NEW YORK, February 12, 2012. Presented below is a speech that President Obama should give but likely will not deliver anytime soon.
“Distinguished guests—tonight I speak on behalf or our children about the course America should set to protect our common future.
For too long, we adults have failed to address the vexing issues that are pulling this nation apart and threatening us abroad in numerous conflicts.
The State of our Union is perilous.
The extraordinary fiscal and monetary solutions we tried have failed.
Growth has been tepid. Bringing interest rates to the floor has punished savers, sucker-punched the value of the dollar, failed to spur investment, and only marginally lessened our structural trade deficit.
Weaker now economically than we were in 1999, America faces emboldened Islamic militants who rise across that portion of the world where the global economy still sources its essential energy supplies.
Rivals and enemies are poised to push for strategic advantage in crucial flash points as they watch us falter in our efforts to re-form a fiscally prudent foundation.
The clearest way to see that we Americans are marching on the wrong path, Republicans and Democrats alike, is to consider some remarkable facts.
Nations who rejected the capitalist approach for decades have schooled the rest of us during the new Millennium.
Russia, the world’s largest energy producer, is hoarding gold and preparing for when the U.S. dollar will no longer be the world’s reserve currency.
China is America’s largest foreign creditor and her businesses are our fiercest and most successful competitors.
India is awakening and Indonesia stands ready in the wings.
Billions of persons in rising nations are eager to work hard and work smart to serve customers all across the globe.
In contrast, our core allies and we continue to march backwards towards our imminent economic undoing.
I realize now that we in the United States together with our friends in Japan and in Europe are actually raising the cost of employment by government action, just as others elsewhere are willing to work effectively for much less.
Together with Japan and the large economies in Europe, America is practicing a kind of economic “futilism”. Each major nation is borrowing too much money to fund too many ineffective government programs that cannot help already highly paid, over-leveraged and slowly growing populations.
Like Japan and Europe, our country has a profound spending and deficit problem that threatens to overwhelm each American: rich, poor and middle class alike.
Our enemies understand the vulnerability we have created for ourselves. Our allies and trading partners are deeply concerned. It is just we, who until now remain oblivious.
Some figures prepared by the Federal Bureau of Economic Analysis are worth serious consideration.
From 1999 to 2007, total Federal tax receipts increased 39 % from $ 1.9 trillion to $ 2.7 trillion. Yet, total Federal spending grew 64 % from $ 1.8 trillion to $ 3.0 trillion. In consequence, the Federal surplus of $ 95 billion in 1999 became a deficit of $ 315 billion in 2007.
The record from 2007 to 2011 has been far more dangerous for all of us.
Federal receipts actually fell 6 % from $ 2.7 trillion to $ 2.5 trillion. By comparison, Federal spending soared by 31 % from $ 3.0 trillion to $ 3.9 trillion. As a result, our Federal deficit quadrupled from $ 316 billion in 2007 to $ 1,394 billion in 2011.
Minority Leader Pelosi
,fellow Democrats and fellow Americans, the first step forward on the road to renewed prosperity is admitting that we do indeed have a severe government spending and deficit problem.
To achieve a lasting, prosperous recovery, we must re-define the mission of government and move away from the pack of aging, deficit-prone, debt-addicted nations that remain wedded to ruinous economic practices.
The United States and her core economic allies have been “hanging together” for years, swinging in the breeze and strangling our populations in an exercise that has been possible because there is no realistic option available to invest the world’s accumulated wealth outside securities denominated in U.S. Dollars, Euros, and Yen.
The time has arrived for us to cut down the rope that chokes off our potential to achieve greatness together as Americans.
We do not need a patchwork quilt of last-minute compromises to prop up old ways of seemingly coping with what ails us. This nation deserves a bold way forward, cut through the wilderness in the same precedent-setting ways our ancestors acted in crucial past moments.
We need a far-sighted approach that will lift up Americans who wish to be productive, protect the vast economic wealth we have accumulated over decades, care for those who cannot care for themselves and, above all, defend America from our foreign enemies.
Almost eighty years ago, President Roosevelt observed: “unless there is security here at home, there cannot be peace in the world”.
Tonight, I propose the outlines for a New Compact between those with financial resources and those without. I believe security and prosperity are at hand by carrying forward 10 initiatives, each of which is readily within our power to implement.
1. A Sound Dollar. Our best minds estimate that global wealth approaches or perhaps exceeds the mammoth sum of $ 250 trillion.
This wealth needs a home that actually holds its value.
Since 1999, the American dollar has dropped 24 % against the troubled Euro, 80 %, against the Brent crude price of oil and 84 % against precious gold.
Yesterday, I directed your cabinet to implement a sound dollar policy that will attract as much wealth as possible inside America’s borders.
Fortunately, interest rates are low, so the pain we may feel propping the dollar will be far less than it was from 1973 to 1981 when America last defended our currency.
Yes, some of the $ 1.5 trillion in goods exports will become more expensive compared to alternatives priced in weaker currencies.
However 100 % of the estimated $ 64.8 trillion in American household wealth will increase, translated into these same currencies and trillions more will flow inside our borders.
Most important, the substantial gains that those with net worth will reap under a strong dollar policy will lessen some of the pain of sacrifice they will be asked to make as part of my 10 point program.
2. A Fortress Central Bank. Like many of you, I find the Federal Reserve System to be opaque and confusing.
Chairmen speak like oracles but facts provided by the Fed are neither timely nor comprehensive.
This has changed already. With effect from December 31, 2012, I organized a capital replenishment effort wherein a portion of the saleable Federal-owned lands
will be pledged to invest in common equity of the Federal Reserve System at a price equal to the audited book value of your Central Bank.
We believe this support is worth $ 1 trillion and will leave the Fed the most solidly capitalized financial institution on the planet.
The independence of the Fed will remain largely unchanged, save for an over-arching sound dollar policy and certain important refinements.
A comprehensive audit is well under way and will be published at the end of February this year and every year thereafter. Furthermore, the Federal Reserve System will set the global standard for timeliness and thoroughness in reporting for financial institutions anywhere.
3. Timely, Granular Data; Strict Regulatory Oversight. The United States will henceforth submit to a new regulatory regime regarding the sale and purchase of all securities.
For too long, government and corporate issuers of securities have failed to keep up with rapid improvements in data analysis and transmission that should substantially improve disclosure practices. All this will change with immediate effect.
My Administration will push Democrats and Republicans to create a Special Commission, with strong subpoena power, to go back over the period from 1999 to present to determine what we need to change to make issuers of securities, executives, directors, and fiduciaries far more responsible to investors. I sense the public at large has grown cynical concerning the close ties that have become inter-woven among politicians, regulators, and those who stand to benefit from securities’ issuers and investors.
America is the richest country on earth and our riches need to be fully protected by a transparent and highly effective regulatory framework.
4. A Fair Deal on Taxes. A simple, yet rigid tax code will do much to unclog the heart of America’s economy, lessen the influence of lobbyists, and break the narrow focus of some elected politicians upon fund-raising and favors.
When income taxes were introduced one century ago, the maximum Federal tax rate was far below 39.6%.
Since then, the tax system has over-whelmed filers and now consumes too much precious time.
I will be proposing a detailed budget for the year that incorporates a simple, equitable deal on federal taxes. From the first dollar of all income, individuals, corporations, and estates will pay a 12.5 % federal income tax with no exemptions or deductions of any kind.
In addition, individuals, corporations, and estates will pay a flat 6 % assessment from the first dollar of income to fund contributions required to make Social Security, Medicare and Medicaid fully solvent.
Moreover, any changes to this approach will only be considered before September 30th in election years.
5. Additional Security for the Less Economically Fortunate. By our estimates, wealth is concentrated in 50% of households. Until now, there has been limited means testing when it comes to making certain transfer payments. This must change swiftly.
Except for the very poorest of us, Americans earn more each year than in an overwhelming majority of other nations. High-earning Americans who have net worth must be willing to surrender some of the transfer payments to which they remain entitled under current law.
Americans who earn less and who have little or no net worth need to have a reliable “safety-cushion” that can work effectively and renew their efforts to become productive inside our economy.
In addition to existing programs that will be adjusted to channel transfer payments to the bottom half of American households (with a strong preference to the bottom 20%), I will work to create an American Sovereign Wealth Fund. Investments in this fund will be concentrated in our vital energy resources, in precious metals and in promising investments outside America. Returns will be re-invested and a portion distributed annually to help the less fortunate.
6. Tort Reform; Health Care Reform. Admitting error is a difficult thing to do. Last week, we learned that the expected annual cost of mandatory health insurance required under relevant provisions of the Affordable Care Act could average $ 20,000 for a typical American family.
or 40 % of the median household income in 2011.
Clearly, something is wrong with this equation.
Last week, I also had the privilege of hearing an American success story, Dr. Benjamin Carson, expound his wise, informed views on challenges facing all Americans with regard to our health care system and other contentious matters.
Ladies and Gentlemen, we can do better than implementing the behemoth that has emerged from the best intentions contained in our signature health care reform initiative.
We must do much better—and we shall. Health care reform cannot work without tort reform.
Above all, health care must stay true to the ancient principle enshrined in the Hippocratic oath: “first, do no harm”.
Therefore, I have directed our cabinet to suspend implementation of the Affordable Care Act immediately and urged Democrats and Republicans to work together as part of the legislative process to draft replacement legislation for my signature that will actually implement health care and tort reform for the benefit of all Americans.
7. Equity in Service to this Country. By Executive Order 10988,
President Kennedy ushered in the present system where unions represent a substantial majority of public servants and I use this term advisedly.
I know that unions were necessary to stand in balance to ruthless monopolists in the private sector during the Industrial Revolution.
However, why are unions required today to protect public servants from their charges—the people of this great nation?
The evidence I see at the Bureau of Economic Analysis shows that public sector workers earn more total compensation per full-time equivalent worker than private sector workers do. What’s more, inevitable out-sourcing, machines, and engineered solutions are replacing high-cost private sector workers everywhere.
In contrast, we seem to hire more and more public sector workers even as their overall cost per worker continues to soar far above private sector equivalents.
Therefore, I will move to enact two changes to the status quo. America will curtail the role of public sector unions and we will repeal laws that push up the cost of investing in government-owned infrastructure by requiring Federal contractors to use union labor.
8. A Bold Military Footprint. America is a nation of 310 million persons in a troubled world of 6,800 million souls.
I do not agree with the French philosopher who said: “Of all follies, there is none greater than wanting to make the world a better place.”
I honor the brave men and women in our fighting forces who so ably defend this great nation.
We remain at war against militant Islam everywhere and we will not fail to defeat and discredit this dread foe and any other that rises, in concert with our allies or alone, as we see fit.
However, it is well past time for some of the richest nations on earth to do their fair share of defending the global peace. It is finally time for America to reduce our presence dramatically in countries like Germany, Italy and Japan. These nations and others have much to gain from securing their own defense, and from promoting regional and global peace.
9. Secure Borders; Encouraging Lawful Immigration. To our north, we have enjoyed amicable relations with our brothers and sisters in Canada who sit atop a substantial portion of the world’s fresh water and the world’s energy, yet number a small portion of the world’s people.
To our south, we have a more troubled history and a different relationship with Mexico. Instead of sealing off a long southern border with Mexico at a monstrous estimated cost, we will match Mexico in a new plan to help upgrade their productive infrastructure. Then, we will work to control Mexico’s southern and eastern borders unless the nations of Guatemala and Belize wish to join our common endeavor with Mexico.
With a firm plan for border security, we will then work swiftly to regularize deserving undocumented residents and encourage potential immigrants from many nations to join and add flavor to the great American experiment.
10. Education the Envy of the World. Inside America, some educational institutions are among the finest on this planet today.
However, the overwhelming majority of America’s schools and students do not compare well in global surveys of best practice and performance. This must finally change—you, the children of this great nation deserve so much more than failing schools that lead impressionable minds to embrace failure as a natural consequence.
The balance between the educators and administrators who care for our children in school and the parents who raise them at home is badly broken. Some suggest that parents should have even fewer choices—I say that freedom of choice is the answer for parents, when it comes to schools, just as it can work so well across our economy and our land.
In the great rush forward following World War II, we Americans have lost sight of an essential governance principle: citizens who comprise our households rule this nation, not our elected officials or the legions of bureaucrats who meddle increasingly in our daily lives.
The time has finally come to strengthen our citizens and our households by throwing off the yoke of burdensome and disconnected Federal government so that individuals, communities, villages, towns, cities, and states can flourish again, consistent with the construction set forth in our enduring Constitution.
By redefining the mission of Federal government, as I have done above, America’s households can move forward again in productive endeavors that constitute our distinctive hallmark.
By enacting measures I propose, the federal deficit can be cut, the nation can march inexorably back to surplus and from there we shall secure essential fiscal strength.
Our dollar will again be sound.
Capital and the most productive people on earth will join us in America, basing themselves and their businesses here.
No enemy will dare to conquer our thriving homeland.
In closing, I urge the children of this nation to heed these words from a President they were never privileged to know in their own lifetimes. President Reagan remarked in his Farewell Address:
“…let me offer lesson number one about America: All great change in America begins at the dinner table. So, tomorrow night in the kitchen I hope the talking begins. And children, if your parents haven’t been teaching you what it means to be an American, let ‘em know and nail ‘em on it. That would be a very American thing to do.”
Ladies and Gentlemen, fellow Americans, let us now make great change together—the kind of productive change that will bring fulfilling prosperity to us all.
If we are going to miss an imminent deadline to adjust our nation’s finances, let us do so because we are making concrete strides towards noble and achievable goals.
Much good has been done before under great pressure in periods as short as 100 days.
Let us work swiftly to secure, America’s role as a world-leading power for ourselves and for our children.
Join with me to fill in and deliver this New Compact for Prosperity.
May God let us fulfill the extraordinary promise of America, together.”
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