially in the Asia-Pacific region), continuing to amend legislation as necessary to protect the American people (think health care and credit cards among others) and encouraging that "key word": Innovation. American exports are notoriously low compared to our imports, one big reason why our GDP (and therefore our productivity, as Obama pointed out) lacks behind that of the European Union.
Obama then began to speak in detail on how these ambitions could be reached, most notably a 3-year freeze in annual Federal spending, so as not to increase the deficit any more. The estimated savings, he warned, while good, will not be enough, so we much move to cut excessive spending wherever it is found, not just in the domestic arena. A powerful motivator for fledging ECONtrepreneurs who are seeking to maximize their futures, and not capitalize on the offerings of the present alone. While Medicare and Medicaid will likely take cuts, he wants to focus on continuing or increasing benefits for those Americans who require assistance to sustain themselves: retirees, the indigent and the impoverished. Other ambitions such as simplifying the tax code, keeping government progressive and of course, not allowing bipartisan politics to hinder our overall growth.
What can the State of the Union 2011 do for you?
cheers,
dls
solid writeup!
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