Foundation

Study: Obama’s State of the Union Address Would Cost $41 Billion

by Douglas Kellogg / /

President Obama’s “tone-setting” State of the Union Address was intended to hit both sharp and conciliatory chords, but the notes the President struck in between would increase spending by $40.967 billion per year, and none of his proposals would decrease spending. That’s the conclusion of National Taxpayers Union Foundation’s (NTUF’s) 15th line-by-line cost analysis of the President’s speech.

“If the country is looking for a message in the State of the Union, it’s ‘more of the same’, as President Obama’s wish list would rack up a $41 billion total with no reductions in outlays,” said NTUF Director of Research Demian Brady. “The cost of this year’s State of the Union was near Obama’s average, though the President discussed some unquantifiable items taxpayers will want to note as potentially quite costly, and many of the ‘tax cuts’ he proposed are actually new spending increases.”

In advance of the speech, the White House laid out a plan to increase taxes by $320 billion over the next ten years and to carve out “middle class tax cuts” totaling $175 billion. However, a number of these tax cut proposals are “refundable” and are available to filers above and beyond any income taxes they may owe.

NTUF’s key findings on the President’s fiscal proposals:

  • The President offered no items that could be determined to reduce spending to go with 10 proposals to increase outlays and 5 with costs that could not be quantified.
  • The most expensive single item President Obama called for was an infrastructure plan, specifically the White House’s 4-year $87 billion GROW AMERICA Act.
  • The President offered five calls for fiscal agenda items in the billions of dollars. The most expensive of these was the community college “free tuition” plan, which according to the White House’s potentially low estimate, would cost $6 billion per year ($60 billion over a decade). The others include:
    • The refundable portion of American Opportunity Tax Credit plan, $5.993 billion annually.
    • A proposal to increase childcare affordability: $3.46 billion per year.
    • New grants to help states establish paid leave benefits, a $2.24 billion annual cost.
    • And, reducing monthly payments on student loans: $1.46 billion per year.

There is certainly more to the story: The President spoke about a number of issues that could incur significant costs but are not included in the official estimate due to lack of detail. 

Notably, the White House’s pre-speech tax credit plan included expansion of the refundable Earned Income Tax Credit that could cost $5.6 billion per year over ten years. The President spoke strongly on climate change, if he had specifically mentioned “cap-and-trade” legislation that could have added $56 billion in annual costs. Finally, it’s unclear whether additional funding would be required if war powers are authorized against the Islamic State terrorists.

If these costs were included, they would pack $61.6 billion on to NTUF’s estimate – making the total $102.6 billion.

Barack Obama’s 2013 speech was his most expensive at $83.4 billion; the record for any President remains Bill Clinton’s $327 billion State of the Union in 1999.

NTUF’s study calculates the cost of each item in the State of the Union Address in terms of its impact on federal outlays only.

“The President did correctly note that deficits have decreased over the past few years, but did not remind his audience of the mounting debt problem of the federal government,” Demian Brady concluded. “His agenda is missing three key ingredients to deal with the debt: pro-growth tax reform, entitlement reform, and spending restraint.”

National Taxpayers Union Foundation (NTUF) is the research arm of National Taxpayers Union, “The Voice of America’s Taxpayers.” More information on NTUF’s work is available at www.ntu.org/foundation.


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