Experts Say Obama has the Right Premise but Wrong Solution to Some Economy Woes


The National Center for Policy Analysis (NCPA) public policy experts provided insight below on President Barack Obama’s proposals from his State of the Union message Tuesday. After a day to study Obama’s address and plans, including mandated wealthy Americans to pay what he terms their “fair share” of taxes, subject matter experts offered their analysis.

Recent actions and words from the new Congress, who were not acknowledged in the President’s address, indicate an unfriendly future may linger between the two government branches. During Senator Joni Ernst’s (R-Iowa) official Republican response after the President spoke, she boldly underlined the message that most Americans are tired of Democratic failed policies. Americans are demanding solutions.

“Redistributing income and promoting middle class dependence on government was the recurring theme,” noted NCPA Senior Fellow Pam Villarreal. “During a time when the labor force participation rate is at its lowest in decades, a more important matter should be getting people back to work and policies to encourage long-term investments in jobs.”

Villarreal explained that “Obama’s version of ‘middle class economics’ was more about paying people’s bills with other people’s money and less about fostering job creation and income growth.”

Experts suggest that because Obama has been taking so much criticism from middle class Americans, he needs to show a way to win over more of this demographic. During his address, the president proposed a $500 “second earner credit” for married households where both spouses work.

“He admits that two-earner couples face high costs associated with both of them working, including costs of transportation and child care,” Villarreal said. “While he has the right premise, the solution is wrong. The marginal tax rate on a second-earner spouse (particularly in families where one spouse far out earns the other), is much higher and punitive for second earners. This would not be the case where an unmarried couple was living together and filing separate returns.”

Villarreal offers the real solution is to “forget the tax credit and change the tax code so that the marginal tax rate for a married couple is the same as the rate for an unmarried couple.”

Because of Obamacare and low wages in the United States, business owners and employers are struggling with more cost burdens that is detrimental to the economy, labor of wellbeing of citizens. Now the White House is proposing “mandatory paid sick leave for private firms. These additional costs to hiring will make employers less likely to hire,” stated Villarreal.

“Instead, why not let firms offer packages of benefits that are tailored to the needs of their firm and employees? For instance, reducing the number of paid sick days provided in exchange for a monetary bonus, or a reduced wage in exchange for comp time.”