Declaring that America has turned the page on war and recession, President Obama urged the Republican-led Congress in his State of the Union address Tuesday night to focus on “middle-class economics” but also said he will request a new authorization for military force against the Islamic State terrorist group in Syria and Iraq.
Brushing aside Republican gains in the midterm elections, Mr. Obama reignited partisan debate by proposing a $320 billion tax increase that would hit wealthier families and big banks to raise money for expanded tax breaks for middle-class families and pay for new federal programs such as government-paid tuition for community college students.
He said his economic policies, including Obamacare, private-sector bailouts and regulation, produced “the fastest economic growth in over a decade.”
“The verdict is clear — middle-class economics works,” Mr. Obama said. “Expanding opportunity works. And these policies will continue to work as long as politics don’t get in the way.”
Republicans said the president’s proposed tax increases were dead on arrival. Senate Majority Leader Mitch McConnell, Kentucky Republican, panned Mr. Obama’s plan as “another income redistribution effort.”
House Ways and Means Committee Chairman Paul Ryan of Wisconsin said tax increases would threaten the economic recovery, and he worried aloud that the president was “picking a fight” with congressional Republicans.
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House Speaker John A. Boehner, Ohio Republican, said Mr. Obama offered only “more taxes, more government and more of the same approach that has failed middle-class families.”
The president urged Republicans to engage in “a better politics,” even as he used the word “veto” twice in his address — once when discussing additional sanctions on Iran, and in a blanket threat about any efforts to roll back Obamacare, Wall Street regulation or his executive action granting deportation amnesty to millions of illegal immigrants.
“If we’re going to have arguments, let’s have arguments — but let’s make them debates worthy of this body and worthy of this country,” he said.
The speech was punctuated with partisanship when Republicans applauded at Mr. Obama’s wistful observation that he had no more campaigns to run. Noting the derisive clapping, the president taunted, “I know, because I won both.” That prompted Democratic whoops and applause.
After six years of promising better times ahead, Mr. Obama clearly was taking a victory lap by detailing the strong U.S. economy over the past year. With the jobless rate falling to 5.6 percent, the president said it’s time for federal policies to help ensure that all workers share in the surging prosperity.
SEE ALSO: Obama, in State of the Union, celebrates improving economy with call for tax hikes
Citing “a growing economy, shrinking deficits, bustling industry and booming energy production,” Mr. Obama said his proposals are needed because “this country does best when everyone gets their fair shot, everyone does their fair share and everyone plays by the same set of rules.”
In challenging Republicans to raise capital gains taxes and close a tax loophole on trust funds, the president asked: “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?”
Former Secretary of State Hillary Rodham Clinton, the presumed frontrunner for the 2016 Democratic presidential nomination, said Mr. Obama’s plans “pointed [the] way to an economy that works for all.”
“Now we need to step up & deliver for the middle class,” she said on Twitter.
But even as he sought to return the nation’s focus to domestic issues, Mr. Obama was being drawn again into the fight against Islamist terrorism. Despite taking credit for ending the wars in Iraq and Afghanistan, the president announced his request for Congress to approve a new authorization of force resolution against the Islamic State, a step that has been in the works for months.
The U.S. has been leading airstrikes against the terrorist group since August under laws approved by Congress in 2001 against al Qaeda and in 2002 against Saddam Hussein in Iraq. The president has said he believes he doesn’t need new authorization, but that the step makes sense with a different strategy against a different enemy.
“This effort will take time,” Mr. Obama said. “It will require focus. But we will succeed.”
Republican lawmakers said they generally support the request.
But Sen. Lindsey Graham, South Carolina Republican, said Mr. Obama’s plan to fight the Islamic State with an all-Arab army won’t succeed without the help of U.S. Special Forces on the ground and that the U.S. needs to confront the air power of Syrian President Bashar Assad.
Mr. Obama said his brand of leadership against international terrorism is succeeding.
“I believe in a smarter kind of American leadership,” Mr. Obama said. “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. That’s exactly what we’re doing right now — and around the globe, it is making a difference.”
But there were troubling developments in the Middle East even as Mr. Obama was speaking. In Yemen, Shiite insurgents stormed the presidential palace, raising questions about who was in control and complicating U.S. efforts to fight al Qaeda’s branch in that country.
Just four months ago, the president cited Yemen as an example of the successful U.S. efforts in combating terrorism. Mr. Obama was being briefed by advisers on the situation in Yemen until shortly before he delivered his speech.
In the wake of cyberattacks against Sony Pictures and other U.S. companies, the president asked Congress to approve policies that he said would help prevent more hackings.
“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,” Mr. Obama said.
On Iran, the president said he would veto any effort by Congress to impose more sanctions against Tehran. He said additional sanctions would “all but guarantee that diplomacy fails” in current denuclearization talks and ensure “that Iran starts up its nuclear program again.”
Citing his decision to normalize diplomatic relations with Cuba for the first time in more than 50 years, the president called on lawmakers to begin work on ending the U.S. embargo of Cuba. He said his policy “has the potential to end a legacy of mistrust in our hemisphere, removes a phony excuse for restrictions in Cuba, stands up for democratic values and extends the hand of friendship to the Cuban people.”
Mr. Obama said it’s time to “finish the job” of shutting down the terrorist detention center at Guantanamo Bay, Cuba.
“I will not relent in my determination to shut it down,” he said.
Paying for it all
The core of Mr. Obama’s speech was his plan to raise taxes on wealthier families and divert most of that money to benefit middle-class families through a series of tax breaks and spending proposals. The president gave the public previews of his proposals over the past two weeks, including more generous paid sick leave for most workers and faster broadband service through greater competition among providers.
His initiative for government-paid tuition for community college students initially would cost the Treasury about $6 billion per year, and would save students an average of $3,800 annually.
Mr. Obama’s proposals for middle-class tax breaks include a $500 “second earner” credit to 24 million households in which both spouses work. He wants to triple the child care tax credit, providing 5.1 million families with up to $3,000 for each child younger than 5.
The president also proposed to reform the education tax system by consolidating provisions and providing students up to $2,500 a year toward completing a college degree. That initiative, which is in addition to the community college tuition proposal, would affect 8.5 million families.
Since the White House announced the $320 billion tax hike plan Saturday, Republican-majority lawmakers have predicted it has no chance of passage in Congress. Senate Majority Leader Mitch McConnell, Kentucky Republican, panned it as “another income redistribution effort.”
White House officials said most of the president’s tax proposals are bipartisan. They said the fee on big banks, the tax credit for second earners and the proposal to expand education tax credits all were proposed or approved by House Republicans last year.
In addition to Mr. Obama’s plans to raise taxes on wealthier families, conservative groups said at least one of the president’s tax proposals would hit the middle class. The president wants to tax all earnings in Section 529 college savings plans. Earnings growth is now tax-free if distributions from the accounts are used to pay college tuition and fees.
Americans for Tax Reform said there are about 12 million such accounts, with an average balance of $21,000. The group said the proposal is “indisputably an income tax hike on middle-class families with children.”
In the wake of a highly publicized cyberattack against Sony Pictures last year, reportedly by agents of North Korea, the president devoted a portion of his speech to cybersecurity. Mr. Obama called for legislation that would encourage information sharing in the private sector, and between the private sector and government , to safeguard against more attacks.
The proposal would require businesses to comply with certain privacy restrictions, such as removing unnecessary personal information and taking steps to protect other personal information that must be shared under the legislation. Mr. Obama said the legislation would give law enforcement more tools to combat cybercrime. The Department of Energy would provide $25 million in grants over the next five years to support a cybersecurity education program to help fill demand for cybersecurity professionals.
Republican lawmakers have criticized the administration for failing to prevent cyberattacks on U.S. businesses and government entities. Some security analysts said Mr. Obama, after initially opposing such regulations, now is acting timidly by calling for information-sharing instead of proposing greater security standards and tough penalties for noncompliance.
The president also called for more protection against identity theft, although some analysts said his plan doesn’t go as far as most state laws in protecting consumers.
Mr. Obama will try to build support for his proposals this week on a campaign-style swing through the West. He will speak to students Wednesday at Boise State University in Idaho, and on Thursday he will visit the University of Kansas in Lawrence.