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Analysis & Fact Check: State of the Union Address (01-24-2012)

January 25th, 2012
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01.25.2012 original article
01.29.2012 update I: expanded article

President Obama at the January 24, 2012 State of the Union address. Vice President Joe Biden (D) and House Speaker John Boehner (R) of Ohio seated. (AP Photo Credit: J. Scott Applewhite)

Analysis & Fact Check: State of the Union Address (01-24-2012)

original article written by Net Advisor

Washington DC. On January 24, 2012 President Obama delivered his annual State of the Union (SOTU) address. SOTU is something a President does each year before Congress to give the American public an idea of what the president has achieved and to argue what future policy should be considered by Congress.

SOTU has become more of a political opportunity, especially in an election year to sway undecided voters using any means of rhetoric a President can.

As of January 18, 2012 only 24% of the American public believe that the U.S. is on the right track (Source: Poll/Rasmussen). With the balance of 76% of Americans believe the country is on the wrong track, President Obama is more likely to stretch the facts to help his re-election campaign. The full text of the speech can be read here) The following represents an analysis and fact check on this SOTU speech.


  • Obama:  “For the first time in nine years, there are no Americans fighting in Iraq.”

FACT: “U.S. military presence will continue in Iraq.” Approximately 10,000 to 15,000 U.S. troops will remain in Iraq. These troops will not be under military control necessarily, they will be under control of the U.S. Embassy (Source: Washington Post). This is more semantics and the Administration was careful in which words it used. “No (actively) fighting troops” does not mean there are no troops still in Iraq, and does not mean that U.S. troops or American civilians are still at risk in Iraq.

In 2011, President Obama stated (video), “as promised the rest of our troops will come home by the end of the year.” The reality is, this is not the case.

  • Obama: “For the first time in two decades, Osama bin Laden is not a threat to this country.”

TRUE: Osama bin Laden was shot and killed by U.S. Special Forces. Generally speaking, dead people are no longer a threat to anyone. The secret mission began some 10 years ago (Source: The Guardian.UK).

  • Obama: “Most of al Qaeda’s top lieutenants have been defeated. The Taliban’s momentum has been broken…”

PART TRUE: FACT: The U.S. has made numerous strides in capturing or killing terrorist leaders, however the Obama Administration has been in secret talks over the last year to let four notorious terrorist-linked leaders out of Guantánamo and back into Afghanistan where the U.S. still is fighting (Report: NetAdvisor.org).

  • Obama: “Some troops in Afghanistan have begun to come home. “

PART TRUE: FACT: The U.S. has began to withdraw some U.S. troops, but only after doubling the number of troops in Afghanistan under the Obama Administration (Source: Los Angeles Times). Even thought the President stated in this SOTU speech that “The Taliban’s momentum has been broken,” and Bin Laden is dead, there are no plans to expedite the withdrawing of U.S. troops in Afghanistan by 2013 (Source: The Guardian.UK).

The President also vowed to end the wars in Iraq and Afghanistan when he took office.

  • Obama (07-16-2008): “I will give our military a new mission on my first day in office: ending this (Iraq) war.”

FACT: It took another three years to withdraw most of the troops in Iraq, and we are still battling in Afghanistan, and that effort has become more deadly since the war began.

“A military helicopter was shot down in eastern Afghanistan, killing 31 U.S. special operation troops, most of them from the elite Navy SEALs unit that killed al-Qaida leader Osama bin Laden, along with seven Afghan commandos. It was the deadliest single incident for American forces in the decade-long war.”

— Source: MS-NBC

Next, Obama attempted to draw a link between the U.S. military that are under control by Congress and the Commander in Chief (The President), and “institutions,” suggestion that “institutions” are not under the President’s control, and that seems upsetting to him.

  • Obama: “At a time when too many of our institutions have let us down, they (military) exceed all expectations. They’re not consumed with personal ambition. They don’t obsess over their differences.”

FACT: The President is vague here and for a reason. He does not want to directly say that Congress should just defer power and authority to one person, the office of the presidency, but that is exactly what Mr. Obama Administration has suggested.

“We can’t wait for Congress to act, so we’re going to take the steps that we can take” (Source: USA Today).

In other words, Congress is a legislate body that is getting in the way of MY policies, so my office will just executive order whatever policies I see fit.

Hope and Change 2.0

  • Obama: “Think about the America within our reach: A country that leads the world in educating its people. An America that attracts a new generation of high-tech manufacturing and high-paying jobs. A future where we’re in control of our own energy…”

FACT: Education: At least 46 states cutting education (Source: Center on Budget and Policy Priorities). “30 states school funding now stands below 2008 levels” (Source: Center on Budget and Policy Priorities). The Federal government also sought to cut education in the FY 2011 budget (Source: Washington Post).

FACT: High-tech manufacturing jobs: “High-tech manufacturing jobs moving to Asia” (Source: Houston Business Journal). “There is a concern that an increasing share of manufacturing—especially high-tech manufacturing—formerly performed in the United States is being done overseas with potentially harmful consequences to the U.S. economy” (Source: Rand.org Report (178pps PDF, page xvii, summary).

FACT: High paying jobs: Not sure what jobs Mr. Obama is referring to. As noted above high-tech jobs moving overseas where government regulations are not so overbearing and costly. The president’s latest jobs plan touted a magical number of “1 million new jobs” from tourism (Source: CS monitor). Working in amusement parks, restaurants, movie theaters, retail stores, or other entertainment hot spots are generally not high wage jobs.

FACT: Energy: The President has blocked every opportunity to use our own energy and instead has continued U.S. dependency on foreign oil (Report: NetAdvisor.org).

The latest move is where Obama blocked new higher paying U.S. jobs in the Canadian Keystone Pipeline (Source: Washington Post). Canada is now looking to shift what would have been new higher paying U.S. jobs and also shift oil to China (Source: Bloomberg-Businessweek).

Obama tired to flood the oil market in 2011 by releasing some of our Strategic Petroleum Reserve (generally held for in times of critical war). The idea was to get gas prices down. Oil prices were $92/ bbl at the time. This has never worked long term for any President. As of 01-25-2012, WTI Crude Oil is at $99.16 and Brent Crude Oil at $103/bbl (Source: oil-prices.net PDF).

  • Obama: “…An economy built to last, where hard work pays off, and responsibility is rewarded.”

Economy hard work, responsibility rewarded: Generally speaking, this is how America is supposed to work, but in reality, that is not how the Obama Administration works.

FACT: “Food-stamp use has increased 46 percent since December 2008” (Source: Bloomberg-Businessweek). 45.8 Million People in USA are unable to feed themselves (on food stamps) (Source: CNN).

FACT: “Number of poor hit record 46 million in 2010” (Source: Reuters).

FACT: “Millionaires should pay at least 30 percent in taxes” (Source: MS-NBC).

FACT: Government (tax payers) pick up the tab – $19 Billion – for Section 8 housing (Source: Wall Street Journal).

The reality is the Administration wants to penalize and tax hard work and responsibility, then give those funds to ever-increasing welfare programs, when basic education and job training  is lacking.

  • Obama:  “Long before the recession, jobs and manufacturing began leaving our shores.”

FACT: As stated earlier, manufacturing jobs are still leaving the USA. What helped start this jobs export trend was NAFTA in 1994.

“The United States had a $1.6 billion trade surplus with Mexico that supported nearly 30,000 U.S.  jobs.” As of May 3, 2011 “682,900 U.S. jobs have been lost or displaced since the North American Free Trade Agreement (NAFTA) took effect in 1994, a new Economic Policy Institute (EPI) study finds”

— Source: Economic Policy Institute (PDF)

  • Obama: “In 2008, the house of cards collapsed. We learned that mortgages had been sold to people who couldn’t afford or understand them. Banks had made huge bets and bonuses with other people’s money. Regulators had looked the other way, or didn’t have the authority to stop the bad behavior.”

This answer is a book, but in brief.

There were clearly people who were ignorant to believe that buying a $300,000+ home on $22,000 year pre-tax wages, using false “stated income” just would never pan out. No one put a gun to someones head and said they had to buy a house or else.

FACT: Government was instrumental in creating legislation that helped crash the housing market (NetAdvisor.org Report).

FACT: The Federal Reserve (The “FED”) raised the Fed Funds Rate 17 times to a 425% increase from 2004 to 2006 (Source: Federal Reserve.gov). This made a huge impact on adjustable mortgages. I argued in 2008 this move significantly contributed to the Housing Crash.

Not sure what “huge bets” Obama was referring too. Banks are in the business of lending. The primary way a bank makes money in terms of dollars is by underwriting home loans. Massive people began defaulting in bigger numbers starting in 2006 (Source: Bloomberg/ Businessweek). This was one of the early signs that eventually lead to the collapse risk of all major banks. As people defaulted in mass, banks took huge losses as property values plummeted.

NetAdvisor warned publicly in 2007 on Yahoo Answers of housing risks. Massive defaults brought down banks, not “big bets” Mr. President. Again, there is a lot more too this, and will cover this more later.

  • Obama: “In the six months before I took office, we lost nearly four million jobs. And we lost another four million before our policies were in full effect.”

FACT: The Administration did not cite a single policy that actually created a single job.

FACT: The Obama Administration has been misleading the American public about the jobs numbers by not making a true count of the unemployed (NetAdvisor.org Report).  CBS 60 Minuets also discussed this after we published our prior jobs reports.

FACT: Unemployment rates has gone UP, not down since Obama took office (NetAdvisor.org Report). Even using the government’s own numbers at currently 8.5% unemployment still represent 16.43% increase of unemployment since Obama took office.

  •  Obama: “In the last 22 months, businesses have created more than three million jobs.”

FACT: We’ll say for argument sake that this is true. If one takes a look at the BLS reports (Jan 6, 2012 PDF, please see page 2-3 highlight) on what kind of jobs are being created, they tend to be more retail and lower wage jobs. Notice Obama said BUSINESS CREATED jobs, not government created jobs.

The Administration wants to use the last 22 months to calculate the jobs numbers instead of from when he took office because it would include the 564,000 temporary census jobs (NetAdvisor.org Report). The 2010 Census cost taxpayers $13 Billion or $42 to count each person (Source: The Economist). Unfortunately for them, president’s don’t get to pick and choose when the government should begin counting or not counting certain data.

  • Obama: “Together, we’ve agreed to cut the deficit by more than $2 trillion.”

This is probably the biggest error in the SOTU speech thus far.

FACT: Obama Deficit to Exceed 8 Years of Bush in Half the Time (Report: NetAdvisor.org).

FACT: In April 2011, government agreed to cut the deficit by just $38 Billion (Report: NetAdvisor.org).

FACT: The Obama Administration has not reduced the deficit (Five Part Report: NetAdvisor.org).

FACT: On August 5, 2011, S&P cut the U.S. AAA credit rating for the first time in U.S. history for government failing to cut the deficit, and failure to control spending. (Report: NetAdvisor.org).

FACT: There was no deficit reduction, not even 1 cent. (Source: CNBC).

FACT: For 2012, the Obama Administration has asked Congress to raise the deficit once again, this time by at least $1.2 Trillion (Source: Bloomberg-Businessweek).

The facts are, this Administration has not cut the deficit at all. According to independent reports, the Administration’s deficit spending policies place the U.S. in further economic risk [Sources: Council on Foreign Relations (19pps PDF) and Congressional Budget Office (8pps PDF)].

  • Obama: “As long as I’m President, I will work with anyone in this chamber to build on this momentum. But I intend to fight obstruction with action…”

Speech writers are often clever to make bold statements that contradict themselves but leaving the appearance of pro-activity. The aforementioned statements seems to fall into this category. What is really being said here is that Mr. Obama is willing to work with anyone (in Congress) as longs as they don’t oppose or disagree with him or his political ideology.

FACT: The President has refereed to those who oppose his policies as “Obstructionists” (Sources: Los Angeles Times and Washington Times).

FACT: In 2008, The Democrats controlled The House, The U.S. Senate and the Administrative Branch. By November 2010, the American People as a majority sent a strong signal that they strongly disagreed with the Administrations policies and ousted – by way of (election vote) and replaced with the largest number of state legislative seats since 1928 (Source: National Conference of State Legislators – PDF)(Further reading: The Great Train Wreck).

As the President refers to these newly ELECTED “Obstructionists” to serve out the public’s clear desire to block the Administration’s policies until a new Administration and like-minded Senate majority takes placed in November 2012. Some members media and in Washington need to understand that the People voted for obstructionism.

  • Obama: “…I will oppose any effort to return to the very same policies that brought on this economic crisis in the first place….(and)… It’s time to apply the same rules from top to bottom: No bailouts, no handouts, and no copouts. An America built to last insists on responsibility from everybody.”

Bailouts & Hand Outs:
Despite the inaccurate rhetoric, the Obama Administration has been instrumental in bailouts, hand-outs, and keeping the same if not more of the past policies that contributed to the housing crisis than ever before. This section could cover 100’s of pages over policies where bailouts and handouts have occurred. Here are just a few highlights.

Bank Bailout FACTS: Under the guide of the Obama Administration, the FDIC bailed out 92 banks in 2011; 157 banks in 2010, and 140 banks in 2009. The FDIC takes failed banks and places (or sells) them to other banks. The acquiring banks don’t want a failed bank on their own books, so the government makes guarantees so the acquiring banks can’t lose much if any money. This program is called a “Loss Sharing Agreement.” The FDIC has picked up about 80-95% of the bad bank debt, essentially handing the acquiring banks virtually free and clear assets with very low risk (NetAdvisor.org Report: FDIC Bank Loss Sharing Program).

The FDIC could just allow these banks to fail, sell off the assets, and close the doors. That is not what the Obama Administration  is doing. They are bailing out the banks by absorbing bad assets, and handing good assets (gov picking winners and losers in the private sector) to other banks.

Auto Business Bailout FACTS: Instead of using existing bankruptcy law, the Obama Administration choose to directly interfere with two public companies (General Motors and Chrysler), and seized control in a $79.6 Billion bailout. Shareholders in old GM and Chrysler were wiped out, Bondholders (who normally under bankruptcy law become creditors), got the shaft. Auto unions, with no material investment stake in the failed auto companies became one of the larger shareholders in the post bankrupt companies (65% in Chrysler and 17.5% in GM).

Despite the taxpayer funded bailouts, U.S. auto makers have shifted new and or expanding plants to China.

Auto Business Handout FACTS: The Obama Administration pushing to eliminate older and gas hogging vehicles, and replace them for more “greener” (American) cars launched “Cash for Clunkers” program in 2009. The program gave handouts (aka taxpayer subsidies) to those following government program rules. The result of cash for Clunkers? Americans bought mostly foreign cars (NetAdvisor.org Report: “Cash for Clunkers” – Tax Dollars Help Foreign Car Sales).

As much as the Obama Administration has been pushing for greener cars, the #1 best selling vehicle in the USA for 2008, 2009, 2010 and 2011 is… the Ford F-150 TRUCK (Report by NetAdvisor.org). For the record, Ford did not require, nor need a bailout.

Food Stamp Handout FACTS: Since the U.S. recession “ended” in 2009, the number of people receiving food aid hit a record 45.8 Million in 2011 (Source: Bloomberg-BusinessWeek) (Chart). Instead of creating polices to expand jobs and grow the economy, the Administration has created greater dependency on government.

Housing Bailout FACTS: The U.S. goverment seized Fannie Mae and Freddie Mac under the Bush Administration and Democrat controlled Congress (2007-2009). The taxpayer cost of this bailout is so far $150 Billion (Source: CS Monitor).

The Congressional Budget Office (CBO) estimated in 2010 that the total cost to bail out Fannie and Freddie could be $389 Billion (Source: CBO 2010 Report – PDF).

Political Hand Outs with Your Tax Dollars?
One could also add paybacks to this section. If the Obama Administration is using U.S. tax dollars to achieve a personal political-end, here are some hand out examples.

FACT: Democrats push to unionize 43,000 people at TSA “which would give labor unions $34 million in annual union dues” (Further reading).

FACT: “Mark Mix of the National Right to Work organization reports that in 2007 alone, Mr. Becker’s lawyering forced 63,000 California workers to pay union dues even after rejecting union membership” (Source: Washington Times). Apparently you have a right to work, but only if some of your money is handed out to union organization that in-turn go back to support the Administration’s political campaign.

FACT: Executive Order 13502 gives preferential treatment for unions to bid and gain federal contracts even if it costs tax payers more money (Source: One Minuet Lawyer).


  • Obama: “Right now, companies get tax breaks for moving jobs and profits overseas.”

Like pretty much the entire SOTU speech, the President offered no specifics, including how American companies get tax breaks for exporting jobs. It would be misleading to suggest that American company’s  are moving profits overseas.

FACT: ANY business operating outside the USA is deemed a foreign business.

FACT: Business (including American ones) operate, and produce good and services in foreign countries that also serve the people in those local countries. Some American business produce goods that are also exported back to the USA. Labor and regulations tends to be less overbearing outside the USA, where business can actually operate profitably and provide jobs.

The U.S. should take a page from this understanding and replicate similar policies to create similar results.

FACT: Any profits earned in foreign country are taxed at the the rates of the hosting country. Under current U.S. tax law, if U.S. companies bring back those profits to the USA, they would be subject to U.S. taxes even though taxes were already paid and the money was not earned in the USA.

  • Obama: “…no American company should be able to avoid paying its fair share of taxes by moving jobs and profits overseas. From now on, every multinational company should have to pay a basic minimum tax.”

Fair Share” has been the mantra of this Administration, albeit a grossly inaccurate analogy.

Income Taxes By Country (2005) Source: en.wikipedia.org

FACT: The top 10% of Americans pay 87% of income taxes. The top 50% of Americans pay 97.75% of income taxes (Source: National Tax Payers Union).

President Obama just acknowledged that U.S. corporate taxes are too high, and wants to change that by accessing a minimum tax on anything produced and sold OUTSIDE the USA.

FACT: The USA has the second highest corporate tax rate in the world (chart above). (Japan is #1 highest corporate tax rate. As of 01-27-2012, Japan’s stock market is still down 77% from it’s 1989 high.)

FACT: 2011 Report: U.S. Corporations Suffer High Effective Tax Rates by International Standards (Source: Tax Foundation.org PDF).

What the Obama Administration does not seem to understand is basic economics. When you take money away from a corporation, what one is really doing is leaving less money for a business to pay employees, develop and expand operations in attempt to become more profitable. A business that needs to expand does so by higher people.

FACT: In 1996 the Congressional Budget Office found that workers suffer lower wages due to high corporate income taxes (Source: Forbes).

FACT: A 2006 CBO report seems to reaffirm that higher corporate taxes hurt employee wages. Forbes also cites a Congressional Research Service paper that suggests shareholders suffer decreased profits due to higher corporate taxes.


We have got through barely 1/3 of the speech and still finding issues to be discussed for accuracy. Due to time constraints, we think the point has been made. There are many holes on the 2012 SOTU speech.

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