Last night, President Biden delivered his second State of the Union before a Joint Session of Congress. The setting, while familiar to the President, presented a visual reminder that the President faces a split Congress with Republicans controlling the House of Representatives. In addition to facing political uncertainty around his domestic agenda, President Biden also spoke at a time of uncertainty on the geopolitical front from the ongoing war in Ukraine, rising tensions with China, and trade disputes with Europe beginning to bubble.
The President used his address to highlight his Administration’s accomplishments, of which there were plenty from the previous year, and outline his goals for the next year. He tried to set an optimistic tone and the address is seen as an unofficial launch for a 2024 run for re-election.
President Biden spent a great deal of his address highlighting his economic agenda focused on supporting working class Americans. Biden called attention to several key measures of economic recovery that the Administration views as indicative of their success including the lowest unemployment rate in 53 years and the creation of more than 12 million jobs, including 80,000 in manufacturing. The President credited the success to ‘deliberate investments’ by his Administration.
While vague on specifics, the President called for continued investment in clean energy, semiconductor manufacturing, and infrastructure under the political theme of “finishing the job”.
As with all SOTU speeches, the President called for action on domestic agenda items that face the reality of a split Congress with little to no chance of advancing. For example, President Biden called for expanding social support programs that would help advance a progressive social policy. On the healthcare front, President Biden called for expanding paid medical leave, restoring the Child Tax Credit, capping insulin prices at $35, reinvigorating the Cancer Moonshot initiative, addressing the national mental health emergency, and tackling the opioid epidemic. While some of the aforementioned items have bipartisan support in Congress, there are limited legislative vehicles that could successfully carry these items. In the near term, Congress and the Administration face a long-haul negotiation to increase the debt limit pushing most other legislative action to later in the year.
Understanding the political dynamics that he faces; President Biden spent a good portion of his speech touting his ability to work across the aisle. At times, the President struck a conciliatory tone and expressed hope that his Administration can work closely with peers in the Republican Party. He pointed out that several key legislative packages, including the CHIPS Act and his infrastructure package, his Administration has prioritized passed only because of bipartisan support. Looking at the road over the next two years, the President pointed to several issues where the parties should work together including onshoring semiconductor production, ensuring Americans have adequate and reliable infrastructure, and increasing the debt limit.
With respect to the debt limit, Speaker Kevin McCarthy delivered a speech yesterday where he began to build off his recent meeting with President Biden. Specifically, McCarthy stated that Republicans would not be cutting Medicare and Social Security, a point that President Biden echoed in his speech which caused some Republican members to react loudly. Despite the alignment, there remains a major gap in negotiations.
House Republicans will continue a vast oversight agenda over the Biden Administration, who in turn will look at regulatory action to advance agenda items that Congress will not touch. With a split government, legislative action is plausible but tough. Furthermore, with 2024 inching closer, we expect that Congress will only advance must pass policy while each side looks to score messaging wins over the course of the next year.