State of the Union: How the President’s Initiatives will Impact States

President Obama focused on what he called “middle-class economics” in his sixth State of the Union address Jan. 20. Many of his plans to boost income and mobility for middle-class Americans—including tax reform and workforce development initiatives—will directly impact state governments.

During the national address, the president expressed optimism the economy would continue “growing and creating jobs at the fastest pace since 1999.” Obama urged Congress to work with the White House on joint initiatives like trade and cybersecurity reform to continue this progress. But he also promised that he would veto any legislation that would reverse his efforts on immigration, climate change or health care.

Here are some key initiatives the president outlined in his speech and how they would impact states.

Workforce Development: Obama proposed making two years of tuition at community colleges free for all Americans. This plan would be a cost-sharing program with states that would include a $60 billion price tag over 10 years. In addition, the president also pressed U.S. businesses to offer more educational benefits and paid apprenticeships to their employees.

Infrastructure: The president asked Congress to look beyond the Keystone XL pipeline and to pass a bipartisan infrastructure plan that will create “modern ports, stronger bridges, faster trains and the fastest Internet.” The Highway Trust Fund is facing declining federal gasoline tax revenue and is expected to become insolvent on May 31. States rely on federal funds for more than half their highway and bridge spending. If Congress and the president do not pass new authorizing legislation, the U.S. Department of Transportation has warned it might limit the amount of money it gives to states.

Labor and Wages: The president asked Congress to raise the minimum wage. In 2014, the president suggested that it be raised from $7.25 per hour to $10.10. At the start of 2015, 29 states had higher minimum wages than the federal wage. A year ago, only 21 states had higher minimum wages. Twenty states raised their minimum wages this year. Obama proposed linking the minimum wage to a cost-of-living adjustment, ensuring that it rises with inflation, which about 10 states already have done. The president also urged Congress to pass a law guaranteeing paid sick leave and equal pay for women. The president said the White House would work with states to adopt paid leave laws of their own.

Trade: Obama urged Congress to pass Trade Promotion Authority. This would expedite the president’s negotiations on two free trade deals: the Trans-Pacific Partnership with 11 countries throughout the Asia-Pacific region and the Transatlantic Trade and Investment Partnership with the European Union. These trade deals include state issues such as government procurement and product labelling. (

Cybersecurity: The president asked Congress to pass legislation to “meet the evolving threat of cyberattacks, combat identity theft and protect our children's information.” Though he did not go into significant detail about what this legislation would look like, the president has voiced his support for the Personal Data Notification and Protection Act. This legislation would establish a national standard for how companies respond to security breaches. Forty-six states already have disclosure laws, but each law has varying levels of consumer protection. 

Cuba: Obama reiterated his new approach to normalize relations with Cuba. The U.S. departments of Treasury and Commerce already have imposed regulatory changes that will ease the trade and travel restrictions to Cuba. Southeastern states currently export the most products to Cuba, and may benefit the most from an ease in export restrictions. More information about the regulatory changes and how states might be affected can be found on the CSG Knowledge Center.