Pelosi and the Democrats hold all the cards here -- if both chambers don't invite the President, he will not be able to make the address.
While this may seem like either a brilliant or petty partisan move, depending on your political leanings, the decision is a sound one that future Congresses should look to continue. The televised State of the Union is simply an extended commercial for the President, one that comes at the expense of Congressional power.
Since the end of the nineteenth century, Congress has repeatedly turned over significant power to the President, notably with the creation of a large Executive Office of the President. When the same party controls Congress and the White House, Congress appears to be a simple appendage, deferring to the President's policy focus almost all of the time. It is only when different parties control the legislative and executive branches that the President is forced to treat Congress as anything like a co-equal arm of government.
This is part of a longstanding trend of Congress allowing the President to increase his power, often at their expense. For example, from the early 1900s through the 1950s, the President's authority on matters of foreign policy expanded. And, over the past 80 years, Congress has ceded power, such as the ability to implement tariffs, to the commander in chief. Perhaps less obvious, the State of the Union is another example of the creeping expansion of the presidency.
The first two presidents gave actual addresses to Congress under the vague Constitutional provision that presidents give information to Congress "from time to time" and propose "measures as he shall judge necessary and expedient." But starting with Thomas Jefferson and lasting through William Howard Taft, presidents didn't appear in person and instead provided written reports. Jefferson's move may have been more in keeping with the goal of the original provision. It may not have been focused on the president laying out an agenda -- rather the reverse: A report on how he was executing the laws that Congress had passed.
It was only during the tenure of Woodrow Wilson -- a time when mass media became more prominent -- that presidents found value in actually appearing before Congress. Successive presidents have managed to put more of a spotlight on the event as new technologies have come into existence. In 1923, the State of the Union was broadcast on the radio; in 1947 it was on TV; in 1965 it was in prime time.
The minority party finally got to give a response to the address in 1966, but that second-tier speech was not a message from a collective Congress, but rather a partisan response to the President.
The address sometimes shows the President laying out a political platform for the coming year. But what it really accomplishes is giving the President an extended time to speak while Congress and the Supreme Court silently (for the most part) watch and clap.
For the nation, there may be some value in having the President stand up and list his goals for the year. This value is limited by the fact that voters don't appear to keep a scorecard on whether he actually accomplishes the projects that are listed. It seems that presidents are now using the address as an opportunity for political gain -- witness the Reagan era use of inviting public heroes to attend in order to piggyback off of their positive light.
But for Congress, yielding so much attention to the President is a bad idea. By appearing there, the President gets to set the agenda for the new session of Congress in a forum where all of Congress appears deferential to the Executive. This creates the optics of a Congress that is responsible for simply carrying out the President's agenda, not legislating as it sees fit -- as the Constitution allows it to.
The Government shutdown has given Pelosi a chance to deprive Trump of this national platform. This may be a one-time hit, designed for an immediate benefit. But there is no reason that future Congressional leaders shouldn't look at Pelosi's move as a good place to begin clawing back Congress' power. If Congress wants a co-equal role in government, they must demand it.
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