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Key Takeaways from President Biden’s State of the Union Address

Brownstein Client Alert, March 2, 2022

President Joe Biden delivered his first State of the Union (SOTU) address last night against the backdrop of war in Europe, persistently high inflation, a waning global pandemic and a deeply divided Congress. The scene was a stark contrast from Biden’s address to a joint session of Congress in April 2021, where a socially distanced selection of invited lawmakers wore masks and refrained from shaking hands as initial vaccination efforts were in full swing.

From the House chamber, where the Ukrainian ambassador attended the speech with First Lady Dr. Jill Biden, the president recapped the administration’s ongoing response to the Russian invasion of Ukraine. He vowed to defend NATO allies from any Russian aggression, assuring the public that “freedom will always triumph over tyranny,” and led the gathered lawmakers and administration officials in a standing ovation in support of Ukraine.

Following his remarks on Ukraine, the speech took on the format typical of SOTU addresses. Transitioning to his domestic agenda, Biden highlighted key components of his stalled Build Back Better agenda without referring to the broader legislation by name. He identified several aspects of the reconciliation bill, ranging from lowering the costs of prescription drugs to expanding access to child care to cutting energy costs through investments and tax credits, as part of his plan to combat inflation.

Throughout the speech, Biden also resurrected a laundry list of policy priorities on his to-do list. These included:

On Labor Policy: Passing the Protecting the Right to Organize (PRO) Act (H.R. 842), Paycheck Fairness Act (H.R. 7), and raising the minimum wage to $15;
On Voting and Civil Rights: Passing the Equality Act (H.R. 5), Freedom to Vote Act (S. 2747), and John Lewis Voting Rights Act (H.R. 4);
On Criminal Justice: Banning the sale of assault weapons and high-capacity magazines, requiring universal background checks, repealing the liability shield for gun manufacturers, and supporting community police and adequate funding for police departments;
On Education and Children: Increasing Pell Grants and support for Historically Black Colleges and Universities, as well as investments in community colleges; enacting privacy protections for children online; and
On Immigration: Providing a pathway to citizenship for Dreamers, individuals with temporary status, farm workers and essential workers; and working with partners in South and Central America to host more refugees and secure their borders.

Many of the proposals remain stalled in the Senate, where Democrats’ slim margins make it impossible to enact legislation without Republican support. He also urged the Senate to confirm his five outstanding nominees to the Federal Reserve Board; the group is held up in committee amid Republicans’ concerns with Sarah Bloom Raskin, Biden’s nominee for vice chair for supervision. Other policies discussed in the speech included Biden’s Cancer Moonshot, efforts to crack down on pandemic-related fraud and improper practices by ocean carriers, and U.S. global competitiveness.

Biden also took the opportunity to highlight the successes of his first year in office, including the enactment of the American Rescue Plan Act and the bipartisan Infrastructure Investment and Jobs Act. He noted that over 80 bipartisan bills were signed into law in 2021, and said he is the first president to cut the national deficit by more than $1 trillion in a single year.

Biden also struck a bipartisan tone on issues such as criminal justice reform, calling for increased funding for police departments and investments in community policing.

Biden concluded with a message of unity. “The State of the Union is strong—because you, the American people, are strong,” Biden told the gathered lawmakers and millions watching at home. The United States, he said, is defined by “possibilities.”

Overall, Biden did not stray far from the policy platform outlined during his 2020 presidential campaign and the early months of his administration, which in part highlighted the many priorities that remain outstanding after his first year in office. The majority of the policies enumerated by Biden require congressional action and cannot be achieved through unilateral agency initiatives. Biden made clear that a budget reconciliation bill is still on the table and is the best path forward on some of his agenda items. On other priorities, such as U.S. competitiveness and voting rights, bipartisan consensus on a compromise bill will be the only path forward.

First-term Iowa Gov. Kim Reynolds delivered the Republican response. Reynolds, who became popular among conservatives after her vocal opposition to mask mandates, lockdown measures and other COVID-19 restrictions, has been rumored as a potential running mate for President Trump, should he seek the presidency in 2024.

Below are our takeaways and more detailed summaries of the president’s remarks on key issues.

Build Back Better

KEY TAKEAWAY: Biden attempted to appease Sen. Joe Manchin (D-WV) by reframing budget reconciliation as a solution to counteract high inflation and lower the deficit. While the president narrowed budget reconciliation priorities, it may still be too broad to win Manchin’s support.

Key Points:

Scope of a Revised Budget Reconciliation Package: While Biden did not mention the Build Back Better Act (BBBA) by name, he did discuss various items in the package. Biden framed it as his plan to fight inflation and lower the deficit, specifically mentioning the following priorities:
- Drug Pricing: Biden called on Congress to cap insulin prices at $35 a month and to let Medicare negotiate lower prices for prescription drugs.
- Child Care: Biden said middle-class and working families should not have to pay more than 7% of their income on child care expenses. He explained his plan under BBBA would “cut the cost [of care] in half for most families” and provide “pre-K for every three- and four-year-old.”
- Home and Community-Based Services: Biden mentioned the importance of funding home and long-term care.
- ACA Subsidies: Biden highlighted the savings from the enhanced ACA premium tax credit and called on Congress to close the coverage gap and make those savings permanent.
- Affordable Housing: Biden made a passing mention of addressing affordable housing.
- Energy: Biden reiterated his commitment to fighting climate change and incentivizing green technology, including electric vehicles and weatherization. He specifically mentioned cutting energy costs for families by an average of $500 a year by combating climate change.
- He also urged Congress to enact tax credits for individuals to weatherize homes and to incentivize businesses to be more energy efficient, to promote solar and wind energy production, and to reduce the price of electric cars.
- Payfors: President Biden’s plans to pay for budget reconciliation remain largely unchanged. The president characterized the tax system as unfair, pushing for corporations and the wealthiest Americans to start paying their fair share. He highlighted a 15% minimum tax on corporations (book profits minimum tax). He also reiterated his promise that no taxpayers earning below $400,000 would be subject to a tax increase. On international taxation, he referenced the Inclusive Framework negotiated through the Organization for Economic Cooperation and Development (OECD). He specifically said the agreement would prevent companies from not “paying their taxes at home by shipping jobs and factories overseas.” OECD countries are aiming to fully implement the global agreement by 2023, but difficulties enacting it in various countries, including the U.S., remain a potential stumbling block.
Will the Revised Package Garner Support from Moderates?: In the House-passed version of the BBBA, the priorities listed above represent over $600 billion in spending. It is unclear if these priorities will have to be scaled back further in order to garner support from Sen. Manchin. On the energy front, Manchin’s main priority, the senator supported about $320 billion in tax incentives to expand credits for clean energy that were included in the House-passed version of the BBBA.
Several Items Seem to Have Fallen Out of Budget Reconciliation: President Biden did not include a number of key priorities that were part of the House-passed BBBA as part of a narrower budget reconciliation bill. This includes an expansion of the child tax credit and the earned income tax credit, increases to Pell grants, free community college, and paid leave. However, all of these items were referenced during his speech as part of a laundry list of Democratic priorities he urged Congress to consider.

International Affairs

KEY TAKEAWAY: Russia will be held accountable and Putin has (mostly) united the West, but U.S. assistance to Ukraine will not include direct military involvement.

Holding Russia Accountable: Biden said the United States’ sanctions regime against Russia has inflicted pain on the country. Elements of the Russian economy are already feeling their effects: the Moscow stock exchange has faltered and the value of the ruble dropped precipitously. However, experts warn that it may take longer—even years—for the sanctions to have a significant impact on the whole Russian economy.
Additional Actions Against Russia: Biden announced several further measures against Russia, including that the United States would close its airspace to Russian-owned and -operated flights and that the Department of Justice will institute a task force to go after Russian oligarchs. The former follows similar moves by the EU, the UK and Canada. In response, Russia will prohibit airlines from 36 countries, including the 27 EU nations, from entering its airspace. The proposed task force demonstrates the U.S. government’s commitment to understanding and targeting high-profile Russians who use complex structures to conceal their assets and accounts globally.
Ensuring the Homeland Is Protected from Sanctions’ Effects: Biden declared he would do all he can to ensure the sanctions against Russia do not affect U.S. businesses and consumers. However, the sanctions may impact the global economy, driving up prices on oil and gas, metals and mining commodities and agricultural products. While the United States has worked with other countries to ensure oil market stability, and although Biden announced the release of 30 million barrels from the Strategic Petroleum Reserve, it is unclear whether these efforts will be effective in controlling oil prices. Our conversations with the administration indicate that the U.S. government continues to engage with oil-producing countries, including Saudi Arabia.
Leading a Unified Western Response: Biden said Putin thought the West would not respond to Russian aggressions in Ukraine and that he could further divide the United States. Instead, the West—particularly NATO and the EU—have assembled to reprimand Putin with a unified front not seen in years. While there is broad agreement on an emergency aid package for Ukraine, disagreements have surfaced in Congress as to how emergency funding should be provided, and over how much money should be allocated. These discrepancies must be resolved before the current continuing resolution expires on March 11.
U.S. Assistance to Ukraine Will Continue, But No Direct Military Engagement: Biden reiterated that the United States and its allies will continue to provide economic, humanitarian and military aid to Ukraine, and touted that the United States will provide another $1 billion in direct assistance. However, Biden also echoed his pledge that U.S. forces will not engage directly in the conflict. Going forward, Biden can expect unified opposition from Congress and the public on deploying troops into Ukraine. However, it is possible some hawkish members of Congress may call for military intervention if the conflict escalates. In particular, Rep. Adam Kinzinger (R-IL)—as well as Ukrainian President Volodymyr Zelensky—have recently called on the United States to enforce a no-fly zone over Ukraine, but the idea was repeatedly rejected by the administration.

COVID-19 Pandemic

KEY TAKEAWAY: From a largely unmasked House chamber, Biden acknowledged the next chapter of the pandemic and said the administration will continue to increase preparedness should a new variant arise. He made no mention of his administration’s failed vaccine mandate.

Encouraging Vaccination: With the rate of severe COVID-19 cases down, Biden said Americans do not have to wear masks in most settings, but encouraged people to get vaccinated and boosted. He said the United States has enough vaccines for children under 5 once approved by the FDA. Noticeably absent was any discussion of the administration’s vaccine mandate for large businesses, which was struck down by the Supreme Court last year and is not expected to reemerge.
Stockpiling COVID-19 Treatments: He said his administration has stockpiled COVID-19 treatments, noting that the United States has bought more doses of Pfizer’s COVID-19 pill than any other country and that Pfizer is working overtime to manufacture these pills.
Increasing Access to Free COVID-19 Testing: Biden announced the launch of a “Test to Treat” initiative so people can get tested at a pharmacy and receive antiviral pills at no cost if they test positive. He also announced that Americans can order more tests from covidtests.gov starting next week.
Deploying Vaccines: Should a new variant arise, Biden said vaccine makers will be able to deploy new vaccines within just 100 days. He also said the United States will continue its global vaccination effort.
Additional Funding: President Biden said he will soon send Congress a request for more COVID-19 funds. He did not provide details on the size or scope of the request.

Health Care

KEY TAKEAWAY: Biden doubled down on a range of existing health-focused initiatives, often reminding lawmakers and the public of his personal connections to the topics.

Health Coverage: Biden called for full parity between physical and mental health care so that Americans can access the mental health services they need. He also said Roe v. Wade is under attack, and emphasized the need to preserve abortion rights and advance maternal health care.
Combating the Opioid Crisis: To combat the opioid epidemic, he said the government should increase funding for prevention, treatment, harm reduction and recovery; eliminate restrictions on the prescribing of MAT; and stop the flow of illicit drugs by working with state and local law enforcement to go after traffickers.
Accelerated Disease Research: Biden highlighted his plan to supercharge his Cancer Moonshot initiative, with a goal of cutting the cancer death rate by at least half over the next 25 years. In order to accomplish this goal, he called on Congress to fund ARPA-H to drive breakthroughs in cancer, Alzheimer’s, diabetes and other diseases.
Caring for Veterans: Biden said his administration is working to provide lower-income veterans with debt-free health care as well as wrap-around services. He also announced that his administration is expanding eligibility for benefits to veterans suffering from nine respiratory cancers.
Nursing Homes: Biden said Medicare will issue higher standards for nursing homes and criticized private equity firms’ acquisitions of nursing homes. This issue will likely see further congressional action or enhanced scrutiny this session. Earlier this week, the administration released new rules tightening requirements for nursing home operators.

Competitiveness

KEY TAKEAWAY: Biden continued to tout the programs enacted under the Infrastructure Investments and Jobs Act and called on lawmakers to complete work on a bipartisan China-focused competition package. He did not posit any new investments or initiatives in this space.

Infrastructure Investment and Jobs Act: Biden highlighted the passage of the Bipartisan Infrastructure Law (BIL), calling it “the most sweeping investment to rebuild America in history.” He said the law has already led to 4,000 new projects, including building a national network of 500,000 electric vehicle charging stations and replacing lead water pipes. This year, the BIL will fund projects to fix 65,000 miles of highway and 1,500 bridges. He also said these construction projects will prioritize environmental justice and address climate change. Many of the programs authorized under the bill cannot move forward until they receive an appropriation from the annual omnibus bill, slowing some aspects of the implementation.
Buy American: Biden recommitted the federal government to the Buy American rule when purchasing products for infrastructure projects, highlighting the BIL’s standards on the matter. He estimated this would impact $600 billion worth of purchases every year.

USICA/COMPETES China Competition Bill: Biden urged Congress to finish and pass a bipartisan innovation-focused bill to invest in America’s manufacturing capabilities and to take on China. He noted that Intel is building a semiconductor mega site in Columbus, Ohio, and he suggested the project could significantly increase in size if Congress passes the innovation bill. He also highlighted investments by American car manufacturers, including Ford and GM, to build electric vehicles in the U.S. The House and Senate passed competing bills that will be resolved through a formal conference process or negotiated separately by lawmakers. The final version is expected to more closely resemble the narrower Senate-passed bill.
Anticompetitive Practices: Biden criticized large companies for driving up prices and forcing small businesses and ranchers out of business. He specifically cited the meat packing industry and ocean carriers as examples of raising prices and making record profit. He said the Department of Justice will be cracking down on enforcement to combat these anti-competitive measures.