President Obama started his final State of the Union address by saying he would “go easy” on the traditional list of proposals, then laid out a rather traditional wish list of over twenty new spending-related initiatives. The price tag of his proposals amounts to nearly $17 billion in new annual spending, however, he also listed a number of items – such as a new federal wage insurance benefit – whose costs are currently indeterminate but could significantly increase the ultimate tab on taxpayers.
Since 1991, National Taxpayers Union Foundation has analyzed the budgetary impact of all the actionable proposals made during the President’s annual address to Congress. Our researchers identify every policy supported during the address that could increase or decrease federal spending. We then match them with cost estimates for identical or similar measures introduced as legislation, in a previous budget proposal, or in third-party studies. By compiling each of those estimates, we are able to derive the total net cost of the agenda presented during the President’s speech.
The 2016 SOTU included 23 proposals that could impact spending, plus an unspecific call to “strengthen Social Security and Medicare.” A detailed line-by-line cost analysis of the Address along with notes and references, is available. Highlights of the findings:
- The President offered one proposal with a verifiable estimate to reduce spending. Criminal justice reform legislation could save taxpayers $75 million per year.
- Eight proposals would increase spending.
- The most expensive proposal on his agenda was to “provide Pre-K for all,” also mentioned in last year’s SOTU. His FY 2016 budget included this proposal at a cost of $5.2 billion per year.
- His call to expand “tax cuts to low-income workers without kids” is related to another item included in last year’s budget submission. The proposal to simplify and expand the “refundable” Earned Income Tax Credit, which can be claimed regardless of a filer’s income tax liability, would see outlays increase by $5 billion per year.
- Providing tuition-free community college, another recycled proposal, would cost $3.6 billion per year over the first five years.
- Rounding out the verifiable new spending programs are a national paid leave benefit program ($2.2 billion), teacher recruitment ($540 million), personalized medicine ($215 million), prescription drug abuse ($68 million), and equal pay ($3 million).
- NTUF identified 15 proposals whose costs are indeterminate due to lack of specificity, including:
- A new wage insurance benefit. Related proposals would finance this program by increasing the federal unemployment fund tax.
- “Fixing a broken immigration system.”
- Promoting computer coding education.
- “Putting tens of thousands of Americans to work building a 21st century transportation system.”
By contrast, last year’s speech included 16 proposals (including one overlapping item), ten of which would increase spending by a net of $41 billion, and only five whose costs were unverifiable.
During last evening’s speech, the President boasted that the budget deficits have been cut. However, policymakers should not get complacent about restraining spending. The Congressional Budget Office forecasts that deficits will soon skyrocket, reaching $1 trillion per year. Instead of "going easy" on taxpayers, adding new spending and entitlement programs could only add to their long-term burden.