President Barack Obama claimed credit Tuesday for an improving economy and defiantly told his Republican adversaries in Congress to “turn the page” by supporting an expensive domestic agenda aimed at improving the fortunes of the middle class.
Released from the political constraints of a sagging economy, overseas wars and elections, Obama declared in his sixth State of the Union address that “the shadow of the crisis has passed,” and he vowed to use his final two years in office fighting for programs that had taken a back seat. He called on Congress to make community college free for most students, enhance tax credits for education and child care, and impose new taxes and fees on high-income earners and large financial institutions.
“We have risen from recession freer to write our own future than any other nation on Earth,” Obama said in an address to a joint session of Congress seen by an estimated 30 million people. “Will we accept an economy where only a few of us do spectacularly well? Or will we commit ourselves to an economy that generates rising incomes and chances for everyone who makes the effort?”
The president used the prime-time speech to call on Congress to pass legislation authorizing the fight against the Islamic State. The president said approval of a resolution granting him that power — something he has long argued he does not need to carry out the 5-month-old campaign — would send an important signal. “Tonight, I call on this Congress to show the world that we are united in this mission,” Obama said.
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“This effort will take time,” he said of the battle to defeat the Islamic State, the Sunni militant group that is also known as ISIS or ISIL. “It will require focus. But we will succeed.”
He also urged lawmakers to lift the trade embargo on Cuba as he moves to normalize relations with the Communist island nation.
When he entered the chamber, a smiling Obama shook hands with members of Congress as he worked his way past six members of the Supreme Court and most of his Cabinet. He received several standing ovations in the first few minutes, with members of both parties leaping to their feet as he saluted the “courage and sacrifice of every man and woman in this 9/11 generation who has served to keep us safe.”
Yet he was facing a skeptical Congress hours after vowing to veto Republican legislation that would restrict abortion and speed the approval of natural gas pipelines, the latest in a series of veto threats that reflect his eagerness to confront conservative ideology despite his party’s major losses in the congressional elections last fall.
He promised Tuesday night that any attempt to roll back his health care law, stand in the way of Wall Street regulations or delay his executive actions on immigration would meet the same fate.
He grew cocky at one point, noting near the close of the speech that “I have no more campaigns to run.”
Pausing, the president went off script to quip, “I know, cause I won both of them.”
The president sought to cement an economic legacy that seemed improbable early in his first term, when the country was in near economic collapse. The speech seemed designed in part to live beyond his presidency by helping to starkly define the differences between Democrats and Republicans ahead of the 2016 presidential election.
“The verdict is clear,” Obama said. “Middle-class economics works. Expanding opportunity works. And these policies will continue to work, as long as politics don’t get in the way.”
House Speaker John A. Boehner, who was behind the president, and the sea of Republican lawmakers facing him in the House chamber sat impassively as Obama listed recent economic bright spots: falling deficits and a slowdown in the growth of health care costs.
“That’s good news, people,” Obama said, turning to the Republicans with a faint smile.
Obama did highlight some potential areas of collaboration with Republicans. He called on Congress to approve a business tax overhaul, the granting of authority to strike trade deals, and a major initiative to repair crumbling roads and bridges and to modernize the nation’s transportation infrastructure.
But the president vowed to push forward with policies that have generated Republican opposition. He called for aggressive action on combating climate change and said he would not back down on changes to the nation’s immigration system. He repeated his support for new regulations on Internet providers and for overriding state laws that limit competition for high-speed service.
Republicans dismissed the speech hours before it was delivered. Boehner circulated a document citing news commentators who questioned Obama’s sincerity and described his proposals, which the White House had circulated for the last three weeks, as fantasy. The document quoted Fox News calling Obama’s plans a “time machine for liberal dreams.”
In excerpts from the official Republican response, Sen. Joni Ernst, the freshman Republican from Iowa, said, “Americans have been hurting, but when we demanded solutions, too often Washington responded with the same stale mindset that led to failed policies like Obamacare.”
Aides to Obama said that although there might be some areas of collaboration, the address was intended as a blueprint that Republicans either accepted or rejected.
“He’s not going to trim his sails because some people, before he’s given the speech, said they don’t like his ideas,” a senior aide told reporters hours before the president stood in front of the joint session of Congress.
Obama’s plans — which would offer free community college for millions of students, paid leave for workers and more generous government assistance for education, child care and retirement savings for the middle class — are to be financed in large part by $320 billion in tax increases over the next decade on higher income earners as well as a fee on large financial institutions.
The tax plan would raise the top capital gains tax rate to 28 percent, from 23.8 percent. It would also remove what amounts to a tax break for wealthy people who can afford to hold onto their investments until death. The proposal would repeal a provision that now allows individuals to pass on such assets without taxes ever being assessed on the capital gains that accrued during their lifetimes. Obama would also limit tax benefits for retirement savings for the wealthiest taxpayers, capping tax-preferred individual retirement accounts at about $3.4 million.
Obama also said he wanted to assess a new fee on the largest financial institutions — those with assets of $50 billion or more -— based on the amount of risk they took on.
Those proposals would pay for the community college initiative, which would cost $60 billion over a decade, as well as an array of new tax credits intended for the middle class. They include a new $500 credit for families with two working spouses; a subsidy of up to $2,500 annually to pay for college; and the tripling, up to $3,000, of an existing tax break to pay for college.
“It’s time we stop treating child care as a side issue, or as a women’s issue,” Obama said, “and treat it like the national economic priority that it is for all of us.”
Some of the tax incentives Obama proposed have found support among Republicans, but most of them have angrily dismissed the plan since the White House previewed it over the weekend, calling it a nonstarter that would reignite a bitter class-based battle without doing anything to fuel economic growth.
Obama waved aside those concerns and said enacting his proposals would represent bold action to improve the lives of all Americans by making sure that everyone had a “fair shot” at receiving the skills and opportunities that lead to economic success.
“That’s what middle-class economics is, the idea that this country does best when everyone gets their fair shot, everyone does their fair share and everyone plays by the same set of rules,” Obama said.
The president argued for his recent decision to begin the process of normalizing relations with Cuba and to loosen trade and commercial restrictions with the island nation. Obama said that the approach of walling off the United States from Cuba had been ineffective, and that it was time to try a new strategy.
He argued for smarter breed of American leadership based on embracing diplomacy and military force.
“We lead best when we combine military power with strong diplomacy, when we leverage our power with coalition building, when we don’t let our fears blind us to the opportunities that this new century presents,” Obama said.
As part of that approach, the president argued that the United States had an opportunity to strike a deal with Iran to prevent its development of a nuclear weapon, and made clear that he opposed legislation — backed by some Democrats and Republicans —to impose new sanctions before those talks had played out.
And in the wake of several high-profile cyberattacks, including a hack of Sony Pictures that his administration blamed on North Korea, Obama called for legislation to bolster protections against such computer-enabled assaults.
“No foreign nation, no hacker should be able to shut down our networks, steal our trade secrets or invade the privacy of American families, especially our kids,” the president said. “If we don’t act, we'll leave our nation and our economy vulnerable. If we do, we can continue to protect the technologies that have unleashed untold opportunities for people around the globe.”
▪ Raise the top capital gains rate on couples with incomes above $500,000 to 28 percent, the rate under President Ronald Reagan.
▪ Create a $500 tax credit for families where both spouses work and have an annual income up to $210,000.
▪ Urge Congress to pass a new authorization for use of military force against the Islamic State group and militant extremists in the Mideast.
▪ Seek support for normalizing diplomatic relations with Cuba.
▪ Vow to veto new sanctions on Iran.
▪ Threaten to veto congressional attempts to roll back Obama’s executive actions on climate change and immigration and existing laws on health care and financial reform.