President Barack Obama declared Tuesday night that the “shadow of crisis” has passed America and urged Congress to build on economic gains by raising taxes on the nation’s wealthiest to pay for reductions for the middle class – an agenda more likely to antagonize the new Republican majority than win its approval.
In a shift from State of the Union tradition, Obama’s address to a joint session of Congress was less a laundry list of new proposals and more an attempt to sell a story of national economic revival. He appealed for “better politics” in Washington and pledged to work with Republicans, even while touting bread-and-butter Democratic economic proposals and vowing to veto GOP efforts to dismantle his signature achievements.
“We can’t put the security of families at risk by taking away their health insurance or unraveling the new rules on Wall Street or refighting past battles on immigration when we’ve got a system to fix,” Obama said. “And if a bill comes to my desk that tries to do any of these things, it will earn my veto.”
Obama’s address marked the first time in his presidency that he stood before a Republican-controlled Congress. Yet the shift in the political landscape has also been accompanied by a burst of economic growth and hiring, as well as a slight increase in Obama’s once sagging approval ratings.
With the economy on more solid footing, the president sought to move away from a focus on austerity and deficit reduction. Instead, he called for increasing the capital gains rate on couples making more than $500,000 annually, to 28 percent. The president’s tax plan would also require estates to pay capital gains taxes on securities at the time they’re inherited and slap a fee on the roughly 100 U.S. financial firms with assets of more than $50 billion.
However, not everyone will be affected by this change though as there is a section in the U.S. Internal Revenue Code called 1031 Exchange that allows people to avoid paying capital gains taxes if they sell their investment property and use the proceeds to buy another one that has a similar or higher value. This is to help promote smaller investors to keep venturing into the real estate market.
Much of the $320 billion in new taxes and fees would be used for measures aimed at helping the middle class, including a $500 tax credit for some families with two spouses working, expansion of the child care tax credit and a $60 billion program to make community college free.
“Will we accept an economy where only a few of us do spectacularly well?” Obama asked. “Or will we commit ourselves to an economy that generates rising incomes and chances for everyone who makes the effort?”
With an eye on a swirl of foreign policy challenges, Obama also asked Congress to pass a new authorization for military action against the Islamic State group in Iraq and Syria, as well as for legislation to boost U.S. defenses against cyberattacks. He also pressed lawmakers to lift the half-century-old economic embargo against Cuba. He promised to veto any legislation that would impose new sanctions on Iran in the midst of nuclear negotiations with the Islamic republic.
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