President Obama's Fifth State of the Union Address – A Little Something for Everyone

by King & Spalding
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[authors: Thomas J. Spulak, Claudia A. Hrvatin, Lauren M. Donoghue]

As required by Article II, Section 3, of the United States Constitution, President Obama appeared last night before members of the U.S. Senate, U.S. House of Representatives, the Judiciary, certain members of his Administration and the American public to deliver his fifth State of the Union address. In a slight departure from language routinely used during these speeches, the President indicated that, "it is you, our citizens, who make the state of our union strong."

Pointing out that Washington "has been consumed by a rancorous argument over the proper size of the federal government," he stated that, should Congress not take legislative action to ensure economic growth, he will "take steps without legislation to expand opportunity for more American families." Implicit in this is a strategy to use Executive Orders to substitute for congressional action. As an example, earlier in the day the President announced that in the coming weeks he would sign an Executive Order raising the minimum wage for employees of federal contractors to $10.10 an hour. During the address, Obama announced another forthcoming Executive Order that will create a new retirement-savings program.

The President called on Congress to join him in making this "a year of action" and set forth several key policy issues and initiatives that will be the focus of his sixth year in office. The following summarizes the President's key objectives.

Investing in the United States

Stating that "first-class jobs gravitate to first-class infrastructure," the President asked Congress to protect more than three million jobs by completing action on transportation and waterways bills by this summer. In addition, he said he would assist in this area by using his authority "to slash bureaucracy and streamline the permitting process for key projects."

Obama highlighted the fact that the United States has now surpassed China in direct foreign investment. The President commented that "half of big manufacturers say they're thinking of insourcing jobs from abroad." In an effort to encourage such investment, he challenged members of Congress to reform the tax code to close "wasteful, complicated loopholes" and to eliminate "incentives to ship jobs overseas and lower tax rates for businesses that create jobs here at home." The President emphasized the importance of completing the Trans-Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (TTIP) trade agreements. However, the predicate for fast track consideration of trade legislation – Trade Promotion Authority (TPA) – is facing serious opposition from congressional Democrats and members of the Tea Party.

The Administration is seeking to establish "hubs" that would connect businesses and research universities and ensure American leadership in advanced technologies and the creation of new jobs. The Administration has already developed two such hubs and, in his speech, President Obama announced the creation of six additional high-tech manufacturing hubs. Beyond those, congressional legislation could double these projects and the jobs they create.

The President called on Congress to pass patent reform legislation that would allow business "to stay focused on innovation, not costly, needless litigation." Proposals to reform the patent litigation system are currently under consideration in the Senate. The House passed its own bill in December.

In an effort to expand growth and opportunity, the President outlined the White House's College Opportunity Summit that brings together universities, businesses and nonprofits to reduce inequality in access to higher education. The White House is partnering with mayors, governors and state legislatures on issues from homelessness to marriage equality.

All in on Energy

In continuing a drumbeat on the importance of creating more jobs through the energy sector, Obama reiterated using an "all-of-the-above" strategy to bring about energy independence. He focused on natural gas as the "fuel that can power our economy with less of the carbon pollution that causes climate change." By cutting red tape to encourage states to build natural gas infrastructure, he called on Congress to help by putting "people to work building fueling stations that shift more cars and trucks from foreign oil to American natural gas." He advocated becoming a global leader in solar energy, by shifting tax policy that gives "$4 billion a year to fossil fuel industries that don't need it," to investments in "fuels of the future that do." The President intends to set higher standards for fuel efficiency for trucks in an effort to "keep driving down oil imports and what we pay at the pump."

The President went one step further in discussing climate change, stating that "the debate is settled … climate change is a fact." He indicated that the Administration will work with "states, utilities and others to set new standards on the amount of carbon pollution our power plants are allowed to dump into the air."

Driving Healthcare Costs Down

President Obama wove merits of the Affordable Care Act (ACA or "Obamacare") into his economic message, asserting that the nation's broken healthcare system had been an economic drain on hardworking families for decades. He stated that the driving force behind the ACA was to build "the peace of mind that if misfortune strikes, you don't have to lose everything."

President Obama pointed out that the ACA will bolster Medicare's finances while keeping premiums flat. He told Americans that under the ACA, over nine million individuals had signed up for either private coverage or Medicaid, more than three million Americans under age 26 gained insurance under their parents' plans, and no longer can individuals be dropped because of a preexisting condition.

It's no surprise that President Obama spent some time touting the benefits of the ACA, and even less of a surprise that he chose to leave out any mention of the law's often-criticized roll-out.

President Obama, somewhat lightheartedly, derided Republicans in the House for voting to repeal Obamacare forty times. "The first forty were plenty. We got it," he quipped. He called for Republicans to offer serious alternatives to the proposals with which they disagree, saying that "we owe it to the American people to state what we are for and not just what we are against." Although, just the day before his speech, Republicans in the Senate did introduce a bill designed as an alternative to Obamacare. The proposal, offered by Senators Tom Coburn (R-OK), Orrin Hatch (R-UT) and Richard Burr (R-NC), would repeal the ACA and replace it with provisions that include a tax-credit to help low-income individuals buy coverage, a cap to the tax exclusion that employees receive for their group health coverage and a per capita cap approach to Medicaid.

In her rebuttal, Rep. Cathy McMorris Rogers (R-WA) stated that "we shouldn't go back to the way things were, but the President's health care law is not working." The highest ranking Republican woman in Congress focused her remarks on the role of people and families, deriding the power of government to solve America's ills. Delivering what is being described as a "measured" speech, she said that Republicans have a more "hopeful" plan for bridging economic gaps.

What Now?

"Whenever I can take steps without legislation to expand opportunities for more American families, that's what I'm going to do." A recurring theme of the President's speech was that he will not wait on Congress to address the nation's problems.

President Obama's declaration that he will act without Congress if he sees fit may be an effective talking point given Congress's abysmal approval ratings, but the reality is that the scope of what he can do without them is very limited. "America does not stand still, and neither will I," the President said last night, but while he may not want to wait for Congress to move forward, there are not many places he can go without Senate and House action.

As we proceed through this mid-term election year, it remains to be seen how the Administration and the Congress, Republicans and Democrats alike, will manage to work for the American public, as they also work to get re-elected. Given the deep chasm between those who consider themselves Democrats or Republicans, it may be a bridge too far to cross. Stay tuned to see if it will indeed be a "year of action," or more of the same.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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