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This evening the Orator in Chief of the United States will walk into a hostile, bicameral Congress for the first time in his presidency. What he says tonight, regardless of its measure of truth, will have an impact on markets tomorrow, not only in the U.S., but in the UK and around the world. Since we already know the main talking points, barring any last minute surprises, we have some idea of what to expect.
He will make some big promises. President Obama desperately needs to win people over to his side. As a former community organizer in the most historically corrupt political arena in America (Chicago), he learned how to use, and has used, promises to gain the support of the electorate, including promising free cell phones for low-income voters in return for their votes. The promises he makes tonight should be taken with a grain of salt, especially when considering the number of promises that he has actually delivered upon from his previous State of the Union addresses (which is pretty close to nil).
He will take credit for things he has not done. Gas prices are down. If he takes credit for that, and if Americans buy into it, we may be as out of touch as much of the rest of the world thinks we are. I believe that he will. He will take credit for the stock market being up, but neither he nor his administration have done anything to make that happen. He will take credit for a 5.6% unemployment rate even though the actual number of unemployed, but willing, workers is at an all time high.
He will blame others for his administrations failures. Have you noticed? The president never takes the blame for anything. He constantly uses his position to condemn Congress for failing to act. Apparently he does not have a clear understanding of the separation of powers define in the U.S. Constitution. He underscores that when he decides to take executive action to usurp what is not within the realm of his authority. Now that both houses of Congress are Republican-led, he will be even more inclined to play the blame game as his trump card. (Note: During his first term, when his party controlled Congress, he blamed the Bush administration for everything.) It is likely that he will blame Congress for the trillions of dollars of national debt, which his party and his administration drove to record heights.
He will paint a rosy picture. With turmoil raging around the globe, he will declare that the U.S. is stronger (and has a smarter leader) than other countries, including Great Britain, France, Russia, Iran, and Israel.
He will propose more socialism. Mr. Obama has had a socialist agenda and legacy that long precedes his terms in office. When he spoke of “Hope and Change” in 2008, he was referring to hope for the disadvantaged by changing the way that the government imposes taxes on the wealthy and businesses so that it can redistribute it to those who prefer to be on welfare. He will propose more taxes to fund his ill-conceived ideas like:
- Free tuition for two-year community college students. Really? I had to work my tail off to pay for my kids’ education. Now I have to pay for my lazy neighbor’s kids too?
- Increasing capital gains tax from 20% to 28%. That’s a 40% increase! How is that an economic incentive for investors and the economy in general?
- Taxing inherited investments like regular capital gains. Again, an attack on investors. While the recipient of an inherited investment pays the taxes only on what is earned once he owns the investment, he does not currently have to pay on any interest owed by the deceased. The president will propose that the tax would be forgiven it the investment is donated to charity.
- Requiring up to seven days of paid sick leave for all workers. Only about 40% currently enjoy that benefit. Once again, his proposal makes it more difficult for businesses to make a profit. He also wants to grant six weeks of paid leave tor federal government workers who are new parents or to let them to care of a sick relative. I guess that’s okay. The government pays them. Oh. I almost forgot. I pay them.
So far, the Obama administration has been a mix of incompetence (see the Recovery Act and the Affordable Healthcare Act) and the polar opposite of Chicken Little. The sky really is falling, but he keeps telling people it’s not.
I can hardly wait for tonight. I can hardly wait to see how the markets react. You don’t have to stay up into the wee hours of the morning to watch. I’ll fill you in tomorrow.
Closing prediction: He will also offend at least one U.S. ally.
