State of the Union Address Mentions Manufacturing
On Tuesday, February 12, 2013, President Obama delivered his fifth State of the Union Address to Congress. Lasting exactly sixty minutes, the President had broad themes and proposals throughout the speech. Discussion of foreign policy accounted for 16% of the speech, the economy and jobs also 16%, budget policies 11%, education 8%, and gun violence 8%.
Manufacturing emerged as a dominant theme at times cutting across several key policy areas including tax reform, education, jobs, and the economy. The President mentioned manufacturing seven times in this 2013 SOTU compared with sixteen times in 2012. While this is a decrease, the number still outpaced all previous addresses to Congress by the past four Presidents.
When it comes to workforce skills, manufacturing groups around the country have said for years that we have a major skills gap in the industry and a recent One Voice Annual Advocacy Issues Survey showed that 91% of these metalworking manufacturers struggle to find qualified employees. The President said the Administration will reward schools that develop new partnerships with colleges and employers, and create classes that focus on science, technology, engineering, and math (STEM). The Administration, over the past several years, has handed out millions of dollars in competitive grants to some states to promote technical and vocations programs and purchase equipment for training. Some have said rather than competitive grants, the federal government should award these to all states based on a formula. However, Washington has yet to reform the workforce system which already has nearly 50 overlapping federal programs.
In addition to an emphasis on skills training and encouraging STEM education programs, the President restated his commitment to what he described as creating a “tax code that lowers incentives to move jobs overseas, and lowers tax rates for businesses and manufacturers that create jobs right here in America.” While calling for comprehensive tax reform, in his speech he provided few details of what that would entail. In the past, the Administration’s “Framework” proposed a 28% corporate tax rate and a 25% effective tax rate for manufacturers structured as C-Corporations. One Voice is hearing the White House wants to use an expanded Section 179 and other deductions and credits to lower the tax rate for small businesses. However, Administration officials have indicated to us they are not supportive of extending beyond 2013 Bonus “Accelerated” Depreciation, a tax provision used by 88% One Voice members according to a recent survey.
Additional Issues Raised During State of the Union Address
Climate Change: Called on Congress to pass a Lieberman-McCain style climate change bill; if not, the Administration will issue executive actions and regulations on its own;
Vehicle Fuel: Proposed to use some of oil and gas revenues to fund an Energy Security Trust to drive new research and technology to “shift our cars and trucks off oil for good”;
Trade: Announced the Administration is officially beginning TransAtlantic Partnership Agreement talks with the European Union;
Infrastructure: Proposed a “Fix-it-First” program and a Partnership to Rebuild America to leverage private and public funding for infrastructure projects but did not say how to pay for it;
Workplace: Called on Congress to pass the “Paycheck Fairness Act” this year;
Minimum Wage: Proposed increasing the federal minimum wage from $7.25/hour to $9/hour over the next three years and automatically adjusting for inflation moving forward.