The circumstances facing President Obama as he delivered his State of the Union address Tuesday night could not have seemed less promising: a presidency with only two years left to get anything done in a Congress that is now totally in the control of a party that has routinely ignored his pleas for cooperation. So he chose wisely to send a simple, dramatic message about economic fairness, about the fact that the well-off — the top earners, the big banks, Silicon Valley — have done just great, while the middle and working classes remain dead in the water. His remedy: skim from the rich and redistribute to those below, while deploying other weapons to raise wages and increase jobs.
He did not frame the debate over inequality as starkly as many economists have, preferring instead to talk about the virtues of “middle-class economics.” But he came close. “It’s now up to us to choose who we want to be over the next 15 years, and for decades to come,” he said. “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?”
Mr. Obama knows his prospects of getting Congress to agree are less than zero; Republicans dismissed his ideas before he even voiced them. That does not make them irrelevant. Mr. Obama was speaking not just to the present but to the future, to the 2016 presidential elections and even beyond. By simply raising the plight of the middle class (and, looming behind it, the larger issue of economic inequality), he has firmly inserted issues of economic fairness into the political debate. Hillary Rodham Clinton or whomever the Democrats nominate cannot ignore them now. Even Republicans, disinclined to raise taxes on top-tier earners, may find attractive the idea of doing something for those in the middle.
Further, while the rhetoric was combative, even defiant in parts, the president’s proposal is hardly radical. It would raise the capital gains tax to 28 percent — which is where it was in the Reagan era. It would impose ordinary income tax rates on dividends and end a provision in the tax code that shields hundreds of billions of dollars in appreciated wealth passed on to heirs. These changes, plus a new fee on big banks, would finance a set of tax breaks for middle-income families, including credits for two-earner couples, increased child care and college tuition credits, as well as other programs, including two years of tuition-free community college for some students. And the whole thing is designed to be revenue-neutral, the tax increases paying for the new programs to avoid the endless wrangling over deficits that have exhausted both political parties as well as the American public.
It was hardly surprising that a president who expects so little from Congress devoted some of his speech to celebrating the things that he has accomplished against considerable odds. With Congress’s help, he rescued the automobile companies, jump-started the renewable energy industry, imposed new rules on financial institutions and, most dramatically, engineered a major overhaul of the health care system. On his own initiative, he ordered major reforms in immigration policy, forged a landmark agreement with the automobile companies on fuel efficiency and proposed tough restrictions on greenhouse gas emissions from power plants.
His task will be to defend these initiatives from almost certain congressional attack, wielding his veto pen, or threatening to wield it, much as President Bill Clinton found himself doing after Newt Gingrich and his Republican majority took over the House in 1995. President Obama should also seek out opportunities to use his executive authority to improve conditions for the middle class and for workers, such as fixing overtime rules, and, at every opportunity, use the bully pulpit on important matters like improving the minimum wage.
There is one other thing he must do: Resist his instinct to follow the false promise of compromise. Give-and-take is part of the legislative process, but trade-offs amounting to Republican legislative triumphs are unacceptable. Gridlock seems almost foreordained over the next two years. Mr. Obama should do nothing to confuse the voters as to where the responsibility lies.
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