In State of Union, Obama calls for higher taxes on wealthiest, ‘better politics’

WASHINGTON — 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, I will veto it.” The president sought out more common ground on foreign policy, pledging to work with Congress on a new authorization for military action against the Islamic State group in Iraq and Syria, as well as legislation to guard against cyberattacks. In a rare move away from his own party, Obama also renewed his call for fast-tracking free trade agreements with Asia and Europe, generating more applause from pro-trade Republicans than skeptical Democrats. 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 — leaving the White House to see little incentive in curtailing or even tweaking its agenda in response to the Republicans’ midterm election victories. After ticking through signs of the rising economy, the president turned toward Republicans sitting in the chamber and said with a wink, “This is good news, people.” The centerpiece of Obama’s economic proposals marked a shift away from the focus on austerity and deficit reduction that has dominated his fiscal fights with Republicans. In a direct challenge to GOP economic ideology, Obama 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. 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?” Even before the president’s address, Republicans were balking at his proposals and painting a far less rosy picture of the economy. “We see our neighbors agonize over stagnant wages and lost jobs. We see the hurt caused by canceled health care plans and higher monthly insurance bills,” said Iowa Sen. Joni Ernst, who delivered the Republican response. “But when we demanded solutions, too often Washington responded with the same stale mindset that led to failed policies like Obamacare. It’s a mindset that gave us political talking points, not serious solutions.” With an eye on a swirl of foreign policy challenges, Obama defended his decision to return to military action in Iraq and also authorize airstrikes in Syria. He said Congress could “show the world that we are united in this mission” by passing a new resolution formally authorizing the use of force against the Islamic State group. As the U.S. eyes a March deadline for a framework agreement with Iran on its disputed nuclear program, the president vowed to veto any effort by Congress to pass new sanctions legislation. Such a step, he said, “will all but guarantee that diplomacy fails — alienating America from its allies and ensuring that Iran starts up its nuclear program again.”