Attempting to lay out his blueprint for an “economy that’s built to last,” an often impassioned, even defiant President Barack Obama vowed Tuesday night to fight obstructionism in Congress and return to a “fairness for all and responsibility from all” approach in his third State of the Union.
“Let’s never forget: Millions of Americans who work hard and play by the rules every day deserve a government and a financial system that do the same. It’s time to apply the same rules from top to bottom: No bailouts, no handouts, and no copouts,” Obama said. “An America built to last insists on responsibility from everybody.”
That “fairness” is likely to include hefty tax increases for many American high earners and successful small businesses, critics say. The president's speech was the first salvo in an administration push to create a millionaire surtax of up to 5.6 percent and raising the capital gains tax rate to 20 percent for upper income taxpayers.
The move is already infuriating Republicans, making it harder to see how both sides can come together on the president's agenda in an election year. GOP leaders such as House Speaker John Boehner believe such a tax is a Democratic attempt at “class warfare” and expanding government bureaucracy.
Taxes are the divisive issue at the heart of this year's election campaign. Democrats have hammered Republicans for supporting tax breaks that favor the wealthy while Republicans staunchly oppose tax hikes, even on the richest Americans, arguing they would hurt a fragile economic recovery.
Obama revived his call to rewrite the tax code to adopt the so-called "Buffett Rule," named after the billionaire Warren Buffett, who supports the president and says it is unfair that he pays a lower tax rate than his secretary. To underscore his push for new taxes, seated next to first lady Michelle Obama and Jill Biden was Debbie Bosanek, Buffett’s secretary. The president is likely to make the “Buffett Rule” a central theme in his plan to create jobs by pushing short-term spending.
“No, we will not go back to an economy weakened by outsourcing, bad debt, and phony financial profits,” Obama declared. “Tonight, I want to speak about how we move forward, and lay out a blueprint for an economy that’s built to last — an economy built on American manufacturing, American energy, skills for American workers, and a renewal of American values.”
Obama also rechristened major infrastructure and stimulus spending as “competitive investments for the future.”
Obama spoke for more than an hour, with applause from supporters in the House and the Senate interrupting him several times.
“Think about the America within our reach: A country that leads the world in educating its people. An America that attracts a new generation of high-tech manufacturing and high-paying jobs. A future where we’re in control of our own energy, and our security and prosperity aren’t so tied to unstable parts of the world. An economy built to last, where hard work pays off, and responsibility is rewarded,” the president said.
Before the president’s annual address, which occurs by tradition based on language in Article II, Section 3 of the U.S. Constitution, Senate Minority Leader Mitch McConnell predicted that Obama would try to divert attention from his record.
“The issue is not what he’s challenging Congress to do going forward. But what he’s already done. We’re living in the Obama economy. It includes a downgrading of our credit rating, a debt now the size of our economy which makes us a lot like Greece — an almost trillion dollar stimulus bill, Obamacare, Dodd-Frank, an explosion of government in every direction,” McConnell told Fox News.
McConnell also correctly predicted that Obama would not mention the Keystone XL pipeline project, which he rejected.
“I can imagine why he wouldn’t want to mention the Keystone pipeline, an entirely private sector effort,” McConnell said. “It wouldn’t cost the government a penny. All it needed was the president to sign off on it. It would have created 20,000 private sector jobs immediately. Of course he doesn’t want to mention that.”
During the address, Obama said the defining issue of our time is how to keep the promise of America alive.
“No challenge is more urgent. No debate is more important. We can either settle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by. Or we can restore an economy where everyone gets a fair shot, everyone does their fair share, and everyone plays by the same set of rules,” he said. “What’s at stake are not Democratic values or Republican values, but American values. We have to reclaim them.”
Obama also pledged to work “with anyone” in Congress to build on momentum but warned “I intend to fight obstruction with action, and I will oppose any effort to return to the very same policies that brought on this economic crisis in the first place.”
In a flag-waving defense of American power and influence abroad, Obama said the U.S. will safeguard its own security "against those who threaten our citizens, our friends and our interests." On Iran, he said that while all options are on the table to prevent Iran from acquiring a nuclear weapon — an implied threat to use military force — "a peaceful resolution of this issue is still possible."
With Congress almost universally held in low regard, Obama went after an easy target in calling for reforms to keep legislators from engaging in insider trading and holding them to the same conflict-of-interest standards as those that apply to the executive branch.
With the foreclosure crisis on ongoing sore spot despite a number of administration housing initiatives over the past three years, Obama proposed a new program to allow homeowners with privately held mortgages to refinance at lower interest rates. Administration officials offered few details but estimated savings at $3,000 a year for average borrowers.
Obama proposed steps to crack down on fraud in the financial sector and mortgage industry, with a financial crimes unit to monitor bankers and financial service professionals, and a separate special unit of federal prosecutors and state attorneys general to expand investigations into abusive lending that led to the housing crisis.
At a time of tight federal budgets and heavy national debt, Obama found a ready source of money to finance his ideas: He proposed to devote half of the money no longer being spent on the U.S. military in Iraq and Afghanistan to "do some nation-building right here at home" to help create more jobs and increase competitiveness. The other half, he said, would go to help pay down the national debt.
Obama also offered a defense of regulations that protect the American consumer — regulations often criticized by Republicans as job-killing obstacles.
"Millions of Americans who work hard and play by the rules every day deserve a government and a financial system that do the same," Obama said. "It's time to apply the same rules from top to bottom: No bailouts, no handouts and no copouts. An America built to last insists on responsibility from everybody."
Obama will follow up Tuesday night's address with a three-day tour of five states key to his re-election bid. On Wednesday, he'll visit Iowa and Arizona to promote ideas to boost American manufacturing; on Thursday in Nevada and Colorado he'll discuss energy, and in Michigan on Friday he'll talk about college affordability, education and training.
Polling shows Americans are divided about Obama's overall job performance but unsatisfied with his handling of the economy.
The speech Tuesday night comes just one week before the Florida Republican primary that could help set the trajectory for the rest of the race.
Mitt Romney, caught up in a tight contest with a resurgent Newt Gingrich, commented in advance to Obama's speech.
"Tonight will mark another chapter in the misguided policies of the last three years — and the failed leadership of one man," Romney said from Florida.
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