Joe Biden, State of the Union: déjà vu all over again - Stephen Collinson, Caitlin Hu and Shelby Rose (CNN)

 

February 8, 2023       Stephen Collinson, Caitlin Hu and Shelby Rose

'The State of our Union is ....'

Biden arrives back at the White House on Monday after spending the weekend at Camp David where he worked on his speech for the 2023 State of the Union.

If President Joe Biden were truly honest in his annual televised address, he might have said something like this: “The State of our Union is divided, politically, culturally and between the uber rich and everyone else; it’s worried about a possible recession; self-estranged over guns; and slipping deeper into confrontation with two nuclear superpowers. And it really doesn’t want to see another election contest between myself and Donald Trump.” But of course, the theatrics of the State of the Union address and his own political requirements mean that Biden -- between incessant standing ovations from his own side of the House chamber -- must proclaim America stronger than ever. The rituals that play out year after year, after the House Sergeant at Arms bellows “Mr Speaker, the President of the United States” beg the question of whether the huge attention given to these addresses is over the top. Presidents are actually only required by the Constitution to deliver to Congress information on the state of the union from “time to time.” Presidents for generations only delivered written updates to Congress, until Woodrow Wilson decided to reinstate the in-person address in 1913. Later in the television age, savvy commanders-in-chief understood the huge opportunity of a captive audience of millions of viewers at home. The State of the Union address has become a bit of a political cliche — but it still offers a rare chance for a President to speak to the nation in prime-time across all TV networks without interruption or questions from pesky journalists. With the splintering of media in the 21st century, the White House typically streams the speech online and swamps social media with soundbites. It remains a big event — though viewing figures will pale in comparison to the numbers of Americans tuning into the other annual winter ritual — the Super Bowl on Sunday. Given America's politically fractured condition, it'd be asking too much for the State of the Union address to unite the nation. Especially this year, for the first time in his presidency, Biden will be in a House chamber run by Republicans, following the party’s narrow win in the midterm elections last year. Pundits are framing this State of the Union as the unofficial kick off of Biden’s reelection campaign. He is expected to tout his quite impressive legislative record, send a message of US resolve toward Russia over the war in Ukraine and to China following last week’s spy balloon crisis, and to subtly make the point that if many Americans are still feeling uncertain and hurting economically, things would be far worse under the Republican Party. One reason why Presidents like the State of the Union: It's one moment in the year when they can bask in the ceremony of their office and are shown the respect that is fleeting in bitter modern day politics. House Speaker Kevin McCarthy has promised his side will live up to the dignity of the occasion and avoid political stunts that could play into Democratic characterizations of the “Make America Great Again” crowd as unhinged extremists. He's also promised not to tear up his paper copy of Biden's speech -- as former Democratic speaker Nancy Pelosi once did after one of Trump's addresses. That’s great, though this is the same McCarthy who in 2021 voted not to certify the president's election victory over false voter fraud claims, so he may not be one to talk about respecting America’s political institutions.  Biden will also have to confront a dubious distinction — as the first 80-year-old to deliver a State of the Union address — and so is under pressure to show vigor and coherence as he asks Americans to begin to think about handing him another term.    While much of the State of the Union hoopla seems hackneyed, it does serve an important, and unseen function. As draft after draft is passed between the White House and government departments, for weeks before the big night, an administration gets to assess what it has done and where it needs to go next. It’s a rare chance to regroup and tighten focus amid the rush of events, crises and political kerfuffles that can easily consume a presidency.

O Estado da (des)Uniao: Brasil e EUA comparados

O título é uma evidente ironia com o discurso anual do presidente americano frente ao Congresso, quando ele de certa forma presta contas de suas ações e indica a política a ser seguida dali para a frente, ou pelo menos nos 12 meses seguintes.
Este editorial do Wall Street Journal é especialmente crítico das políticas intervencionistas do presidente Obama e creio que o mesmo poderia ser dito, mutatis mutandis, do Brasil, que tem um Estado, políticos e políticas ainda mais dirigistas e intervencionistas.
Nos dois países -- mas nos EUA a carga fiscal fica apenas em 30% do PIB, quando no Brasil ela já se aproxima de 40%, quando não superou, efetivamente -- os governos pretendem fazer "investimentos", o que é uma palavra profundamente errada para o que de fato fazem: retiram dinheiro dos cidadãos e das empresas, que poderia estar sendo usado para fins de consumo ou de investimento produtivo, passam esse dinheiro pelo moedor de carne da administração federal -- que já cobra um pedágio elevado, ainda mais elevado no Brasil do que nos EUA -- e depois pretendem alocar esses recursos com base em decisões políticas, não guiados pelos preços de mercado, como indica apropriadamente o editorial do WSJ.
Concluindo: só pode dar errado, aqui e lá. As consequências são "misallocations" de recursos, desvio de dinheiro de oportunidades de maior retorno relativo e distorsão geral das regras econômicas, com perda de oportunidades para todos, para o país, para a sociedade, para os indivíduos. Os únicos que ganham são os políticos e os burocratas.
Leiam e comparem, Brasil e EUA.
Paulo Roberto de Almeida

The Great Misallocators
Editorial The Wall Street Journal, January 26, 2011

What Barack Obama and General Electric have in common.

President Obama on Tuesday night stressed U.S. economic competitiveness as a new policy theme, accentuating the point he made last week by naming General Electric CEO Jeffrey Immelt to lead his new jobs council. This is welcome, though not solely because it may signal less Administration hostility to business. The pairing is also instructive because both Mr. Obama and GE symbolize a major reason the U.S. has become less competitive—the misallocation of resources.
***

Step back for a minute from the day to day policy fights and consider how an economy can grow faster. One way is to get people to work harder or longer. The government can contribute here with policies that reward work and investment, such as lower taxes.

A second route to faster growth is innovation, which means inventions or new processes that increase productivity. Government can help with money for basic research, but private investment, human ingenuity and luck are the main drivers.

The third way is through the more efficient use of capital, both human and monetary. These resources are scarce in any economy, and growth will be fastest if they are allowed to find their highest return. If resources are allocated to less productive uses or create asset bubbles due to bad policy, then overall growth will be slower than it should be.

In our view, this third point has been the largest but least appreciated problem in the U.S. economy in recent years. First the Federal Reserve's subsidy for credit and other policies pushed resources into the financial industry, and especially into real estate. When that bubble burst, triggering the 2008 financial panic and recession, the U.S. responded over two years with a huge expansion of the federal government.

Both periods were marked by the misallocation of trillions of dollars into wasted investments. One reason the current recovery has been so lackluster is that it takes time for an economy to retool from these mistakes. Money that went to build now-empty condos on the Vegas Strip—or to government transfer payments—can't be reclaimed to rebuild American manufacturing and technology.
***

No company illustrates this great misallocation better than the General Electric Co. For decades it was a symbol of U.S. manufacturing and export prowess, building jet engines, gas turbines, consumer appliances and more.

Yet during the bubble years, its fastest growing and often most profitable subsidiary became GE Capital. In some years, GE derived nearly half its total profits from the finance business. This contributed greatly to profits and made former CEO Jack Welch a shareholder hero before he retired in 2001.

Mr. Immelt inherited the time bomb that was GE Capital and it is probably too much to have expected him to defuse it before the panic hit. Most other finance CEOs and everyone in government also misjudged the mania. Yet without federal loan guarantees for debt issuance, among other government aid during the crisis, GE Capital might well have taken the entire company down.

Along with Mr. Obama, Mr. Immelt is now preaching the virtues of U.S. manufacturing and innovation. A glance at the GE homepage invites readers to "watch the rebirth of rails," of all things. GE also wants to produce more in the U.S., even though its domestic employment fell by about 34,000 from 2000 to 2009. These are laudable intentions.

Less laudable is Mr. Immelt's habit of inviting government to be his business partner and promoter. In his 2008 letter to shareholders, the CEO declared that the financial crisis and election of Mr. Obama meant that the U.S. economy had been fundamentally "reset."

His key line: "The interaction between government and business will change forever. In a reset economy, the government will be a regulator; and also an industry policy champion, a financier, and a key partner."

This is an invitation to the same kind of capital misallocation that led to the housing bubble. Mr. Immelt's particular goal is to promote policies and subsidies that aid green energy, in which GE is deeply invested. But if wind turbines are a good business, they will find a market on their own. If wind power turns out to be an uncompetitive bust, then the government will have misallocated hundreds of billions more dollars that could have found more productive uses.
***

Which brings us to Mr. Obama and the government bubble. In last night's State of the Union, Mr. Obama tried to reposition himself as a champion of business and reformer of government. His support for lower corporate tax rates was especially welcome. The test of his sincerity will come in his policy choices in the coming months.

Yet Tuesday night can't erase the fact that in his first two years Mr. Obama has overseen an historic expansion of government. He has increased federal spending to as much as 25% of the economy from a modern average between 20% and 21%. In terms of allocating resources, this means that 4% of annual economic output was suddenly taken out of private hands and put under government control.

Government "investments"—Mr. Obama's favorite word last night—are by definition made for political purposes, rather than for their highest potential return. They are allocated by politics rather than by prices. In our view, that 4% of GDP a year could have contributed far more to economic recovery had it stayed in private hands.

But even if you believe that such spending prevented a depression, it makes no economic sense to keep those resources under political sway now that the recovery is underway. Would you rather have Congress allocating that 4% of GDP, or millions of individuals deciding among Apple, Gilead Sciences, or the next great idea?
The path back to faster growth, more jobs and a more competitive U.S. economy does not travel through more political mediation. Nor does it lie in endlessly easy Fed policy in a misguided attempt to refloat the housing bubble or revive the financial boom. A better economy requires policies that reward work and innovation, while letting capital flow to the companies and individuals with the best ideas. They might even be GE's.