“An economy built to last, where hard work pays off”
Policy + Politics

“An economy built to last, where hard work pays off”


President Obama last night offered a Clintonesque State of the Union address, calling for economic fairness to fire up his political base.  He gave short shrift to the issues that have animated his virulent Republican opposition over the past three years – the desire to dramatically shrink government and rein in the nation’s still-rising national debt.

Even as he tried to reassure his base that the fighting Obama of 2008 was back – his 65-minute speech was interrupted over 75 times by House and Senate Democrats – he sought to reassure middle-of-the-road Americans that his stewardship of an economy ravaged by the worst downturn since the Great Depression is finally bearing fruit. Seizing on recent signs that the economy has finally turned a corner, the president offered a variety of programs to water those green shoots and said – as he has in previous budget proposals without success – that he will tax the rich to help pay for them.

Obama proposed a change in the tax code so that those who make more than  $1 million a year pay a tax rate of at least 30 percent and  forgo a series of  deductions he said they do not need. His proposal comes amid a controversy over the fact that Republican presidential candidate Mitt Romney, a wealthy former businessman and governor, pays only a 14 to 15 percent tax rate on his income.

The State of the Union address to a joint session of Congress was a particularly fitting way to launch the theme that Americans will no doubt hear over and over again on the campaign trail – that his efforts to restart the economy have been plagued by a highly partisan and do-nothing Congress. “As long as I’m President, I will work with anyone in this chamber to build on this momentum,” he said. “But 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.” 

Obama’s failure to devote more than a few passing lines to the nation’s $15 trillion debt was seized on by Indiana Gov. Mitch Daniels, who delivered the Republican rejoinder. “No nation, no entity, large or small, public or private, can survive intact with debts as huge as ours,” he said. “The president . . . sincerely seems to believe we can build a middle class society by creating government jobs with borrowed dollars.”

But the only public sector job creation mentioned in the president’s speech involved rebuilding the nation’s infrastructure and devoting more money to scientific research, efforts that usually win bipartisan support. To spur on the creation of new jobs, Obama focused on tax breaks for manufacturers, technology companies, and small business, which will be paid for by repealing other business tax breaks; a mortgage refinance program for troubled homeowners; mandatory schooling until age 18 or high school graduation; and reform of the nation’s community colleges, among other small-bore programs.

They are the types of legislative programs that require little in the way of direct public financing. Like Clinton during the mid-1990s after the Republicans had also seized control of Congress, Obama was clearly signaling to his political base that his forthcoming budget, which has been delayed until mid-February, will contain no major new spending initiatives.

In his few comments on the deficit, the president pointed out that Congress passed and he signed over $2 billion in budget cuts in the past year. That is nearly equal to the amount called for by his bipartisan deficit commission, which sought a $4 trillion in deficit reduction package over the next decade. The Bowles-Simpson commission also called for raising $1 trillion in additional revenue, which Republicans in Congress and on the campaign trail oppose. Obama said removing the Bush-era tax cuts on people earning over $250,000 a year would raise about $1 trillion.

The theme of tax fairness clearly motivates rank-and-file Democrats, but alienates Republicans and many moderates, according to focus group polling done during the speech by CNN. Yet on a day when one of his likely opponents in the fall – former Massachusetts Gov. Mitt Romney – released a tax return that showed he paid less than 15 percent in federal taxes on over $40 million in income, the president pointed to Warren Buffett’s secretary, Debbie Bosanek, who sat near First Lady Michelle Obama, and pledged to reform a tax code that provides big breaks for millionaires and companies that shift jobs overseas.

“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,” he said. “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.”

There were several times during the evening when bipartisan bonhomie prevailed. The high point came at the very beginning when everyone in the House chamber rose to greet Rep. Gabrielle Gifford, D-Ariz., who was shot a year ago in an attempted assignation. Her slow but remarkable recovery led her to announce earlier this month that she will be retiring from politics.

But appearing in Congress for the first time wearing a bright red dress and dark frame glasses, she received long, heartfelt hugs from the president and Secretary of State Hillary Clinton as her tearful husband, astronaut Mark Kelly, waved from the gallery. Her political opponent, Ariz. Sen. Jeffrey Flake, sat by her side and repeatedly helped her rise to her feet to applaud the president.
Republicans and Democrats together also cheered the president’s salute to the military and its remarkable successes of the past year.

The president reminded Congress that there were no Democrats or Republicans in the situation room or in the compound where Navy Seals charged up the stairs to take out Osama bin Laden, the terrorist mastermind of 9/11 whose demise in 2011 will certainly be remembered as one of the most historically important events of the year.

And there was even bipartisan support for the U.S. auto industry and General Motors, which recently reclaimed the title as the largest automaker in the world. Pointing out that the auto bailout saved a million jobs and the industry has since added 160,000 more, the president declared that “we bet on American workers. We bet on American ingenuity. And tonight, the American auto industry is back,” he said.

The president used that success as a jumping off point to use John F. Kennedy-like rhetoric to encourage other U.S. manufacturers to follow the auto industry’s lead. “Tonight, my message to business leaders is simple,” he said. “Ask yourselves what you can do to bring jobs back to your country, and your country will do everything we can to help you succeed.”

Yet the National Association of Manufacturers issued a statement immediately after the president’s speech that rejected his offer. “His decision last week to reject the Keystone XL killed the promise of nearly 20,000 manufacturing and construction jobs along with the 118,000 indirect jobs that would ripple across our economy,” said Jay Timmons, chief executive of the group. “The Keystone XL pipeline could have accomplished the goals espoused in tonight’s speech and its rejection undermines the President’s commitment to them.”

Republicans began attacking the president’s speech days before Obama arrived on Capitol Hill to address the joint session of Congress. House Speaker John Boehner, R-Ohio, told Fox News Sunday over the weekend that “I’ve read a lot about what the president is going to talk about Tuesday night, and it sounds to me like the same old policies that we’ve seen: More spending, higher taxes, more regulation.”

Republican presidential candidate Mitt Romney delivered a stinging advanced critique of the president’s speech in Florida Tuesday morning, predicting that Obama would make “the opening argument in his campaign against a ‘do-nothing Congress’ Tuesday night.

“But we cannot forget that for two years, this president had a Congress that could do anything he wanted it to do,” Romney said in Tampa. “ It was a Democrat controlled Congress with huge Democrat majorities in the House and in the Senate. President Obama was free to pursue any policy  he pleased. Did he fix the economy? No. Did he tackle the housing crisis? No. Did he get Americans back to work? No. He spent $787 billion on  a stimulus bill that didn’t work, and put us on track to borrow and spend $5 trillion in just his first term.”

Conservative  Rep. Doug Lamborn, R-Colo.,  announced  he was boycotting the speech because he assumed Obama would be in “full campaign mode.” Last August, Lamborn caused a stir by comparing Obama to a political “tar baby” in a radio interview.