SOTU and the Economic Case

Update 760 — Setting the SOTU Stage:
(How) Can Biden Make Economic Case?

Tomorrow night, a likely prime-time audience of 30 to 40 million Americans will tune in to watch President Biden’s third State of the Union (SOTU) address. The state of the nation’s economy is strong, by almost any measure, and Biden will no doubt say so. But per recent polls, Americans are still unconvinced, with a narrow majority describing the nation’s economy as “poor.”

Biden famously outwitted the GOP in an impromptu negotiation on entitlements at last year’s SOTU. He needs to seize the forum again this year to turn heads and hearts, making the broader economic case for re-election and drawing contrasts with presumptive Republican presidential nominee Donald Trump in an equally compelling fashion. Where is he most likely, and advised, to do so, and how? See below. 



Tomorrow night, President Biden will deliver his third State of the Union address just two days after a Super Tuesday that all but decided the Presidential nominees for both parties. The speech therefore presents an opportunity for Biden to pivot and face Trump and the GOP by positioning himself as a fighter on the side of American families, pointing out the singular strength of America’s economic recovery, highlighting his administration’s significant wins, and emphasizing a clear vision of a more broadly prosperous and equitable economy. 

Achieving the World’s Strongest Recovery 

Though improvements in the broader economy have failed to move the needle with many Americans, the post-pandemic American economy has proven remarkably resilient by global standards. Most economists predicted we would slide into a recession last year, but real Gross Domestic Product has grown every quarter since the second quarter of 2022. On top of that, this growth has lifted up the middle class, as household median wealth increased by 37 percent between 2019 and 2022. 

The Biden administration’s economic policies have yielded the strongest post-pandemic recovery of any advanced economy, with the economy growing by 3.1 percent and adding roughly 2.7 million jobs in 2023 — and over 12 million overall. Unemployment has dropped from a peak of over 14 percent in March of 2020 at the onset of the pandemic to 50-year lows of less than four percent in early 2022, which have been sustained ever since. Meanwhile, inflation fell by about two-thirds from its peak of nine percent in mid-2022. 

Fiscal Considerations for the SOTU

President Biden will highlight his fiscal priorities before releasing his Fiscal Year (FY) 2025 budget next Monday. Most critical among these priorities are proposals to bolster Social Security and implement tax reform. Of lesser import to voters, Biden will also certainly urge Congress to enact his supplemental request for international aid for Israel and Ukraine and to fund border security, as well as full-year FY2024 appropriations — two fiscal priorities remain unresolved, languishing after months of negotiations.

Protecting and Expanding Social Security

Biden is advised and expected to unveil a plan to shore up Social Security. The Social Security Trustees have projected insolvency in 2034, which would result in a 20 percent benefit cut – a major concern for lifetime low-wage earners who rely more heavily on Social Security benefits for retirement income. Social Security has gained traction in the media in recent months as Republicans push to establish a debt commission that would focus on benefit cuts over revenue-raising measures.  

A majority of voters favor not only protecting but expanding Social Security benefits. Expansion was a feature of Biden’s 4-point plan for Social Security released during his 2020 campaign but he has not made it a priority since. The State of the Union address is an opportunity to renew his messaging on this issue, as he did last year to great effect. 

President Biden’s last extensive proposal for Social Security reform would:

  • reinstate the 12.4 percent payroll tax on income greater than $400,000 (currently, there is no Social Security payroll tax for income over 168,600),
  • change the measure used to calculate cost-of-living adjustments from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to the Consumer Price Index for the Elderly (CPI-E), 
  • raise the special minimum benefit for lifetime low-earning workers to 125 percent of the federal poverty level, and 
  • lift the primary insurance amount for higher-aged beneficiaries. 

The speech is tailor-made for President Biden to expand on his proposal in the SOTU, for its own sake as well as to establish a clear contrast with Donald Trump, who has remained relatively silent on the issue.

Increasing Taxes for the Wealthy and Corporations

President Biden is expected and, again, advised, to refer to major tax reform in Thursday’s speech, especially as we approach the expiration of major TCJA provisions in 2025. Playing on the theme of tax progressivity and fairness, President Biden could outline a proposal to increase the corporate tax rate from 21 to 28 percent, as speculated by Bloomberg — a middle ground between the 34 percent corporate tax rate before Donald Trump and the 21 percent rate Trump enacted in the Tax Cuts and Jobs Act of 2017. We also expect Biden to propose tax increases on the wealthy, though it is unclear what form these proposals will take. 

Biden will also likely highlight the importance of protecting the $80 billion of IRS funding provided by the 2022 Inflation Reduction Act. The IRS recently announced enforcement actions against wealthy Americans who haven’t filed tax returns for years and who have been writing off their private jet trips as business expenses. Republicans have continued to attack that funding despite the high return in federal revenue that adequate funding provides and general voter support for enhancing tax fairness. Establishing a contrast on tax equity is a political winner and advised. 

National Security Supplemental

Last October, President Biden sent a $106 billion supplemental request to Congress. President Biden will likely demand that Congress immediately pass the national security supplemental package to send resources to American allies and frame it as vital to America’s military readiness from its substantial domestic investment in the country’s industrial base.

The President’s request, and the many iterations that have followed, assign nearly two-thirds of the Ukraine funding to be spent in the U.S. and would create thousands of jobs across the country. Calling on Congressional Republicans to take action may add further pressure for legislators to pass the national security supplemental, which is stalled in the House. 

Infrastructure and Industry

As one of the signature accomplishments of his term in office thus far, President Biden will no doubt point to his infrastructure investments. When the bipartisan Infrastructure Investment and Jobs Act reached its two-year anniversary last November, over $400 billion had been spent on over 40,000 projects in over 4,500 communities across all 50 states. Biden will also highlight federal investments in clean energy infrastructure made through the Inflation Reduction Act (IRA), stressing jobs created as well as his commitment to fighting climate change. Infrastructure spending remains broadly popular with voters, but only to the still-limited extent Americans have seen its fruit in their communities. 

Central to his industrial policy, the President will also likely tout the growth in American manufacturing as a major success. Spurred by the aforementioned bipartisan Infrastructure Investment and Jobs and Inflation Reduction Acts as well as the promise of billions of dollars in grants and tax credits provided by the CHIPS and Science Act, America has seen a surge in factory construction which will create hundreds of thousands of manufacturing jobs. Because much of the economic payoff of this combined private and public investment into American industry will not come to fruition until late 2024 at the earliest, President Biden should make clear that these economic benefits are on the horizon at a time when many voters are skeptical of “Bidenomics.”

Corporate Consolidation, Competition and Junk Fees

The President should also use the address to highlight progress his administration has made toward tackling anticompetitive mergers, price fixing, and perceived price gouging. The President has made addressing corporate consolidation and promoting competition a key goal of his administration and has made significant progress implementing his 2021 Executive Order on Promoting Competition in the American Economy, consistently stressing that capitalism without competition is exploitation.

Just yesterday, the White House launched a Strike Force on Unfair and Illegal Pricing to strengthen coordinated efforts by the FTC and DOJ to stop illegal corporate behavior that’s keeping prices high in key sectors. 

The Biden administration has also made significant progress in tackling junk fees charged by banks, airlines, and healthcare companies. Yesterday, the Consumer Financial Protection Bureau released its final credit card late fee rule, which will reduce the average credit card late fee from $32 to $8, saving American families an estimated $10 billion annually, an average savings of $220 per year for the more than 45 million consumers charged late fees, per the Bureau. The credit card late fee rule follows the CFPB’s release of its proposed overdraft fee rule which would save consumers an estimated $3.5 billion or more in fees per year, translating to $150 in potential savings for households that pay overdraft fees, on top of $3.5 billion that has already been saved through voluntary changes at some banks.

The President should highlight his administration’s work to hold corporations accountable for profiteering at the expense of the American people and the savings the most vulnerable Americans can expect because of the administration’s work. 

Bringing Down Student Debt Piece by Piece

The Supreme Court’s decision to strike down Biden’s original plan to cancel $400 billion in student loans for as many as 43 million Americans was a major setback for the President’s campaign promise. In Biden’s 2023 State of the Union address, he made no direct mention of his subsequent student loan forgiveness efforts, as many of them were being held up by court challenges. 

But if Biden wants to revitalize his sagging support among young voters, it is vital for him to emphasize his efforts to chip away at the nation’s student debt overhang, despite a Supreme Court ruling striking down his original plan to enact more sweeping student debt relief. To date, the Biden administration has forgiven about $138 billion in student loans for almost 4 million borrowers in a series of piecemeal student loan relief measures. Just last month, the Biden administration discharged $1.2 billion in loans for nearly 153,000 borrowers who were eligible for forgiveness through President Biden’s Saving on a Valuable Education (SAVE) Plan. 

While these efforts are not having the same impact that Biden’s initial plan would have had, it would be beneficial to his reelection prospects to stress the impact that such efforts have, in fact, made.

Housing Affordability

Housing has not been a key focus of the Biden Administration, so we do not expect much attention will be paid to it in the address. That said, the lack of affordable housing is becoming increasingly dire. An estimated 42 million households paid over a third of their income on housing in 2022 — a major reason why so many Americans have negative views about the economy. Persistent increases in housing costs are a major reason why inflation has remained high. Biden should mention the executive actions his Administration has taken to improve housing affordability. He needs to reassure voters that he is taking the issue seriously.

Highlighting the Risk to Our Nation’s Democracy 

Democracy continues to be a central theme and critical point of contrast in the 2024 presidential election, given the presumptive Republican nominee’s legal battles. Yet this issue does not appear to be central to Democrats running for Congress, as many shy away from or adjust their framing of democracy talk to avoid partisan association. 

President Biden will likely conclude his speech with a call to protect American democracy and access to the ballot, highlighting the John Lewis Voting Rights Advancement Act, reintroduced in the Senate on Monday. The President should urge voters to deliver a stronger pro-democracy coalition in the House and the Senate to get critical legislation to his desk during his next term. 


The stakes are high for this year’s State of the Union address as presumptive Republican presidential nominee Donald Trump currently leads in early polling for the 2024 general election. A speech from President Biden that convinces voters of the value of the Administration’s successes to date, with a vivid articulation of his plans going forward, as well as a clear contrast with his opponent would be a timely and needed use of the speech that will surely help his chances in November.