Taxing the rich would level playing field, Obama says

WASHINGTON – President Barack Obama used an election-year State of the Union address Tuesday night to frame the national debate not as a referendum on him but as a pivotal decision on how to save the American dream.

He boasted that the nation’s economy has improved, albeit slowly, from the depths of the Great Recession. “The state of our Union is getting stronger,” he said.

But he said the middle class has been losing ground for decades, and he urged a new agenda of taxes and government spending to tilt the playing field away from the rich and powerful and more toward the rest of the citizenry.

Once, he said, Americans believed “the basic American promise that if you worked hard, you could do well enough to raise a family, own a home, send your kids to college, and put a little away for retirement. The defining issue of our time is how to keep that promise alive.”

The speech fleshed out a broad vision Obama laid out in December in a speech in Osawatomie, Kan., one modeled after a 1910 speech that Theodore Roosevelt gave in the same town laying out themes for what would become the Progressive Era.

Among his proposals: a 30 percent minimum tax on millionaires, a minimum tax on companies that ship jobs overseas coupled with tax cuts for those that keep factory jobs at home, and a $200 billion, six-year plan to build roads, bridges and railways with money saved from bringing U.S. troops home from Afghanistan and Iraq.

Obama opened his speech declaring victory in bringing U.S. troops home from Iraq, eliminating Osama bin Laden, and beginning to withdraw troops from Afghanistan. That enables the country, he said, to “think about the America within our reach.”

Republicans countered with a similar vision of a more prosperous America where everyone shares the bounty. But they offered a far different agenda and castigated Obama for policies they said have made things worse.

“As Republicans our first concern is for those waiting tonight to begin or resume the climb up life’s ladder,” said Gov. Mitch Daniels of Indiana, giving the official Republican response. “We do not accept that ours will ever be a nation of haves and have nots. We must always be a nation of haves and soon-to-haves.”

He said that Obama hurt the economy with overregulation of business, a refusal to allow domestic energy production, and proposals to raise taxes on the rich that amount to dividing the country.

Obama insisted that his agenda is what’s needed to put the country back on track.

“Millions of Americans who work hard and play by the rules every day deserve a government and a financial system that does the same,” he said. “It’s time to apply the same rules from top to bottom: No bailouts, no handouts and no cop-outs.”

Under the broad theme of helping build a fairer economy, Obama laid out proposals in four categories: helping restore U.S. manufacturing, improving U.S. energy independence, teaching workers new skills for a changing economy, and tax increases he called “a renewal of American values.”

He proposed that millionaires pay a minimum tax of 30 percent, putting a precise number to the idea he proposed last year. The proposal comes as Republicans vying for his job all have proposed cutting taxes for the wealthy, arguing they create jobs.

Obama’s proposed tax rate would double the income taxes paid by one of those candidates: Mitt Romney revealed Monday that he made $20.9 million last year and expects to pay $3.2 million in taxes. Senior administration officials said the proposed 30 percent rate was in the works for several weeks and had nothing to do with Romney.

Obama also vowed ever more oversight of Wall Street, saying he had directed Attorney General Eric Holder to create a Financial Crimes Unit to investigate and prosecute financial fraud.

To ease the enduring housing crisis, Obama said he will send Congress a new plan that would help responsible homeowners who are current on their payments save $3,000 a year by refinancing their mortgage. The program would be paid for with a new bank fee he has proposed.

To improve the country’s energy picture, he lauded the fact that the United States in 2009 became the world’s top producer of natural gas.

He said his administration will prepare “common sense” new rules to ensure safe drilling of shale natural gas on public lands, drilling he said will create 600,000 new jobs by the end of the decade. He said he will also require disclosure of the chemicals used in “fracking” operations on public lands. Fracking is the use of water and chemicals under high pressure to extract oil from shale.

Obama looked out on a Congress where Republicans control the House and have ruled out most of his proposals.

“As long as I’m president, I will work with anyone in this chamber,” Obama 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.”

In the Republican response, Daniels rejected the criticism of his party as obstructionist.

“It’s not fair and it’s not true for the president to attack Republicans in Congress as obstacles on these questions,” he said. “They and they alone have passed bills to reduce borrowing, reform entitlements and encourage new job creation, only to be shot down nearly time and again by the president and his Democrat Senate allies.”