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Taxpayer's Tab: Billions On The Line in Obama's Speech

by Dan Barrett / /

Play the SOTU Price Tag & Win Prizes!
Vol. 6 Issue 2, January 15, 2015

 

SOTU: What to Expect & What You Can Do


On Tuesday, taxpayers will hear what President Obama plans to do with their tax dollars as he delivers the annual State of the Union (SOTU) Address. Though we’re not expecting a budget proposal to be released for another few weeks, NTUF will offer Americans the next best thing: our line-by-line analysis of new spending proposals included in the President’s speech (more on that below).

But in the meantime, you have the opportunity to contribute to the SOTU discussion BEFORE Tuesday’s speech! Ahead of all of the pundits and politicians comment on what they think the speech will include or whether President Obama’s proposals are good or bad, you can guess how much those proposals will ultimately cost. Not only can you show off your budgetary knowledge, you’ll be playing for a chance to win some NTU Foundation swag, including a “Taxpayer Kit” and an exclusive interview that will be featured on our blog.

It’s easy to enter and you can double your chances by filling out a simple ten-question Taxpayer Survey, which helps us keep in touch with you better!

Guess what the SOTU Price Tag will be TODAY!

 

NTUF’s line-by-line SOTU report

The process we use to score the speech is simple, but the effort is not: Presidents tend to tout the benefits of each new policy or program, but all too often they leave out the costs. The White House may publish fact sheets online after the Speech that will contain additional information about the proposals, but these also don’t always include the costs. To fill in the blanks, NTUF experts will look through the 23 years worth of fiscal data compiled in the BillTally project, which examined the net cost of every bill as introduced in Congress. When a proposal offered in the President’s Address matches a cost estimate in BillTally, or other reports from sources such as the Congressional Budget Office, the Government Accountability Office, or the media, we apply that annual cost or savings to the SOTU Price Tag.
 
Even though the data is at our fingertips, it takes a lot of energy to determine if the President is pledging to change government in a unique way or if he is highlighting a previously proposed measure. This is where the decades of experience between Director of Research Demian Brady, Policy Analyst Michael Tasselmyer, and NTUF President Pete Sepp comes into play. They stay up long after SOTU concludes to agree on a final net budgetary impact of the President’s new agenda.

NTUF needs help to compile all of the SOTU data. Please consider making a tax-deductible contribution to the Foundation so we can keep taxpayers up to date on the latest proposals from President Obama and your local Member of Congress!

What is President Obama’s SOTU history?

In total, Tuesday’s speech will mark his seventh SOTU Address. However, historically speaking, Presidents do not give SOTU’s in their first year in office, so his 2009 speech should be considered a separate address compared to the proceeding six.

Every year that President Obama has delivered a SOTU Address, NTUF has scored them for their impact on spending:
 
President Obama's State of the Union Speeches
($ in billions) 
 Net Annual CostNumber of Proposals
 2009*$62.714
2010$70.521
2011$21.315
2012($28.0)18
2013$83.440
2014$40.029

Average

$41.7

22.8

*Historically, Presidents do not give SOTU addresses their first year in office
As can be seen above, President Obama’s SOTU spending agendas have spanned the budgetary spectrum:
  • Largest Increase: In 2013, his proposals equaled both his highest standard total ($83.4 billion per year) and NTUF determined an alternative net total of $100.4 billion, counted towards a measure to put off sequester cuts.
  • Largest Decrease: As opposed to the previous eleven years on record, we found that President Obama’s 2012 Address could decrease net spending by almost $28 billion each year. NTUF has found that SOTU’s are not typically avenues by which Presidents propose spending reductions.
The table offers a glimpse into how the federal budget might change if measures in President Obama’s past SOTU’s are enacted. One consideration to take into account when looking at these numbers is that NTUF is not able to score every single proposal made in these speeches. Every President has proposed reforms that are too broad or difficult to score given available budgetary information. Instead of guessing, Foundation researchers mark these points as unknown cost items.

To provide taxpayers with the most accurate information, we not only score each President’s speech as extensively as we can, but we also offer background information on related legislation or cost estimates on each point. Often, a President will advocate policies that were previously offered as proposals in  budget submissions to Congress, as stand-alone legislation, or included in white papers published by academic and policy organizations, and we point this out whenever possible. Even when we cannot determine a specific dollar figure for a proposal, we are sure to present any related data or information that we can in order to give you the context you need to understand it.

NTUF has observed some recurring themes in President Obama’s speeches:
 
President Obama's Largest SOTU Spending Increase and Decrease Proposals
($ in billions)
 Largest Increase ProposalLargest Decrease Proposal
2009*Mortgage Relief +$75Education Efficiencies ($0.5)
2010Cap and Trade System +$52Discretionary Spending Freeze ($10)
2011Infrastructure +$50Military Cuts ($16)
2012Infrastructure +$11Military Cuts ($49)
2013Cap and Trade System +$56Medicare Payment Reform ($2)
2014Immigration Reform +$20Housing Insurance Reform ($0.1)
Even among his largest increase- and decrease-spending proposals, President Obama has repeatedly supported three policies that could significantly change the budget:
  • Instituting Cap and Trade: As a way to monetize and limit carbon emissions, a cap and trade system would award carbon credits to states and businesses. The credits would limit how much CO2 that they could release into the atmosphere. If they do not expend their credits, they could sell them on a new carbon market to other entities. At last tally, NTUF determined that establishing and operating such a system would cost taxpayers $56 billion annually.
  • Infrastructure Projects: Since taking office, the President has pledged to improve the nation’s roads, bridges, and utilities, principally as a job stimulus. Taking the form of different types of programs, he has repeatedly called for the creation of a national infrastructure bank and for a significant boost in federal infrastructure expenditures, ranging from $11 to $50 billion.
  • Defense Cuts: On the spending-decrease side, SOTU has been a time for the President to talk about what the military needs and what it can do without. Pentagon officials have pledged billions in reductions and the President has sought to codify those cuts through Congress as a means to reduce the deficit and dedicate spending elsewhere. Similar to his infrastructure plans, the price tag varies between $16 and $49 billion in annual savings.

What should taxpayers expect this year?

Over the past few days, President Obama has been traveling across the country to make speeches that the White House has said are “previews” into what he will discuss during SOTU.
  • Economic Growth: At a Ford assembly plant outside Detroit, Obama defended the White House’s $80 billion auto industry bailout as a policy that prevented a deeper recession. From there he traveled to Phoenix, Arizona to introduce a plan to lower mortgage premium rates by 0.5 percent, a move the White House claimed would lower payments by $900 per year for first-time home buyers.
  • Community College Funding: In Knoxville, Tennessee, the President rolled out his vision for “free” community college, in which federal and state governments would cover the cost of 2 years’ worth of tuition for qualifying students. The White House claimed it could help an estimated 9 million students, but didn’t elaborate on how it plans to finance the proposal (related universal education measures, such as the President’s pre-k proposal introduced in past SOTUs, have depended on higher tobacco taxes). NTUF’s Demian Brady discussed the hefty price tag associated with the idea on our blog.
  • Cybersecurity and Broadband Access: On Wednesday, the President was in Cedar Falls, Iowa (home of the nation’s third-fastest broadband speeds) to tout his support for faster broadband speeds across the country. Prior to that, he was at the Federal Trade Commission’s headquarters in Washington, D.C. to announce new regulations to fight online ID theft. Today, Vice President Biden was in Norfolk, Virginia to push for new federal grants dedicated to funding cybersecurity job training.
  • Paid Family and Medical Leave: Also on Wednesday, the White House proposed a $2 billion fund “to encourage states to develop paid family and medical leave programs” and also called on Congress to enact legislation to establish paid leave regulations on businesses with at least 15 employees.

While we won’t know the full extent of the cost of these proposals until the President offers more details in his speech, taxpayers can make a guess ahead of time using our past analyses. Be sure to enter the SOTU Price Tag contest by Tuesday, January 20 at 7 PM!

The Bottom Line: President Obama has proposed new federal spending in all but one of his previous SOTU addresses. This year, he’s expected to support new measures to strengthen cybersecurity and broadband access, fund community college education, and lower mortgage payments for first-time borrowers. Guess the cost of his speech ahead of time, and you could win some NTU Foundation swag.
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National Taxpayers Union Foundation is a nonpartisan research and educational organization dedicated to helping Americans of all ages understand how taxes, government spending, and regulations affect them. Through our timely information, analysis, and commentary, we’re empowering citizens to engage in important policy debates and hold officials accountable.

Our findings are provided for educational purposes only and are not intended to aid or hinder the passage of legislation or as a comment on any Member’s or Candidate's fitness to serve. 
Photo Credits: Pixabay (byrev, tpsdave, Hans), Wiki Commons


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