United States President Barack Obama made no effort to hide his pride during his State of the Union address last week. “I have no more campaigns to run,” he said. “I know, because I won both of them,” he then added, off the cuff, to the applause and laughter of his colleagues among the Democrats.
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Obama can indeed take pride in the 5% pace of America’s economic growth in the third quarter, the most rapid pace in 11 years, and in growth forecasts of 3% annually going forward, which is more than most developed economies. The U.S. unemployment rate has fallen to 5.6% and the stock market is breaking (nominal) records. Obama may be able to take credit for the fact that he kept the U.S. from sinking into an economic slump, though it is hard to prove that and a lot of Republicans will gladly explain why he didn’t.
But there are things that he cannot take pride in, which include the dismal failure in restraining the financial institutions that did so much damage to the economy in the great financial fallout of 2008, the widening of socioeconomic gaps and the U.S.’s diminished status on the world stage, which has not really recovered since George W. Bush destroyed it.
To mend the economic gaps, which some see as the most significant danger to democracy and long-term economic prosperity, Obama is proposing investing in tax breaks for working families and students, free tuition at community colleges and funding all this by increasing taxes on the rich, closing tax loopholes and imposing levies on large financial institutions.
Although the chances of his proposals passing in the Republican-dominated Congress are slim, it is important to read between the lines of his address to understand the direction in which the U.S. is heading.
Obama also announced that he would veto legislative attempts to weaken or abolish his health-care reforms. Indeed, he threatened to make two vetoes in the hours preceding his address – one on a bill that would prohibit abortions after 20 weeks of pregnancy and another on speeding up the approval for construction of natural gas pipelines.
Obama succeeded in getting elected for a second term because of the wide-raging changes in American demography, which give a great deal of power to women and ethnic minorities. His Republican rivals meanwhile have been led by the extremist Tea Party movement, which favors small government and low taxes as the means to drive economic growth but is actually promoted by the 1% who care little for the interests of blue-collar workers. The Republicans won the Congressional race because of the decentralized and split nature of American politics, but their chances of winning the next presidential election are not particularly good.
Families – or, more precisely, women – was one of the key points in Obama’s address and will be a significant issue in the next election. More children are being brought up in single-parent families, as opposed to traditional families with two parents. Women are playing a bigger role in the economy, establishing businesses as well as raising and supporting the next generation and reaching the upper echelons of the job market.
The American labor force participation rate – the percentage of working-age people who either have a job or are actively seeking one – has declined dramatically among both men and women in recent years. In 1990, the employment rate among American women was the world’s highest, soaring to a record 74% among women aged 52 to 54 in 1999. Today that rate has declined to 69% – and that is in one of the world’s most flexible job markets.
But it is not only American women (and men) who are leaving the workforce. Young Americans are having difficulty paying for a top-quality higher education, evidenced by the fact that student-loan debt has soared to more than $1.2 trillion. Members of the class of 2014 graduated with an average debt of $33,000, compared with $26,600 just three years ago. Their debt is almost double that of students who graduated 20 years ago. Access to quality education in general, and high-quality education in particular, is shrinking for many.
Although the healthcare reform, which the Republicans want so much to repeal, expanded the number of insured Americans by millions, the healthcare system overall still suffers from difficulties and failures in pricing and accessibility. That is an inseparable part of the state of the American nation, in which teachers, blue-collar workers, police officers and firefighters are saddled with higher tax rates than billionaires who manage hedge funds and high-tech companies.
When we examine the state of the nation in Israel, that tiny country surrounded by enemies, we can be encouraged by several comparisons with the U.S. Education in Israel is still more affordable and accessible, while government support for families is greater, even more than in many European countries such as Germany, and of course more than in Japan. Healthcare services in Israel are universally accessible and more inclusive. The rate of secular women’s participation in the workforce is one of the highest in the Western world, and the rate of participation by Haredi women is improving. It is only necessary to start a similar process in the Arab population as well.
Still, the trend here is worrisome, because we are heading in the U.S.’s direction precisely in areas where it does not excel. It is not as if quality healthcare did not exist in the U.S.; it has some of the best physicians, hospitals and medical research in the world. It is not that the U.S. isn’t home to most of the best universities in the world; it still leads in all the rankings. It is not that productivity is low; it has one of the highest rates on earth.
But all these fields of excellence exist in isolated places and benefit only a few. The majority – large populations who live far from the industrialized, bustling coastal regions, but also in the hearts of the large cities – suffer from poor health because they have no access to care; from entrenched ignorance and from large numbers of people dropping out of the workforce because they lack sufficient education. Women drop out of the workforce, so that instead of realizing their potential, they only increase its deficit.
There is no doubt that we want a competitive and free economy. But without a policy that ensures that the fruits of freedom and competition will be enjoyed by everyone, and not only by those with high financial means, our loss will offset our gain.