Finding Common Ground on the State of the Union

Jared Bernstein is a senior fellow at the Center on Budget and Policy Priorities in Washington and a former chief economist to Vice President Joseph R. Biden Jr. Phillip Swagel is a professor at the School of Public Policy at the University of Maryland and was assistant Treasury secretary for economic policy from 2006 to 2009.

News reports in advance of the State of the Union address focused on President Obama’s promise to take unilateral action on his priorities in defiance of Congress, and subsequent reports have stressed the president’s intention to go over Congress’s head.

But while the two of us come from alternative sides of the aisle on much economic policy, we think this story line misses some potential opportunities for bipartisan progress.  Such progress is by no means assured even when there is broad agreement on a policy â€" the details matter for reaching agreement, as does the political messaging (the latter sometimes too much). But even so, we see possibilities to make for a truly stronger union.

Here are some areas raised in the speech upon which we (mostly) agree, and where we wonder if perhaps something useful could come to fruition.  Even as we’re old friends trying to model good behavior and play nice, however, there are patches of this common ground where we disagree.  We briefly elaborate those as well.

Immigration Reform

We agree that the bipartisan agreement reached in the Senate would be a positive step for the overall economy, for our fiscal situation, and for the millions of undocumented workers and families stuck in the shadows.  President Obama struck the right tone in calling for progress but giving the House the political space to move forward.  There are signs that the House leadership intends to do so, with legislation in steps, presumably focused on border security first and then on providing undocumented immigrants with some sort of legal status, though perhaps not a path to citizenship.

We share concerns about immigration reform that brings in new workers when the labor market is weak.  Inbound immigration decreases when United States economic growth slows, as has been the case in recent years. But even so, the Senate bill includes provisions in which the flow of low-skilled immigrants is adjusted depending on local labor-market conditions.

For undocumented workers already in the United States, immigration reform is a pure positive â€" legal status should diminish the extent to which such workers can be exploited in ways that undercut others in the low-wage work force.

Improving the Quality of Low-Wage Jobs

We disagree on the minimum wage but we’re happy to add to the consensus that is building around expanding the earned-income tax credit (the president cited Senator Marco Rubio’s support in the speech), a wage subsidy for low-wage workers in low-income families.  Specifically, the idea is to raise the part of the credit that goes to childless adults, as this part currently provides a much smaller subsidy than the credit to families with children. The president could welcome movement here without giving up on his push for a higher minimum wage.

Phill: A modest increase in the minimum wage will have modest effects, but I see unintended consequences arising from some low-skilled workers who are not hired and do not get started on the upward ladder.

Jared: It takes both a higher earned-income tax credit and an increased minimum wage to raise the pay of low-wage workers.  They’re complements, not substitutes.  We cannot fully offset the burden of low-wage work with tax credits.  In fact, to do so ends up wasting some of the credit on subsidizing low-wage employers.  Plus, evidence shows that moderate increases in the wage floor, like the $10.10 that the president called for, would help low-wage workers without markedly hurting their job prospects.

Early Childhood Education

We both support the part of the recent budget agreement that relaxed the sequestration and provided about $1 billion in early childhood funding that will restore cuts to programs for low-income children and expand both access to and evaluation of high-quality early childhood programs.

This is a crucial step toward the president’s goal of providing quality educational opportunities for every 4-year-old, a proposal based on the considerable evidence that early interventions can improve the lifelong trajectory of children’s lives. The key, however, is to know first what works. Additional funding would help figure this out.

Jared: No disagreement here, but there is this: when I hear conservatives express support for ideas like this, I don’t see how they’re compatible with their proposed budgets, which cut extremely, and unrealistically, deep into precisely such spending areas.

Phill:  Republicans are looking for programs that work. Readers who are shaking their heads at this should read the recent remarks by Representative Paul Ryan and Senator Marco Rubio.  I would cut dumb spending â€" start with the “crazy train” in California, which the president and Gov. Jerry Brown absurdly still support.  But fund good things.

Other Issues

Other issues on which there is bipartisan support at a broad level include housing finance reform, patent reform, and continued development of American natural gas resources.  While the two parties disagree on important details in each area (we both share concerns about the environmental impact of fracking), there are common goals:  to ensure the availability of mortgages while protecting taxpayers from future bailouts; to support innovation; and to make the United States less dependent on imported energy while providing a bridge to lower-carbon energy sources and renewables.

The two sides will continue squabbling, and neither of us is predicting an end to gridlock (note that the president’s first trip in support of his agenda is focused on the minimum wage).  But the question is whether both sides can get to “yes” on areas where they, like us, agree.  The fact that we both see President Obama as having set out several such areas on Tuesday suggests that there may be more common ground than you’ll read about in the headlines.