Obama urges taxing the rich, reining in Wall St.

WASHINGTON, (Reuters) – U.S. President Barack
Obama used his last State of the Union speech before the
November election to paint himself as the champion of the middle
class, by demanding higher taxes for millionaires and tight
reins on Wall Street.
Taking advantage of a huge national platform to make the
case for his re-election, Obama on Tuesday defiantly defended
his record after three years in office and laid blame for many
of the country’s woes at the feet of banks and what he called an
out-of-touch Congress.
He proposed sweeping changes in the tax code and new
remedies for the U.S. housing crisis, setting as a central
campaign theme a populist call for greater economic fairness.
He mentioned taxes 34 times and jobs 32 times during his
hour-long speech, emphasising the two issues at the heart of
this year’s presidential campaign.
While the biggest proposals in Obama’s speech are considered
unlikely to gain traction in a deeply divided Congress, the
White House believes the president can tap into voters’
resentment over the financial industry’s abuses and Washington’s
dysfunction.
But even as he called for a “return to American values of
fair play and shared responsibility,” Obama seemed to put no
blame on himself for a still-fragile economic recovery and high
unemployment that could trip up his re-election bid.
With polls showing most Americans disapprove of his economic
leadership, he still faces the stiff challenge of convincing
them that the candidate who was swept into the White House in
2008 promising hope and change now deserves another term.
Standing before a joint session of Congress, Obama unleashed
a partisan attack over taxes and vowed no return to “the days
when Wall Street was allowed to play by its own set of rules.”
“Washington should stop subsiding millionaires,” Obama
declared as he proposed a minimum 30 percent effective tax rate
on those who earn a million dollars or more.
Obama said he would ask his attorney general to establish a
special financial crimes unit to prosecute those parties charged
with breaking the law, and whose fraud contributed to the
2007-2009 financial crisis that plunged the United States into
recession.
Obama’s message could resonate in the 2012 campaign
following the release of tax records by Mitt Romney, a potential
Republican rival and one of the wealthiest men ever to run for
the White House. He pays a lower effective tax rate than many
top wage-earners.
A new proposal outlined by Obama to ease the way for more
American homeowners to get mortgage relief – and to pay for the
plan with a fee on banks blamed for helping create the housing
crisis – also struck a populist note.
Democrats have hammered Republicans in Congress for
supporting tax breaks that favor the wealthy. Republicans
staunchly oppose tax hikes, even on the richest Americans,
arguing they would hurt a fragile economic recovery.
“No feature of the Obama presidency has been sadder than its
constant efforts to divide us, to curry favor with some
Americans by castigating others,” Indiana Governor Mitch Daniels
said in the Republican response to Obama.
House of Representatives Speaker John Boehner, the top
congressional Republican, insisted the election would be a
referendum on the president’s “failed” policies.
The U.S. unemployment rate was 8.5 percent in December. No
president in the modern era has won re-election with the rate
that high.
CHEERS AND SILENCE
Obama’s rhetoric and his audience’s response was more
overtly partisan than last year when both sides sought a tone of
civility in the aftermath of an assassination attempt on
Democratic Arizona lawmaker Gabrielle Giffords.
In the most emotional moment of the evening, Obama warmly
embraced Giffords as he made his way to the podium. The
congresswoman, who has made a remarkable recovery after being
shot in the head, announced on Sunday she was retiring from
Congress.
The response to Giffords was one of the few moments of
bipartisan enthusiasm in a Congress riven by antagonism.
Democrats rose en mass to cheer, and Republicans stayed
seated in stony silence, when Obama vowed to “oppose obstruction
with action.” But both sides applauded when Obama called for
developing all domestic energy sources.
Obama used the speech to revive his call to rewrite the tax
code to adopt the so-called “Buffett rule,” named after the
billionaire Warren Buffett, who says it is unfair that he pays a
lower tax rate than his secretary.
Those making more than $1 million a year would pay an
effective tax rate of at least 30 percent and their tax
deductions would be eliminated.
To underscore his point, Buffett’s secretary, Debbie
Bosanek, was seated in the first lady’s box in the House of
Representatives for Obama’s address.
As the president walked to the podium to give his speech he
was overheard congratulating Defense Secretary Leon Panetta.
“Good job tonight. Good job tonight.”
Only later was it learned Obama was apparently referring to
the rescue by the U.S. military of an American and a Dane being
held hostage by pirates in Somalia. The operation was not made
public until after the speech.
Obama will shift into full campaign mode on a three-day tour
starting on Wednesday to Iowa, Arizona, Nevada, Colorado and
Michigan, all election battleground states.
In his speech, Obama also rolled out proposed corporate tax
reforms, including a minimum rate on companies’ overseas profits
and a tax credit for moving jobs back home.
Taking aim at China – an election-year target of Republicans
and Democrats alike over its currency and trade practices –
Obama proposed creation of a new trade enforcement unit within
the federal government.
Promising what amounts to a peace dividend, Obama also
proposed using half of the “savings” from ending the war in Iraq
and winding down in Afghanistan to pay down U.S. debt, with the
other half going to fixing decaying roads and railways.
Addressing the housing crisis, Obama said he would send to
Congress a proposal to allow more Americans to take out new and
cheaper mortgages as long as they are current on their payments,
savings that would amount to $3,000 per household each year. The
depressed housing market continues to drag on the economy.