The State of the Union

January 23, 2007

Tonight, President Bush will deliver his sixth State of the Union address at nine pm EST. He enters the speech with his political standing in its weakest state, highlighted by a record-low approval rating of 28 percent and growing dissatisfaction with the war in Iraq. In the address, "Bush plans to dangle ideas—some new, some recycled—on reducing America's oil dependence and making health care more available, among others." If history is any judge, the speech will be filled with a series of proposals that either go unfulfilled or are forgotten entirely. Below we tell you what to expect and what you need to know.

  • Uninsured Americans will receive little help and must turn to expensive coverage. The president's proposal to substitute tax deductions for today's tax preference for employer-provided coverage would replace one regressive, flawed tax deduction with another. Most uninsured Americans pay low or no taxes, so they would receive little help from this proposal, while doing away with the current exclusion could accelerate the decline of the employer-based system. As Center for American Progress Senior Fellow Jeanne Lambrew observed in a June 2006 piece in Tax Notes,"the tax exclusion is a thread that, if pulled in isolation, could unravel health coverage in the United States," and even "minor changes to the exclusion could accelerate the recent trends" of employers dropping coverage for the 175 million Americans who receive insurance through their employers. In addition, the president's Health Savings Accounts (HSAs) initiative would increase the number of uninsured. It does not offer savings on health care costs for average Americans and primarily benefits the wealthy. "Low- and middle-income uninsured people will gain meager or no tax savings" from health savings accounts, according to a Commonwealth Fund study. Roughly 50 percent of uninsured adults pay no federal income taxes, meaning that "tax incentives for high-deductible health plans would have little impact on uninsured adults." Moreover, "uninsured people in the middle income tax bracket would see potential savings of just three percent to six percent on a typical high-deductible health plan premium of $2,000. "The Government Accountability Office (GAO) found "that the average income of HSA users was $133,000 in 2004 compared to $51,000 for all non-elderly tax filers." Additionally, these HSAs are being used as tax shelters for the wealthy. HSAs are "not likely to be an important contributor to expanding coverage among uninsured people" because most of uninsured Americans "do not face high-enough marginal tax rates to benefit substantially from the tax deductibility of HSA contributions."

  • Any comprehensive solution to the climate crisis must involve a move towards energy independence as well as enforceable caps on global warming pollution. Carbon dioxide emissions in the U.S. have increased by 354 million metric tons since 2001. The Energy Department's latest analysis projects that America’s carbon dioxide emissions will increase by one-third from 2005 to 2030 [Department of Energy; SustainableBusiness.com]. Last February, President Bush claimed there is still "a debate over whether [global warming] is man-made or naturally caused." There is no real scientific debate over this question. Most recently, the National Academy of Sciences unequivocally stated that natural causes cannot explain the unprecedented warmth over the last 400 years. Rather, “human activities are responsible for much of the recent warming,” the report states [ThinkProgress, National Academy of Sciences]. President Bush has pledged to reduce our energy dependence in every State of the Union he has delivered since taking office. At the same time, the United States has become increasingly dependent on foreign oil, from 58 percent of oil consumed in the U.S. in 2000 to 70 percent in September 2006. U.S. dependence on OPEC nations for oil imports "has risen to its highest level in 15 years" [ThinkProgress; Department of Energy; Financial Times, 1/2/07]. At last year's State of the Union, President Bush said the "best way to break this addiction [to oil] is through technology." Yet his 2007 budget actually proposed to spend less on energy efficiency, conservation, and renewable energy resources in inflation-adjusted dollars than was appropriated in fiscal year 2001—$1.176 billion in nominal dollars in both 2001 and 2007. [President Bush, 1/31/06; President's Budget, FY 2007]

  • President Bush's strategy of escalation was tried this summer in Baghdad and failed. During the last six months, the United States has increased—or “surged”—the number of American troops in Baghdad by 12,000, yet the violence and deaths of Americans and Iraqis has climbed alarmingly, averaging 960 a week since the latest troop increase. This past summer, Bush announced a major effort to secure Baghdad, stating at a news conference that thousands of U.S.-led coalition troops would be moved into the city. As a result, violence intensified throughout the country, and U.S. deaths in Iraq spiked. Bush later acknowledged that "our operations to secure Baghdad have encountered greater resistance. ... I'm not satisfied." Sen. John Warner (R-VA), an influential conservative on military affairs, offered a resolution that opposes President Bush's escalation plan. Top military leaders, including former Gen. Colin Powell, the current Joint Chiefs, and Gen. John Abizaid, have expressed their opposition to putting more U.S. troops on the ground. The president's strategy goes against the recommendations of the recently-released Iraq Study Group. Despite Bush's claim that progressives don't have their own plan, the Center for American Progress has had a responsible Iraq strategy for over a year that calls for comprehensive strategic redeployment.

  • The president's economic policies would do little to stimulate growth and would worsen the country's fiscal health. The Bush tax cuts "have been the single largest contributor to the reemergence of substantial budget deficits." The Congressional Budget Office reports that tax cuts enacted from 2001 to 2006 were responsible for 51 percent of the deterioration in the budget. Only one- third was due to increases in security spending, and about one-sixth to increases in domestic spending. Bush has "never proposed a balanced budget since it went into deficit, never vetoed a spending bill when Republicans controlled Congress and offered little sustained objection to earmarks until the issue gained political traction last year." The president's bloated budgets have reflected skewed priorities and have not stimulated economic growth. Economic growth fell to two percent in the third quarter of last year, following 2.6 percent growth in the second quarter, and a surprisingly strong first quarter growth of 5.6 percent.

Daily Talking Points is a product of the American Progress Action Fund.