Behind the Rhetoric of Obama’s 2016 State of the Union Address

Jan. 11, 2016

Behind the Rhetoric of Obama’s 2016 State of the Union Address

Public Citizen Experts Can Provide a Reality Check 

In his State of the Union address on Tuesday, President Barack Obama is expected to highlight his accomplishments and outline his vision for what he wants to achieve in his remaining months in office.

Behind the soaring rhetoric, though, are important caveats. Below, we offer you information about a range of issues from a public interest perspective as well as experts you can call.

MONEY IN POLITICS

Experts:
Robert Weissman, president, Public Citizen
rweissman@citizen.org
w. (202) 588-1000
c. (202) 360-1844

Lisa Gilbert, director of Public Citizen’s Congress Watch division
lgilbert@citizen.org
w. (202) 454-5188
c. (551) 404-5200

Craig Holman, government affairs lobbyist, Public Citizen’s Congress Watch division
cholman@citizen.org
w. (202) 454-5182
c. (202) 905-7413

Because of the U.S. Supreme Court’s rulings in Citizens United, McCutcheon and other cases, corporations and the wealthy are spending eye-popping sums to influence elections. A record $10 billion is expected to be spent on the 2016 races, topping the $7 billion spent four years ago. This is dangerous for democracy; money – or a lack of it – is a main barrier facing Americans who want to participate in the political system.

Obama has talked at length about the need to curb money in politics. But he has failed to do the one thing within his power to help rein in out-of-control corporate spending. Obama could – and should – issue an executive order requiring federal contractors to disclose their political spending. Public Citizen has been leading the push for such an order, and, with other groups, delivered a million signatures last month to the White House calling for an executive order.

Less than a third (PDF) of the 15 largest publicly traded federal contractors fully disclose the details of their contributions to nonprofit groups and trade associations – contributions that could be used for electioneering expenditures. The proposed executive order would ensure that at least 70 percent of the Fortune 100 companies disclose their political spending.

Momentum is growing nationally for other solutions Public Citizen has been calling for. They include:

  • a constitutional amendment to overturn Citizens United and enable the government to regulate campaign spending;
  • a requirement by the U.S. Securities and Exchange Commission for publicly held corporations to disclose their political spending;
  • IRS rules defining “political activity” for nonprofits; and
  • publicly financed elections.

ENERGY AND CLIMATE CHANGE

Experts:
David Arkush, managing director of Public Citizen’s Climate Program
darkush@citizen.org
w. (202) 454-5132
c. (202) 550-0107

Tyson Slocum director of Public Citizen’s Energy Program
tslocum@citizen.org
w. (202) 454-5191
c. (202) 256-3152

Robert Weissman, president, Public Citizen
rweissman@citizen.org
w. (202) 588-1000
c. (202) 360-1844

Obama has sent mixed messages this year on curbing climate change.

Bucking industry opposition, the Obama administration finalized the Clean Power Plan this year. The rule, designed to curb greenhouse gas-causing emissions from existing power plants and prompt states to improve energy efficiency and rely more on renewable energy, will be good for consumers and the environment. It is a critical step, but much more is needed to prevent catastrophic climate change. The administration also wisely rejected the Keystone XL pipeline boondoggle and helped ink a historical international climate deal in Paris.

On the other hand, our progress on climate change is undermined by Obama’s “all of the above” energy plan. The White House promotes opening up more offshore areas for oil and gas drilling, which already accounts for nearly a quarter of all U.S. greenhouse gas pollution and threatens some of our most vulnerable habitats. What’s more, Obama signed into law the repeal of the oil export ban, which will deal a setback to American consumers and the environment.

WALL STREET REFORM

Experts:
Lisa Gilbert, director of Public Citizen’s Congress Watch division
lgilbert@citizen.org
w. (202) 454-5188
c. (551) 404-5200

Robert Weissman, president, Public Citizen
rweissman@citizen.org
w. (202) 588-1000
c. (202) 360-1844

About 70 percent of the rules required by the Dodd-Frank Wall Street Reform and Consumer Protection Acthave been completed – five and a half years after the bill became law. The measure has done a lot to help ensure that Wall Street doesn’t sink the global economy as it did in 2008.

But the work isn’t yet done. Not only does the Obama administration need to complete the Dodd-Frank rules, but it still needs to address too-big-to-fail banks.

The conditions that led to the 2008 financial crisis remain stubbornly present in the current regulatory regime. Regulators still have not made sufficient progress on key components of Dodd-Frank and have failed to boost transparency in political spending, which is necessary for allowing shareholders to hold companies accountable.

CORPORATE ACCOUNTABILITY

Expert:
Robert Weissman, president, Public Citizen
rweissman@citizen.org
w. (202) 588-1000
c. (202) 360-1844

The Obama administration still is failing to hold corporate criminals fully accountable.

In September, instead of criminally prosecuting GM for the ignition switch disaster that killed at least 174 people, the U.S. Department of Justice entered a deferred prosecution agreement with GM, enabling the company to escape criminal liability. Instead of advancing justice, this compounded the damage inflicted on those injured and killed by GM’s wrongdoing, and on their families. The deal did not hold GM accountable and will not deter future corporate wrongdoers. 

Similarly, the administration appears to be going lightly on HSBC Holdings PLC., which agreed in 2012 to pay $1.9 billion in fines and restitution for claims of violating federal anti-money-laundering laws, among other charges, to avoid criminal prosecution. The agreement said that the criminal investigation into HSBC could be reopened if the bank fails to fully comply with the agreement. The Justice Department has found HSBC to be lagging in shoring up its compliance protocol, yet has not acted.

The solution is for the administration to end its use of deferred prosecution agreements for corporate criminals and act on the Yates memo, which promised to hold top-level executives criminally liable for corporate wrongdoing. Congress also should establish that it is a crime for corporate officers to knowingly conceal serious dangers that lead to consumer or worker deaths or injuries. The Hide No Harm Act, introduced by Sen. Richard Blumenthal (D-Conn.), would do just that.

Congress must also ensure that desperately needed criminal justice reform legislation – to address issues such as overincarceration and overcriminalization of nonviolent drug offenses – does not provide a get-out-of-jail free card for corporate criminals, who are well-resourced and rarely prosecuted.

REGULATION

Experts:
Robert Weissman, president, Public Citizen
rweissman@citizen.org
w. (202) 588-1000
c. (202) 360-1844

Lisa Gilbert, director of Public Citizen’s Congress Watch division
lgilbert@citizen.org
w. (202) 454-5188
c. (551) 404-5200

Amit Narang, regulatory policy advocate, Public Citizen’s Congress Watch division
anarang@citizen.org
w. (202) 454-5116
c. (202) 603-8683

Obama has promised to finish dozens of rules before the end of his administration – and time is running out. Whether it’s the silica rule to protect construction workers from toxic dust, the overtime pay threshold to raise wages for hourly workers, the fiduciary rule to keep financial advisors honest, or any number of disclosure rules to expose corporate money in politics, the White House needs to hurry up and get them done.

Polling shows both specific rules and tougher enforcement are overwhelmingly popular with American voters. And according to the latest report (PDF) from the U.S. Office of Management and Budget, regulations produced up to $812 billion in benefits for the public over the past decade – as much as 14 times the costs to industry.

Yet instead of having an honest debate, Republicans in Congress are lining up behind the same old deregulatory agenda backed by their big business donors. Their real goal is to roll back decades of health, safety, environmental and financial protections that benefit American workers, consumers and families – and to block or delay urgently needed safeguards that are expected to be finalized this year.

TRADE

Expert:
Lori Wallach, director of Public Citizen’s Global Trade Watch
lwallach@citizen.org
w. (202) 454-5107

Obama’s State of the Union is expected to prioritize the Trans-Pacific Partnership (TPP). The TPP text was finally released in November after seven years of secretive talks, during which 500 U.S. trade advisers representing corporate interests had special access.  Only six of the TPP’s 30 chapters deal with traditional trade matters. As this recent New Yorker piece describes, the rest require limits on food, financial and other regulations, provide pharmaceutical companies new monopolies and expand the contentious investor-state dispute settlement system.

The U.S. Department of Agriculture issued the administration’s only major study on TPP’s economic impact and found it would result in 0.00 percent increased U.S. growthif all tariffs on all products were eliminated, which did not occur. The United States already has free trade deals in place with Canada, Mexico, Peru, Australia, Chile and Singapore, which collectively represent more than 80 percent of the trade counted in the oft-touted line about the TPP covering 40 percent of world trade.

A recent study found the TPP would spell a pay cut for all but the richest 10 percent of Americans by exacerbating income inequality, as past trade deals have done. That would contradict Obama’s 2015 SOTU inequality reduction goal. Macroeconomic theory predicts if Americans face more competition from workers in Vietnam who make less than 65 cents per hour, wages will be pushed down. The TPP includes rules that make it cheaper and less risky to offshore U.S. jobs to low wage nations.

The pro-free trade Cato Institute calls these investor protections a subsidy on offshoring.The administration stopped claiming the TPP would create jobs after a four Pinocchio rating by the Washington Postfact checker. Since the North American Free Trade Agreement (NAFTA), more than 57,000 U.S. manufacturing facilities have closed and fivemillion U.S. manufacturing jobs – one in four – were lost with more than 875,000 U.S. workers certified under just one narrow U.S. Department of Labor program.

Obama’s most recent free trade agreement, the U.S.-Korea Free Trade Agreement (FTA), served as the TPP’s template and was sold as a way to create “more exports, more jobs.” After three years of that deal being in effect, the U.S. goods trade deficit with Korea has increased more than 90 percent as our exports fell 7 percent and imports surged.During Obama’s 2010 SOTU sales pitch, Obama said he would double exports in five years. However, given our paltry annual export growth rate, the export-doubling goal would not be reached until 2057 – 43 years behind schedule.

In the face of the Korea FTA’s flop, the administration has tried to shift focus to a “tax cut” narrative to sell the TPP. The mantra focusses on 18,000 tax cuts for U.S. exported goods. But last year, the U.S. only exportedany goods in less than half of the 18,000 touted tariff categories. By using the raw number of tariff lines cut with respect to the five nations with which we do not already have FTAs (Japan, Malaysia, Vietnam, New Zealand and Brunei), the administration distracts from the real question: Does 18,000 tariff cuts equate to more U.S. exports or jobs’For the nearly 7,500 categories of goods out of the claimed 18,000 for which we did sell anything, almost 50 percent had sales under $500,000.

The other dodge is to perennial trade pact sales pitch of last resort: foreign policy imperatives. That TPP is a bulwark against China is absurd, if only because China has been invited to join and has shown increased interest in doing so. While U.S. concerns about the implications of China’s rising economic power and influence are legitimate, the notion that the establishment – or not – of any specific U.S. trade agreement would control this process is contradicted by the record. And the TPP certainly is not about the U.S. writing the rules versus China doing so. The TPP’s rules are those demanded by its 500 official corporate trade advisors andpromote more U.S. job offshoring and ban the application of Buy American preferences, further gutting the U.S. manufacturing base, even as a recent U.S. Department of Defense report warned that U.S. deindustrialization poses a threat to national security.