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David Stockman: State of the Union Does Nothing for Economic Recovery


President Obama spent a lot of time on the state of the economy, but didn't recommend a single hard choice or call for a scintilla of sacrifice.

The president's speech was just dreadful -- a ponderous procession of pedantry and platitudes. He didn't recommend a single hard choice or call for a scintilla of sacrifice. The nation is borderline bankrupt yet he now proposes to double-down on December's $800 billion tax giveaway with billions of so-called "investment" spending -- just another pot of pork on closer examination.

We are already spending $1 trillion on education. That's 7% of GDP and is double the constant dollar level of 1990. Real spending per pupil is up 50% in that period, but test scores haven't improved. Instead of busting the budget, we need to bust the teachers' unions and their predatory waste of existing funds.

Obama's call for more federal R&D funding is also off the mark. We already spend nearly $400 billion, or 2.7% of GDP, on research and development -- a higher share of national income than Germany, France, England, and China. And green energy subsidies are just another opportunity for plunder by the K-Street lobby brigade. Instead, put a big tax on oil imports if you want more domestic production and alternative energy investment.

We don't need another $50 billion in pork-barrel transportation infrastructure and high speed rail projects, either. We are already spending $150 billion on transportation annually -- the highest level in history.

Finally, the proposed freeze on a tiny 12% corner of the budget and merely $15 billion per year in defense spending cuts is pitiful. We need decisive leadership to: (a) drastically shrink our obsolete $800 billion defense and security establishment; (b) establish means testing of $1.2 trillion in Social Security and Medicare entitlements; and (c) enact major new sources of revenue -- such as a transaction tax on Wall Street. On these tough anti-deficit choices, the president was utterly silent.

See also, Most Comprehensive Trading Guide for the State of the Union.

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