Obama Prioritizes Innovation, Manufacturing in State of the Union Address

In his fifth State of the Union address, President Obama announced education and immigration reform as core issues for his second term and laid out a plan for innovation and job creation policies that would be fundamental drivers for broad-based, long-term economic growth. While acknowledging the need for entitlement reform and deficit reduction, President Obama held firm in his conviction that public investment is necessary to ensure that the United States remains an economic superpower in the 21st century.

The president's national innovation strategy focuses on growing the manufacturing sector, which has added 500,000 jobs over the past three years. The White House has proposed using a one-time investment of $1 billion to establish a system of 15 ‘innovation institutes’ across the country that can work with regional partnerships between universities, businesses, government, and community colleges to grow our country's manufacturing sector. President Obama referenced the recently launched innovation institute in Youngstown, Ohio, (the first constructed under his administration) that already has become a center for 3D printing technology. He mentioned that three more manufacturing hubs are being developed in cooperation with the Department of Defense and the Department of Energy. The administration also will seek to increase funding for the Manufacturing Extension Partnership to launch two pilot Manufacturing Technology Acceleration Centers that serve as industry-specific coordination centers for supply chain innovation.

Efforts to strengthen U.S. manufacturing will be complimented with a continued drive to boost exports by pursuing free trade agreements with the European Union (Trans-Atlantic Partnership) and large grouping of East Asian states (Pacific Partnership). The president also is seeking to boost American competitiveness by pushing for policies that re-shore manufacturing jobs, citing Apple as a company that is bringing jobs back from abroad. President Obama suggested that the federal government could work to make the U.S. a magnet for foreign manufacturers, announcing an expansion of the SelectUSA, a program that works with governors and mayors to attract foreign investment to cities hit hard by outsourcing. Five selected cities that rely heavily on manufacturing also will be chosen for an Investing in Manufacturing Communities Partnership pilot program that works with local businesses, leaders, and workers to re-develop local infrastructure. Additionally, the president has proposed making the R&D tax credit permanent, lowering business tax rates for manufacturers to 25%, creating a Manufacturing Communities Tax Credit, and establishing an “offshore tax” for companies that ship jobs overseas.

President Obama also promised to continue the country's march towards energy independence, both by promoting the development of renewable energy technologies and by speeding up oil and gas permits. The president asked for the reauthorization of the Advanced Energy Manufacturing tax credit and called on funds obtained from drilling on federal lands to be used for investment in a national energy security fund that could be directed towards renewable energy technology development. The administration also is seeking to address national energy consumption by supporting improvements in building efficiency, setting a goal to cut energy waste in half over the next 20 years by working with states on enacting new regulations that create markets for efficiency.

Immigration reform was tied directly to job creation in the speech. President Obama called on Congress to enact reforms that encouraged foreign individuals to move to the United States to start businesses or invest in startups. Under his plan, high-skill workers would be given preference for visas and foreign students graduating with degrees in STEM fields would be given clear pathways to citizenship and visa sponsorship by U.S. employers.

Building public-partnerships is part of the administration's broader strategy of increasing science and innovation investment and also was touted as a strategy for improving education. President Obama proposed massively expanding partnerships between community colleges and businesses through a Community College to Career Fund that would help train students in high-growth, high-wage jobs, such as P-Tech in Brooklyn, NY, a joint program between the city and IBM. President Obama also encouraged states to redesign their high schools to better equip students for working in the 21st century, and promised rewards for schools that could develop innovative STEM education programs. It also was announced that within weeks the White House will release a College Grade Card that will provide parents and students with a grade for U.S. universities that measures their economic value. This will supplement efforts by the administration to reduce the cost of higher education by capping tuition costs.

President Obama's fifth State of the Union address offered a series of bi-partisan proposals for education and immigration reform that are aimed at promoting American competitiveness and driving economic growth. But while the overtures for cooperation were made, there were only a handful of instances during the speech when both Republicans and Democrats stood for applause. Perhaps anticipating a lack of support from Congress, Obama mentioned several times during the speech that if his plans met opposition he would not hesitate to use executive orders and federal agency directives to pursue his policy goals.