Trump's State of the Union: Home run or Disaster?

Speaker of the House Nancy Pelosi looks on as U.S. President Donald Trump delivers his State of the Union address to a joint session of the U.S. Congress in the House Chamber of the U.S. Capitol in Washington, U.S. February 4, 2020. REUTERS/Leah Millis
February 9, 2020 Topic: Politics Region: Americas Blog Brand: The Buzz Tags: State Of The UnionEconomyDonald TrumpNancy PelosiRegulations

Trump's State of the Union: Home run or Disaster?

And what did he get wrong?

—Justin Bogie, senior policy analyst in fiscal affairs, Grover M. Hermann Center for the Federal Budget, Institute for Economic Freedom and Opportunity

Warning Against Socialism

President Donald Trump declared, “Socialism destroys nations. But always remember, freedom unifies the soul.”

Today’s progressive politicians are calling for expanded government control in a myriad of sectors in addition to health care, such as energy, utilities, housing, and education. This would transform the United States economy into something reflective of many nations across Europe where the government spending as a percentage of GDP is far higher.

Ordinary taxpayers bear the brunt of this burden. For instance, payroll taxes in France top 50%. Consumers pay national sales tax (value added tax) of up to 27%. Overall, a typical $40,000 a year worker pays $6,000 more in taxescompared to the same worker in the U.S.

Even if every dollar of income is taxed from those earning more than $200,000 per year, this doesn’t come close to paying for the $48-$92 trillion in spendingproposed by progressive politicians over 10 years.

Many Americans—especially the younger generation—are unfamiliar with the Cold War, the misery endured by hundreds of millions under communist regimes across Eastern Europe, the USSR, Southeast Asia, and even parts of Latin America.

Thankfully, Nordic countries have been moving away from the “democratic socialist” economic model after growing tired of the economic stagnation which it created. But across swaths of Western Europe, “democratic socialism” continues to yield high taxes—including on the middle class, slow economic growth, high unemployment, and lower wages.

—Joel Griffith, research fellow, financial regulations

Defense & Foreign Policy

Progress in Rebuilding Military

The president declared that “our military is completely rebuilt.” 

The last three years have indeed been good for the U.S. military, and much of the lost readiness that had dwindled over the years has been restored. Army readiness, for example, is up 55%. 

But despite favorable budgets, the military is not yet fully rebuilt. Years of budget cuts and years of over-use have strained the military, postponed necessary equipment refresh, and caused the military to shrink in size. 

While there are unmistakable signs of progress, there is still work to be done to fully restore the military. Additional investment and attention will still be needed.

As noted by the president, the creation of the Space Force is a true step forward for the United States. It will allow our country to better focus its efforts in this critical domain. 

The United States depends on space, and other countries are seeking to deny those capabilities. The Space Force will put America in a much stronger position, as our experts explain.

—Thomas Spoehr, director, Center for National Defense

Clear Message on the Middle East

The Middle East was prominently featured in Trump’s State of the Union speech. The president noted that his administration had made a priority of “combating radical Islamic terrorism” and briefly described his Israeli-Palestinian peace initiative, which calls for the disarming of Hamas and other Islamic terrorists, as part of that effort.

He spent much more time in recounting the progress his administration has made in defeating ISIS terrorists in Iraq and Syria. He noted the death of ISIS leader Al-Baghdadi in a U.S. military operation last year and received one of the longest standing ovations of the night. 

He also introduced the parents of Kayla Mueller, an American aid worker who was kidnapped in Syria, tortured and enslaved by ISIS, and kept as a prisoner by Al-Baghdadi, before being murdered. He revealed that the U.S. Special Operations forces that eliminated Al-Baghdadi had named their mission “Task Force 8-14” after Kayla’s Aug. 14 birthday.

Trump also introduced the family of Army Staff Sgt. Christopher Hake, who was killed in Iraq by a roadside bomb. He noted that the leader of the Iranian Revolutionary Guard force that provided the bomb was Gen. Qassim Suleimani, who was killed in a U.S. military operation in Iraq last month.

Trump warned: “Our message to the terrorists is clear: You will never escape American justice. If you attack our citizens, you forfeit your life.”

Trump ended the Middle East portion of his speech by drawing a distinction between Iran’s long-suffering people and Iran’s oppressive regime. He called on Tehran to end its nuclear weapon ambitions and support for terrorism, while stressing that he remains open to a diplomatic resolution of these issues:

Because of our powerful sanctions, the Iranian economy is doing very poorly. We can help them make it very good in a short period of time, but perhaps they are too proud or too foolish to ask for that help. We are here. Let’s see which road they choose. It is totally up to them.

—Jim Phillips, senior research fellow, Middle Eastern affairs

Health Care

Empowering States to Reduce Health Costs

President Donald Trump is right to call on Congress to lower health costs, protect people with preexisting conditions, and protect American families’ ability to choose the private coverage that is right for them.

He’s made progress toward this goal already—delivering reforms to lower the cost of care by providing consumers and small businesses with new, more affordable health insurance options and by giving states more latitude to provide relief from high premiums for individual coverage. 

One reform alone—allowing states to obtain waivers to deviate from some of Obamacare’s cost-increasing mandates—has led to lower costs while better protecting people with preexisting conditions. Seven states that obtained waivers saw premiums fall a median of 7.48%, while premiums in the other 44 states and the District of Columbia rose by a median of 3.09%.

Congress should build on this progress and adopt the Health Care Choices Proposal, endorsed by over 100 conservatives across the country, that can lower premiums by as much as a third, while increasing private coverage and focusing resources on vulnerable people with preexisting conditions.

Many laws today work against families being able to choose the plan and doctor that is right for them. This proposal would address these laws and empower people—not government bureaucrats or insurance companies—to make the best decisions for their families, a goal shared by 94% of Americans.

Rejecting Ideas That Would Make Existing Problems Worse

The left’s ideas—as the president rightly warns against—would make current problems facing American families worse, not better.

That’s because the left’s proposals would drastically expand the role of government in our health care sector.  Some bills in Congress wouldimmediately outlaw private coverage and put us all on a new government program. Others would move toward the same goal on the installment plan, using so-called public options that ostensibly would have the government compete with private plans, but in reality would put in place the infrastructure and produce the same outcomes.   

The left likes to claim that people are better off under this approach. In reality, Heritage Foundation estimates show that ideas like “Medicare for All” would cost some working families more than their budget for electricity; others, their gasoline budget; and others, even more than their food budget. 

As a result, roughly three-quarters of Americans will have less money in their pockets under Medicare for All. That’s because fully funding Medicare for All requires a new, additional tax of 21.2 cents on every dollar Americans earn—meaning the government will take roughly half of your paycheck. (To learn how several sample families would be impacted, see “In Charts, How Medicare for All Would Make Most Families Poorer.”)

Ending Surprise Medical Billing

The president rightly called on Congress to address concerns families face today when dealing with the health care system, such as surprise medical billing—an unfair practice that is hurting patients. This occurs when patients who try to follow insurance company rules are hit with surprise bills through no fault of their own.

Heritage’s solution would eliminate surprise bills, ensuring patients get honest information before they receive care.

Lowering Prescription Drug Costs 

The president also is right to call on Congress to address high prescription drug costs. Government policy created this problem through flawed regulations and subsidies that drive up costs. 

Policymakers must reject heavy-handed solutions, such as those proposed by House Speaker Nancy Pelosi, because they would limit access to lifesaving medicines and impede access to new cures. 

Congress should instead consider Heritage’s roadmap, which addresses the flawed government policies behind high costs and would provide relief for patients and taxpayers. Specifically, Congress should reform Medicare’s prescription drug programs and ban practices that prevent affordable generic medicines from coming to market.

—Marie Fishpaw, director, domestic policy studies


Federal Tax Credit Scholarships

More than half of all U.S. states offer eligible K-12 students a private learning option in addition to the child’s assigned district school. A new federal tax credit scholarship program would further complicate the already complex federal tax code.

Furthermore, the new program would eclipse state authority over K-12 education. And because it would be dollar-for-dollar and most state tax credit scholarships are not, it would encourage donors to preference the federal program, draining donations to state scholarships.

We offered more detail on the negative tax implications and other problems that would stem from a federal school choice program here.