By accounts, last night's State of the Union address was one of the more inspirational, optimistic speeches given by President Obama. (There were no boos or nasty shout-outs, as in speeches past). But what does all the rhetoric (62 minutes' worth) mean to you and your future?
Here's some of what President Obama called for -- and the takeaway.
Obama said we need to "out-innovate, out-educate and out-build the rest of the world." While it's all about competing better with developing nations such as China and India, innovation also means entrepreneurship and, ultimately, jobs. Because at bottom, Obama's success (not to mention his re-election) will stem from his ability to provide jobs and robust income growth for Americans.
But you have to wonder: If all of the high-tech manufacturing jobs continue to be shipped out of the U.S., how exactly is this innovation going to create millions of jobs?More Exports
Assuming that exports (up 17% in the first 11 months of 2010) continue to rise (Obama wants to double them by 2014), and that Americans buy more U.S.-made goods, this could result in more jobs. But creating millions of jobs requires strong economic growth overseas and a big shift in exchange rates.
Obama called for a five-year domestic spending freeze (excluding Social Security, Medicare, Medicaid, defense, homeland security and veterans programs). His aim is to reduce the deficit (currently over $14 trillion) by more than $400 billion over 10 years. That's all fine and good, but it's been tried before, with limited success. In fact, domestic spending was reduced six times in the past 30 years, including three times by Ronald Reagan and two times under Bill Clinton. In other words: We'll see, but one thing that's certain is that the government cannot continue to spend more than it takes in.
Lower Corporate Taxes
At 35%, our corporate tax is the highest in the world -- and the theory is that if you lower it, companies will expand their operations and add to the headhunt. Maybe, but I'm not so sure, given that companies are already sitting on almost $2 trillion and aren't hiring. Why not? They've become accustomed to working with ultra-lean forces and wouldn't have it any other way.
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