Context
Tuesday, 24 January 2012 saw US President Barack Obama delivered his third State of The Union address to Congress. While the overall theme was getting the US economy back on track, there were some interesting references to China and Iran. The President’s speech was received with mixed feelings both abroad and at home.
Analysis
This year’s State of the Union address has been heralded as the start of President Obama’s 2012 election campaign. The gifted orator was compelling and eloquent in his speechifying, however this was not enough to silence his critics.
At home Obama’s speech was met with a somewhat icy reception by Republicans, with Republican Governor of Indiana Mitch Daniels among the most vocal of the President’s decriers. Daniels was chosen to deliver the official GOP response to the President’s speech, which he labeled, ‘extremist’ and ‘divisive’ saying that “No feature of the Obama presidency has been sadder than its constant effort to divide us, to curry favor with some Americans by castigating others.”
He was referring to the planned tax hike for millionaires, which would see them pay a 30 percent tax on their income. The GOP is viewing this as tantamount to class warfare, and to chastising and penalizing entrepreneurship and achievement. Obama, however, made it clear he was serious about adjusting taxes in favor of the middle class:
“Right now, we’re poised to spend nearly $1 trillion more on what was supposed to be a temporary tax break for the wealthiest 2 percent of Americans. Right now, because of loopholes and shelters in the tax code, a quarter of all millionaires pay lower tax rates than millions of middle-class households. Right now, Warren Buffett pays a lower tax rate than his secretary.”
Unfortunately for the President, someone didn’t do their homework and it turns out Warren Buffett’s secretary earns a healthy 250,000 to 500,000 per year and is hardly a representative of the majority of US tax payers. This incident has been grabbed by the media and almost overshadowed the rest of the President’s speech.
China
China was made mention of a number of times in the speech, and all in the context of economic competition. The President seemed to crow that it was getting more expensive to produce goods in China, stating that he is creating a new Trade Enforcement Unit to deal with countries “like China” who are perpetrating unfair trade practices. In this vein he mentioned that there were already a number of trade cases against China, and that he would go after countries where US movies, music and software were pirated. He further stated that he would not “cede wind or solar or battery industries to China” and claimed that their competitiveness is the result of unfair subsidies.
The complex US-China relationship was reduced to a tit-for-tat on economic competitiveness and trade practices and the Chinese were quick to take note of it. Another part of the speech which were of particular interest to China was the quip by Obama that:
“The renewal of American leadership can be felt across the globe. Anyone who tells you otherwise, anyone who tells you that America is in decline or that our influence has waned, doesn’t know what they’re talking about.”
Chinese media particularly focused on this quote, which comes on the back of months of tension between the two nations, which ratcheted up a level when Obama unveiled his new Defense Strategy with a refocus on the Asia Pacific.
Interestingly, Indian media was primarily focused on the Chinese elements in Obama’s speech, glad that its biggest rival in the region economically was coming under the spotlight in such a prominent and unflattering way. That being said, it would have noticed a veiled reference to its own huge black market for pirated goods in Obama’s speech as well.
The way in which China was dealt with in this year’s State of the Union address is quite a departure from Obama’s previous two speeches, which were much more forgiving toward China. This harder tone comes at an opportune time for the US, where China is in no position to take up an economic fight and is more concerned with domestic issues than with any problems abroad. China will see a leadership transition this year and is spending the majority of its energy in trying to ensure that takes place without mishap.
Russia And Other Nations
The only reference to Russia in the State of the Union address was as an ‘emerging market’ that the US could move its products into. This mild reference is no doubt due to the Russian Reset put into place in 2009. However, with Russia opposing the US on Iranian sanctions, and relations straining over the US ambassador’s interaction with Russian dissident groups, the Reset could be headed for stormy waters.
Obama was perhaps being overly optimistic when he commented that the international community was behind the new Iranian sanctions, with China and Russia both in opposition, this is a slightly (read: very) skewed assessment. However he did mention that all options were “on the table” with regards Iran, qualifying this remark by saying he has a preference for diplomacy and negotiations to resolve the Iranian issue.
With regards Israel, Obama reaffirmed the US’s “ironclad” support for their security, which was a message to Israel, and all her neighbors in the Middle East.
Over all, this year’s State of the Union speech has been taken as much for what it said, as what it didn’t say. Some of the most pressing issues in Washington, such as “Obamacare” were off the agenda, public pensions, and even foreign policy were largely untouched. For Republicans, it was chiefly viewed as rhetoric, for Democrats, it was the start of a long haul to the ballot box in November. For the President, there was one theme that stood out: he feels hamstrung. The party divide in Congress makes it very difficult to get anything done, and Obama’s numerous pleas in his speech for Congress to work together and get new bills “to his office” or “on his desk” speak volumes.
