State of the Union on NPR . . . let's listen in . . .
"Rebounding housing market . . ." due to Fed ZIRP . . . but redirected FDI from China to US is correct.
"Let's Move (obesity) and Joining Forces (veterans) . . ." for once, I agree.
"Trade promotion . . ." historically has always been bipartisan. NAFTA was a success story.
"Basic research . . ." lots of IP already on shelves at federal lab consortium. Why not put the six new tech hubs next to the biggest labs?
"Energy independence / natural gas . . . " true for now but shale wells have steep decline rates. I see these all the time in investment presentations. US has maybe 20-30 year window to use NG as bridge fuel.
"Immigration . . ." plays to high-tech business lobby eager to train HB-1 engineers cheaply and import lower-cost labor, keeping wages under pressure. Contentious only in border states.
"Unemployment / education . . ." nature of work is changing to piecemeal, education transforming to MOOCs. Hard to design top-down solutions to either from policymakers accustomed to government employment. I can't see a federal solution to this obsolescence.
"Race to top (education) . . ." still a traditional K-12 state-owned solution. Just like No Child Left Behind, ignores MOOC revolution driven by entrepreneurial disruption.
Repeat meme "let's come together . . ." but where was togetherness in multiple budget / cliff negotiations?
Note to self: I need a raise.
Hard to raise wages when labor market is still slack. Will federal contractors in Afghanistan have to pay locals equivalent in US wages?
"My RA (retirement account) . . ." need more details.
"Health care . . ." ACA still seems like a very complicated way of expanding insurance pools with no reference to underlying actuarial calculations. Cost controls still not adequate and health care sector likes it that way, which is why surgery and pharma are still hugely expensive in US.
"Afghanistan . . ." I assure you US is not leaving in 2014.
"Fighting Al-Qaeda . . ." not the whole reason for continued operations. Watch China's moves in Africa. Sleight-of-hand stalking horse, sort of.
"Iran's program . . ." Tehran has stated a different interpretation. Expect a repeat confrontation.
"New sanctions bill veto . . ." veiled message to AIPAC saying "trust me."
"Asia-Pacific . . ." far longer verbiage than messages about Europe and Ukraine. Veiled message to Beijing: US will not leave Asia.
"Veterans . . ." start by digitizing VA records management to speed up case processing!
Hooah. When in doubt, thank a veteran.
Closing rhetoric was Reaganesque, hitting all the right notes much like his convention renomination speech.
GOP up next . . . now hear this . . .
For crying out loud, this woman's rhetoric is flat and uninspiring. No wonder the GOP isn't connecting with the middle.
Enough with the personal stories. This isn't even as good as Nixon's "Checkers" speech.
"We have plans to . . ." do what exactly? Zero specifics. No wonder Dems have such an easy time painting GOP as obstructionist.
Best GOP response I ever heard was Gov. Christine Todd Whitman during Clinton administration. This woman is a snooze-fest.
Good Lord, that response was a nothing-burger! Embarrassing. Not even a soundbite for a future campaign. Did GOP pick her because they thought a woman would connect? This is why national GOP is rudderless.
That's the end of my impressionistic commentary. Now I shall be more deliberative. I tried to be as fair as possible in my stream-of-consciousness deconstruction of the speech and its response. The President does in fact speak well from prepared text - diction, intonation, themes, images are all excellent. My disagreements with the substance of Administration policy - and I have many points of disagreement - are not based on the President's public persona or personal history. We should remember that modern Presidents excel in part because of their role as public performers. President Reagan understood this and remained personally popular and effective even after the tax increases of his first term and Iran-Contra in his second. President Obama exhibits the same qualities. I admit this even though I would have preferred Mitt Romney on that podium.
NPR's commentators correctly identified the President's goals as modest. What they missed is linguistic analysis that goes deeper and broader than mention of specific programs. Geopolitical analysts are trained to deconstruct major policy speeches by heads of state to identify shifts in national priorities and strategy. The US commitment to Afghanistan and pivot to Asia are obvious. Both of those themes are clear messages to China that the US will block Chinese encroachment upon its Asian neighbors. The mention of the pursuit of Al-Qaeda's remnant throughout the world is likely another veiled message to China that the US will maintain a flexible presence in many areas where China seeks influence. Chanting "Al-Qaeda" is a way to keep the American people motivated and tolerant of foreign interventions. The discussion of Iran's diplomatic status was a message to Israel that it should take its cues from US leadership and not overreact; this is designed to prevent a unilateral Israeli strike on Iran's nuclear program.
The discussions of domestic priorities were focused on favors to strong constituencies in the President's base. The health care sector and teachers' unions will continue to benefit from subsidies that insulate their business models from disruption. This will of course make them even more fragile and prone to disruption, and their long-term collapse will be all the more sudden once disruptive alternatives find viable mass markets.
The official response from the loyal opposition reveals the intellectual bankruptcy of one party in America's two-party political system. The GOP articulated precisely zero positive policy prescriptions and rendered zero effective criticisms of the President's agenda. This leaves the President and his party with a relatively free hand for the remainder of 2014, until the Congressional mid-term elections reveal their results. Speaker Boehner's dislike of the Tea Party caucus is well-known in DC and among national pundits. The Tea Party represents the inarticulate, disaffected middle of America that is rapidly becoming the GOP's sole remaining constituency outside of the evangelical South.
Neither the President nor the opposition addressed income inequality in detail. Raising the minimum wage is not a middle class solution and merely strengthens one potential transmission channel for a wage-price spiral in hyperinflation. Tax reform received a passing mention, with few specifics. I predict that "income inequality" will be a useful campaign theme in 2014 with no real policy outcomes after the election.
The 2014 State of the Union does not change the basic investment thesis of Alfidi Capital. The Federal Reserve continues a ZIRP policy and the federal government continues deficit spending. Those two policies will eventually trigger some combination of a deflationary asset market collapse and a hyperinflationary policy response. The address is worth noting for the tone it sets and the coded messages it sends to foreign capitals.