Were Obama's State of the Union proposals too modest?


by John Dickerson / CBS News

CBS News

Posted on January 29, 2014 at 9:02 AM

Updated Wednesday, Jan 29 at 9:13 AM

WASHINGTON -- “America does not stand still," said President Obama in his State of the Union address, "and neither will I."

For the next hour the president plotted the path he would walk and the strides he would take to get around the members of Congress who had blocked his path before. But when the speech was over, the president hadn't moved very far at all. He was still a leader entangled by Congress and the Constitution.

In the lead-up to the speech, the president and his aides talked about how he was going to use the tools of his office—the pen and the phone—to address the challenges of the day since Congress would not. But, judging from his speech, you can't do much with a pen and phone.

When the president outlined his executive actions, the biggest items were a modest effort to raise the minimum wage for companies with federal contracts, six additional manufacturing hubs, and an ill-defined savings instrument aimed at making it easier for lower-income Americans to sock away money. Those are hardly initiatives that amount to a “year of action.” The rest of his offerings were even smaller—cajoling CEOs, convening college professors, and cutting red tape. He put Vice President Biden in charge of improving the 47 government job-training programs.

It's not that these are unworthy efforts. They're just modest compared with the president's stated goal, of reversing decades-long changes in the workforce brought about by global competition and technological innovation. Indeed, you can’t imagine a president asking Americans to assemble to hear this list of proposals if there wasn’t a tradition saying he had to.

The president and his team are hoping that small programs will create a "foothold," produce some good results, and then expand beyond their original design. By raising the minimum wage for employers who sign new federal contracts, for example, administration aides hope for a multiplier effect that will go beyond the limited number of employees who will benefit directly from the raise to $10.10 an hour. The idea, explains a senior administrative official, is that a big company that has to meet the minimum wage for contracting will feel pressure to raise the wage for the whole workforce, which will then compel a competitor to do the same in order to stay competitive when hiring new workers. The president’s proposal to fund school modernization would work along the same theory. Though the funding would only cover a limited number of school districts that competed for the dollars, an aide said it would create demand. The losing school districts would call their members of Congress and pressure them to raise funding so that they could update their facilities, too.

The president is pinning these policies on a lot of hope. That’s because—as becomes abundantly clear when you hear his aides explain how they arrived at some of these executive measures—he is operating under legal constraints that make it hard for a president to do much. His minimum wage effort is limited to companies entering into new contracts, because his authority to do it comes from his power to do things that are good for the "efficiency" of the government. The minimum wage increase can be defended on those grounds, say officials, because studies show it leads to retention. But it can't be applied to all existing contracts because that would require ripping up those agreements, which is hard to defend as efficient.

It was hard to pin the White House down on specifics behind some of the programs. The manufacturing hubs, for example, require a sustained level of funding to help innovative businesses get on their feet and thrive. The money for the initial experiments in Ohio and North Carolina was found in the defense and energy budgets. Is there enough money for the six more the president promised and to sustain the investment for a sufficient duration? White House aides would not immediately say. “If you have uncertain funding for a very short time, the danger would be that you have startups that can’t scale up and then remain in a kid of zombie limbo,” says Mark Muro, policy director of the Metropolitan Policy Program at the Brookings Institution.

The president says he is focused on the big issue—the welfare of the middle class—and that he is doing everything he possibly can to further that goal. If better posture would help, he’d sit up straight, on the theory of his speech that every bit counts. But to take big strides the president needs Congress’s cooperation, which meant this ended up being a thoroughly conventional speech in which he called on his audience to help him enact tax reform, extend unemployment benefits, reform immigration laws, raise the minimum wage, and expand the Earned Income Tax Credit to apply to workers without children.

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