(Bloomberg) -- President Barack Obama reached into his
party’s progressive past to deliver a robust endorsement of
higher taxes for the wealthy, government intervention in the
economy and an array of new benefits for lower- and middle-income Americans.
“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?” Obama said in a State of the Union address Tuesday night that at times sounded more like a party-rallying convention speech.
His direct appeal to taxing the rich and giving to the poor is a sign of just how mainstream populism has become at a time when 2016 presidential hopefuls, including Democrat Hillary Clinton and Republican Mitt Romney, are talking about how to help those left behind.
“We’ve seen a rhetorical shift from some Republican candidates for president in 2016. Tonight the president called their bluff and said here’s my agenda for addressing income inequality,” said Seth D. Harris, a former acting Labor secretary under Obama. “He issued a challenge to congressional Republicans and the long list of Republicans who want to be president in 2016 to lay out their agendas for addressing those issues.”
The Republican-led Congress is unlikely to join Obama in raising taxes on banks and investors -- or to spend $60 billion to subsidize community college tuition. In fact, little of what he proposed will advance in either the House or Senate.
For Obama and fellow Democrats, the failure of the recovery to lift all boats is both a reminder that it’s politically risky to claim victory for policies already enacted and an incentive to target aid to the working class.
Many Americans have continued to lose ground since the 18-month recession ended in June 2009. Median household income fell 3.9 percent to $51,939 in 2013 compared with 2009 when Obama took office, U.S. Census Bureau data show. The poorest fifth fared even worse, with incomes dropping 5.9 percent to $20,900.
The president also may be putting pressure on Clinton to stay close to him on the populist approach to economic policy. It will be difficult for her to track his positions without displeasing her financial-industry patrons. Clinton endorsed Obama’s speech tonight in a tweet.
“@BarackObama #SOTU pointed way to an economy that works for all. Now we need to step up & deliver for the middle class. #FairShot #FairShare,” Clinton tweeted.
The stakes are even higher for Republicans. And there are two reasons for the party to sound more populist notes, said Dan Schnur, the executive director of the Jesse M. Unruh Institute of Politics at the University of Southern California.
One is a belief in Republican circles that if Romney had done a better job of courting lower- and middle-income voters, he would have beaten Obama in 2012. Romney’s campaign was hurt when he was recorded telling an audience that “47 percent” of Americans are dependent on the federal government and would vote for Obama on that basis.
Romney has changed his tack since in recent days, while making clear that he’s considering a third bid for the presidency.
“Under President Obama, the rich have gotten richer, income inequality has gotten worse and there are more people in poverty than ever before,” Romney said Friday in a speech to Republican National Committee members. “The only policies that will reach into the hearts of the American people and pull people out of poverty and break the cycle of poverty are Republican principles, conservative principles.”
“As the Republican Party becomes driven more and more by social conservatism, a natural space has opened up for a more economically populist argument,” he said. “There’s no shortage of Republican presidential candidates who seem to want to talk about economic inequality.”
Grover Norquist, president of the Washington-based group Americans for Tax Reform, said Republicans have to do a better job of demonstrating that their policies will help lower-and middle-income Americans. That’s starting to happen, he said.
“The shift is entirely correct,” he said. “You’ve got to make the case.”
“Attacking financial reform is risky and wrong,” she wrote. “Better for Congress to focus on jobs and wages for middle class families.”
Warren has said she won’t run, but her success in setting the debates within the Democratic Party is evident in Clinton’s effort to distance herself from the financial industry after years of raising money on Wall Street for her campaigns and her family’s foundation.
Another potential Democratic contender, Senator Bernie Sanders, elected as an independent in Vermont, referred to “obscene levels of income and wealth inequality” in endorsing Obama’s plan to tax the wealthiest Americans to expand tax credits for higher education and child care.
“Our opposition to fast-tracked trade deals that are giant giveaways to big corporations must be resolute,” AFL-CIO President Richard Trumka said in a statement.
Democrats see potential for continuity between Obama’s proposals and the forthcoming Clinton campaign.
The Center for American Progress, a research group aligned with both the Obama White House and Clinton’s political operation, released a report last week, written by former Treasury Secretary Lawrence Summers and others. It argued for increasing wages, investing in infrastructure and making it harder for corporations to avoid taxes.
That’s in line with the plan Obama laid out Tuesday night.
“He made an eloquent case for government intervention in labor markets and the economy to remedy the unfair distribution of opportunity in our country,” Harris said.
To contact the reporter on this story: Jonathan Allen in Washington at jallen149@bloomberg.net
To contact the editors responsible for this story: Craig Gordon at cgordon39@bloomberg.net Mark McQuillan, Jodi Schneider
“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?” Obama said in a State of the Union address Tuesday night that at times sounded more like a party-rallying convention speech.
His direct appeal to taxing the rich and giving to the poor is a sign of just how mainstream populism has become at a time when 2016 presidential hopefuls, including Democrat Hillary Clinton and Republican Mitt Romney, are talking about how to help those left behind.
“We’ve seen a rhetorical shift from some Republican candidates for president in 2016. Tonight the president called their bluff and said here’s my agenda for addressing income inequality,” said Seth D. Harris, a former acting Labor secretary under Obama. “He issued a challenge to congressional Republicans and the long list of Republicans who want to be president in 2016 to lay out their agendas for addressing those issues.”
The Republican-led Congress is unlikely to join Obama in raising taxes on banks and investors -- or to spend $60 billion to subsidize community college tuition. In fact, little of what he proposed will advance in either the House or Senate.
Framing Debate
The real aim of Obama’s address could be more significant: trying to frame the debate for the 2016 presidential campaign. Both parties are training their rhetoric at the same set of Americans, those who haven’t felt the benefits of booming markets and an economy growing at its fastest pace in more than a decade.For Obama and fellow Democrats, the failure of the recovery to lift all boats is both a reminder that it’s politically risky to claim victory for policies already enacted and an incentive to target aid to the working class.
Many Americans have continued to lose ground since the 18-month recession ended in June 2009. Median household income fell 3.9 percent to $51,939 in 2013 compared with 2009 when Obama took office, U.S. Census Bureau data show. The poorest fifth fared even worse, with incomes dropping 5.9 percent to $20,900.
‘Working Families’
“Middle-class economics means helping working families feel more secure in a world of constant change,” Obama said in his State of the Union speech. “That means helping folks afford child care, college, health care, a home, retirement -- and my budget will address each of these issues, lowering the taxes of working families and putting thousands of dollars back into their pockets each year.”The president also may be putting pressure on Clinton to stay close to him on the populist approach to economic policy. It will be difficult for her to track his positions without displeasing her financial-industry patrons. Clinton endorsed Obama’s speech tonight in a tweet.
“@BarackObama #SOTU pointed way to an economy that works for all. Now we need to step up & deliver for the middle class. #FairShot #FairShare,” Clinton tweeted.
‘Third Term’
America Rising, a Republican political action committee, pointed to the tweet as evidence that Clinton is “running for Obama’s third term.”The stakes are even higher for Republicans. And there are two reasons for the party to sound more populist notes, said Dan Schnur, the executive director of the Jesse M. Unruh Institute of Politics at the University of Southern California.
One is a belief in Republican circles that if Romney had done a better job of courting lower- and middle-income voters, he would have beaten Obama in 2012. Romney’s campaign was hurt when he was recorded telling an audience that “47 percent” of Americans are dependent on the federal government and would vote for Obama on that basis.
Romney has changed his tack since in recent days, while making clear that he’s considering a third bid for the presidency.
“Under President Obama, the rich have gotten richer, income inequality has gotten worse and there are more people in poverty than ever before,” Romney said Friday in a speech to Republican National Committee members. “The only policies that will reach into the hearts of the American people and pull people out of poverty and break the cycle of poverty are Republican principles, conservative principles.”
Republican Populism
The more important reason for the new Republican populism is that it reflects a change in the party’s base, said Schnur, who was communications director for John McCain’s 2000 presidential campaign.“As the Republican Party becomes driven more and more by social conservatism, a natural space has opened up for a more economically populist argument,” he said. “There’s no shortage of Republican presidential candidates who seem to want to talk about economic inequality.”
Grover Norquist, president of the Washington-based group Americans for Tax Reform, said Republicans have to do a better job of demonstrating that their policies will help lower-and middle-income Americans. That’s starting to happen, he said.
“The shift is entirely correct,” he said. “You’ve got to make the case.”
Clinton, Warren
While there aren’t as many would-be Democratic presidential contenders, the party’s agenda is also being shaped by a populist bent. Clinton, echoing the arguments of Senator Elizabeth Warren of Massachusetts, wrote in a tweet last week that Republicans shouldn’t dismantle Wall Street changes.“Attacking financial reform is risky and wrong,” she wrote. “Better for Congress to focus on jobs and wages for middle class families.”
Warren has said she won’t run, but her success in setting the debates within the Democratic Party is evident in Clinton’s effort to distance herself from the financial industry after years of raising money on Wall Street for her campaigns and her family’s foundation.
Another potential Democratic contender, Senator Bernie Sanders, elected as an independent in Vermont, referred to “obscene levels of income and wealth inequality” in endorsing Obama’s plan to tax the wealthiest Americans to expand tax credits for higher education and child care.
Labor Reaction
While Democrats roundly praised Obama after the speech, two of the nation’s most powerful labor organizations, the AFL-CIO and the Communication Workers of America, criticized his call for Congress to expedite new trade agreements as counterproductive.“Our opposition to fast-tracked trade deals that are giant giveaways to big corporations must be resolute,” AFL-CIO President Richard Trumka said in a statement.
Democrats see potential for continuity between Obama’s proposals and the forthcoming Clinton campaign.
The Center for American Progress, a research group aligned with both the Obama White House and Clinton’s political operation, released a report last week, written by former Treasury Secretary Lawrence Summers and others. It argued for increasing wages, investing in infrastructure and making it harder for corporations to avoid taxes.
That’s in line with the plan Obama laid out Tuesday night.
“He made an eloquent case for government intervention in labor markets and the economy to remedy the unfair distribution of opportunity in our country,” Harris said.
To contact the reporter on this story: Jonathan Allen in Washington at jallen149@bloomberg.net
To contact the editors responsible for this story: Craig Gordon at cgordon39@bloomberg.net Mark McQuillan, Jodi Schneider
