The Hill (3/7, Needham) “On The Money” blog reported that in the National Association of Manufacturers Shopfloor blog, Chad Moutray blogged, “We have begun to see some signs of improvement in many of our largest trading partners, with the major exception of the Eurozone as a whole.” Moutray, Chief Economist for the NAM, also blogged, “Manufacturers are looking to policymakers in Washington move forward with a robust trade agenda that will help open more markets to US manufactured goods exports. If we continue the rest of the year with slow export growth similar to January we won’t reach the goal of doubling exports.”
This from Zogby Analytics – “The latest nationwide poll of likely voters by Zogby Analytics shows a majority (51%) approving of President Barack Obama’s job performance. A substantial minority (46%) disapprove of his performance. The new Zogby Poll, conducted online of a random sample of 1500 likely voters on February 27, reveals that the President is holding on to the base of supporters that re-elected him last November.
Women (55% approve, 42% disapprove) are more favorable toward Mr. Obama than men (46%-51%), and support for the President starts high among younger voters (54%-40%) and steadily declines with age. Hispanic voters, who gave the President 71% of their vote in 2012, have increased their positive view of his job by 7 points – 78% approve, while 20% disapprove. African American voters approve 89% to 10%.
Significantly, the President obtains majority support among several key groups: Catholics (53%-46%), the Investor Class (54%-45%), the Creative Class (59%-38%), and NASCAR fans (52%-46%).
Thus the President’s numbers remain good despite the sequestration and the new poll showing that only 35% now see the United States heading in the right direction and 54% feeling that things are on the wrong track. Those numbers are substantially lower than immediately after Mr. Obama’s re-election.”
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Jim Kuhnhenn, reporter for the Associated Press, writes that the “fiscal deadline [is] all but blown.” President Obama says he will wait until the very last second to sign the sequester order – ever hopeful a deal can be struck. However, according to The New York Times, Speaker John Boehner says “the revenue issue is now closed.” New York stands to lose hundreds of millions of dollars and the loss of many jobs. Syracuse.com reporter Mark Weiner wrote a very good piece about how the sequestration will affect New York.
We’re just days away from across-the-board cuts of nearly $1 trillion. Those budget cuts will go into effect on Friday, unless President Obama and Congress can agree on a so-called “grand bargain.”
Jimmy Vielkind, reporter for the Times Union, takes a look at how much New York would lose in funding and which employees who could, at least temporarily, lose their jobs.
Governor Says State Needs to Take Into Account Any Federal Action on Minimum Wage
Jimmy Vielkind wrote the following story for the Times Union:
Saying a federal push has made his own efforts to raise the minimum wage in New York more “complex,” Gov. Andrew Cuomosuggested Sunday he might drop language increasing the minimum wage to $8.75 from his budget proposal to allow for further negotiation.
Cuomo, a Democrat, is facing resistance from Republicans who have partial control of the state Senate. They say a minimum wage increase could hurt businesses, and used President Barack Obama‘s call in last week’s State of the Union address for a $9 minimum wage that would automatically increase with inflation as a reason to oppose Cuomo.
“That assumes it happens federally, and if it actually passed federally at $9, they would have a point. But there’s a long way between here and there,” Cuomo told journalists at a cocktail party sponsored by the New York State Association of Black and Puerto Rican Legislators.
The governor emphasized that the minimum wage remains “under negotiation.” On Thursday, Democrats who dominate the Assembly reintroduced a bill using Obama’s parameters for a minimum wage increase. Cuomo said he felt no need to re-propose at the current time.
“We’re at the table, we understand everybody’s position. … What we have to figure out is, what is the likelihood the federal law will actually pass, or not, and if it’s going to pass, when,” Cuomo said. “We’ll see where we are … [as the budget deadline approaches.] It can either be done in the budget or toward the end of session.”
The state’s current spending plan expires March 31. State law gives the governor a strong hand in negotiations by limiting changes legislators can make to budget bills; if Cuomo left language in, he could essentially dare legislators to pass it into law along with the rest of the budget or shut down state government if they refuse.
The President’s annual address to Congress arises from Article II, Section 3 of the Constitution which says the Chief Executive “shall, from time to time, give to the Congress, information on the state of the Union.” The method of delivery and timing have changed over the decades, from the written report preferred by Jefferson, to the first radio and television broadcasts made by Calving Coolidge and Harry Truman respectively. Today it is less a Presidential communication to Congress and more a communication to the American people. It remains an evolving American tradition more about public relations than substance.
These annual presentations have become a kind of formula. There is a litany of proposed Presidential initiatives, some serious and some to appease his base, references to his philosophical visions for the future, challenges to the opposition party and a few of obligatory olive branches to appear bipartisan. These State of the Union presentations are normally forgettable. Ultimately though, they should be an assessment of the most pressing problems of our day and the President’s preference for resolving them. In this case, the most pressing problem of our time is the ticking time bomb of debt being piled up by the Federal government.
The fiscal cliff and the pending sequestration are creations of Congress and the White House. They were their inept attempt to address the pending fiscal abyss. Astonishingly, a movement has been building recently to deny the reality of our nation’s pending fiscal crisis. Some political commentators suggest the deficit reductions achieved through the 2011 Budget Control Act (BCA) and the recent American Taxpayer Relief Act (ATRA) leave the goal of controlling federal debt essentially resolved. Some go so far as to suggest changes to entitlement programs are unnecessary. To his credit, the President put this delusional thinking in proper perspective while at the same time painting a rosier path to resolution than actually exists.
Taken together, BCA and ATRA reduce deficit projections by about $2.6 trillion over the next decade. According to the Committee for a Responsible Federal Budget, “lawmakers have achieved only slightly more than half of the minimum necessary deficit reduction to achieve sustainability over the next decade.” But even with these reductions, our national debt remains on an upward swing beyond the ten-year window, reaching about 80% of GDP within the decade, headed toward 100% of GDP by 2030. Because deficit reductions to date come from just discretionary spending and revenue sources and not serious reforms to rapidly-expanding entitlement programs, the actions already taken have actually solved a much smaller portion of the longer term debt/deficit problem. Indeed, estimates suggest entitlement programs will either be bankrupt and/or will consume every dime in federal taxes in a similar time frame. This trend is itself simply unsustainable and leaves no room for increased federal government growth.
It is one thing to talk about comprehensive tax and entitlement reform but quite another to actually spend political capital making it happen.
More importantly, economic assumption can fluctuate wildly depending on economic growth. To that point, growing the nation’s GDP is the single most critical aspect to real deficit reduction. Therefore, any plan to reduce federal deficits, to include raising taxes, must be primarily evaluated relative to the effects such efforts have on real economic growth. That is a reality left unsaid in this State of the Union.
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During the State of the Union, President Obama announced a plan to make the American education system more focused on tech skills. The president cited Brooklyn’s P-TECH high-school as a model. P-TECH is a public high school that, in collaboration with IBM, New York Public Schools and the City University of New York, offers students a chance to “graduate with a high school diploma and an associate degree in computers or engineering,” said President Obama.
“We need to give every American student opportunities like this,” Obama said. To do that, the President announced a new challenge “to redesign America’s high schools so they better equip graduates for the demands of a high-tech economy.”
In December, The Business Council hosted a conference on education which featured P-TECH founding principal, Rashid Ferrod Davis. Much of the discussion focused on replicating the P-TECH success story.
During his State of the Union speech last night, President Obama called for a hike in the minimum wage. It is an issue Governor Cuomo is grappling with right now, and a move The Business Council has opposed. In a statement released earlier this month, The Business Council said that raising the minimum wage “would increase the cost to affected employers – with direct costs of nearly $3,000 for each full-time minimum wage employee, plus indirect costs caused by “wage compression,” as wages are adjusted for higher earning employees.”
President Obama proposed hikes to the minimum wage would be tied to inflation. Here’s the story by Reuters:
U.S. President Barack Obama proposed on Tuesday to hike the minimum wage by more than 20 percent, invest $50 billion on crumbling roads and bridges and spend $15 billion on a construction jobs program in a bid to boost economic growth.
In his annual State of the Union address, Obama urged Congress to support his plan, which would include tax and education reforms that the administration believes would help attract manufacturers back to the United States.
The complete cost of the program would be offset by spending cuts and tax reforms that will be laid out in Obama’s budget proposal in the weeks ahead, senior administration officials told reporters.
The minimum wage increase would lift incomes for 15 million Americans and be done in stages, the officials said, noting that an increasing number of corporate chief executives support such a move.
The officials said economic studies show increasing the minimum wage is effective at reducing poverty while reducing turnover costs for businesses.
Obama is also proposing to raise the tipped minimum wage – the wage for jobs whose compensation includes gratuities – and have it indexed for inflation, a move, the officials noted, that was supported by Obama’s 2012 Republican presidential opponent, Mitt Romney.
As expected, Obama is announcing in the speech the start of free trade talks between the United States and the 27-nation European Union.
As part of his push to give Americans skills to be competitive in a global economy, Obama proposed a new program to create universal access to pre-school for all 4-year-olds.
Kent Hoover of The Business Journals writes about what The Business Council has long known… that small business is the engine behind economic growth. President Barack Obama made little mention of small business in his State of the Union speech last night, which caught the attention of Todd McCracken, president and CEO of the National Small Business Association. Here’s Hoover’s story:
But some business leaders who watched the speech were struck that Obama didn’t talk much about one of the best ways to grow middle-class jobs — creating an environment in which small businesses thrive.
The president did talk about small businesses in the context of tax reform, and in a way that McCracken said hit the biggest tax problem facing small business owners — the tax code’s complexity.
“The American people deserve a tax code that helps small businesses spend less time filling out complicated forms, and more time expanding and hiring,” Obama said.
The president, however, didn’t talk about access to capital, which remains a problem for many small businesses. Obama did talk about reaching a long-term deficit reduction deal, but was vague about how to get there.
Uncertainty over the government’s fiscal future is holding small businesses back, said NSBA Chairman David Ickert, vice president of finance for Air Tractor Inc. in Olney, Texas.
“We need a big budget deal — we need to quit lurching from crisis to crisis,” he said.
The polls are all looking quite good for the President and the Democrats right now. This week’s Zogby Analytics Poll has the President moving up a point to 57% job approval. Above and beyond that number, likely voters give him higher marks than previously on most topics: the economy (51%), understanding the middle class (54%), health care (48%), education (58%), and immigration (50%). Even better, a solid majority (55%) are optimistic about the United States for the next four years, a plurality (48%-30%) feel that the Republicans should work with the President on his agenda, and more are likely to say they are doing better financially than worse in the past four years.
For President Obama, this is a good place to be. He is moving along on immigration reform, on gun control, on getting his Cabinet approved, and on watching the other side uncertain about its future with voters. As I have noted many times in this column, the GOP has a serious demographic problem and I am not sure they know how to address it sufficiently.
While it is hard to find any seriously bad news for Mr. Obama in the polling, there are lessons he and his Democratic Party must learn. The first is that honeymoons don’t last very long. He is wise to strike right now, early in his second term, while the numbers are good, and before some sort of a second term “jinx” or “scandal” wipes a lot of the good will away.
The more important lesson, however, is this: just because you won does not mean you are winning. Surely, Mr. Obama was re-elected by a majority and his numbers are well over 50 percent. But voters in the Zogby Poll still have two major concerns. The President, who engineered a coup on saving middle class tax cuts and increasing taxes on higher earners has a net negative approval rating from the voters on taxes – 47% approve, 50% disapprove. And kicking the can down the road on the deficit may see that can go down a manhole cover very soon. The President only gets a 42% approval rating on the deficit with 55% disapproving.
The public is in consensus mode when it comes to sequestration. Across the board cuts could mean the loss of 800,000 jobs just in defense alone, perhaps over a million more. Besides, not addressing the problem of the deficit with a plan is not leadership, it is the lack of it. It means that the number one security issue of the day – the solvency and trustworthiness of the federal government, the biggest threat of a new recession, the livelihoods of millions of people, the reputation of all elected leaders – is too big to handle. Even worse, if one can imagine, sequestration (i.e. defaulting on the responsibility to lead in a time of crisis) is as bad as a nuclear attack or a major act of cyber-terrorism.
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