Obama warns of vetoes as he hits road to push new programs, taxes

21 Jan 2015 | Author: | No comments yet »

Obama Speech Likely to Rile Congressional Republicans.

United States President Barack Obama used his penultimate state-of-the-union address on Tuesday to try to reframe US domestic politics for the next two years.Republicans are trying to burnish their party’s image–and Congress’–by promising to “get things done” now that the GOP controls both the House and Senate.

Declaring that the American resurgence is real, he made the case for why the country now needs a period of greater shared prosperity after the worst economic downturn since the 1930s. It draws the political battle lines for the final two years of his administration and the 2016 presidential race — targeting those who make money from their money and rewarding those who work for it. Obama has made much of the fact that 2014 was the fastest year for job growth since the 1990s with unemployment falling faster than any year since 1984. The poll conducted from Jan. 14-17 found that two of the major issues congressional Republicans and the White House have identified as candidates for bipartisan action–trade and simplification of the tax code–didn’t even make the top five issues that people feel need to be addressed urgently.

But there are some issues the president identified that Republicans have said they could work with him on: authorizing military force in Iraq and Syria, new cybersecurity legislation, tax reform; and approving new free trade agreements. Public surveys show he is riding a new wave of popularity – with a 50 percent approval rating, according to a new Washington Post-ABC News poll – as the U.S. economy continues its surge. The poll tried to identify the issues that are most important to Americans by asking which issues they considered an “absolute priority” for Congress and the president to act on this year, as opposed to issues that they think could be delayed.

Meanwhile, he offered to give middle- and lower-income households a bigger earned income tax credit, a new tax credit to encourage both parents in a family to work, and new retirement plans. The president also ruled out a few areas of negotiation: He said that attempts to roll back Obamacare, or reduce regulations on Wall Street or new sanctions against Iran would earn his veto.

His core policy ambition is that, after a very tough economic period for many, “every American [should] feel that they’re a part of our country’s comeback”. Yet anyone who expected Obama to begin his second-to-last year in office by courting the very adversaries he will need to pass any significant legislation – from tax reform to investment in infrastructure – left disappointed. Many voters, though hardly all, approve of his recent normalization of relations with Cuba and efforts to allow illegal immigrants to stay and work in the country.

Add to that the other policy ideas he’s plugged — a higher minimum wage, apprenticeships, and paid sick days — and you have a plan that embraces the quintessential American value that hard work pays off, but argues that the government is needed to make sure that pay is high enough. Yet, despite outlining new high profile initiatives to further this, including making community college free for many students, and expanding paid family leave for new parents, much of his domestic agenda is likely to be stymied by the Republican-controlled Congress.

For the first time in his presidency, however, the Democratic president faces a Congress in which Republicans control both the Senate and the House of Representatives after winning sweeping victories in the November elections. But people are virtually yawning at the prospect of expanding U.S. trade, a priority for an administration trying to finalize a new free-trade agreement with Asian and Pacific Rim countries.

Most of Obama’s plan won’t ever become law, but the proposal itself is a marker for where he and the Democratic Party stand in a post-Great Recession era, a recovery that has been great for stockholders, who rode the market to incredible highs last year, but not for regular workers, whose wages have remained stagnant. Many Republicans are seeking to overturn Obama’s Cuba and immigration policies, while continuing to oppose his signature national health care reforms. After Obama reported on solid economic growth, lower deficits and the higher stock market, he paused and said: “This is good news, people.”. “And to everyone in this Congress who still refuses to raise the minimum wage, I say this: If you truly believe you could work full-time and support a family on less than $15,000 a year, go try it.

Even with his party’s losses in the congressional elections last November, Obama has maintained the initiative on national policy with executive actions, including an order protecting 5 million undocumented immigrants from deportation, an end to the half-century-old Cuba embargo and a climate deal with China. Obama will call for raising taxes on profits that individuals make from selling such assets as stocks, bonds and real estate, ending tax breaks for inherited estates worth millions of dollars, and imposing a fee on the country’s biggest financial firms. Simplifying the tax code is also an issue that’s not a top-five policy priority for most Americans, but is treated like a motherhood issue by politicians of both parties.

While giving a nod to possible areas of compromise such as trade deals, the president made no effort to temper his aspirations to the political realities of Republican control of Congress. Just over half polled said it was an urgent priority–less than the percentage who wanted to make “efforts to address Iran’s nuclear program” a top agenda item. Nor did he signal any attempt to pull back from a collision course with Republican lawmakers on several issues, repeating his threats to veto any attempt to gut his signature health-care law or unravel Dodd-Frank financial regulations. “The verdict is clear. Reluctantly, one or two from the aisle to the president’s left – and ideological stage right – began to stand up or offer a tepid applause, following the lead of the new Senate majority leader, Mitch McConnell.

The irony is that the rhetoric he uses borrows from an old Republican line — work, not welfare — to sell the very redistribution model that conservatives have always loathed. The second off-the-cuff remark arrived toward the end of a nearly hour-long address that, to the dismay of Republicans, did not contain even a single nod to their electoral gains. “I have no more campaigns to run,” Obama said, in what was intended to signal that his remaining focus will be on governing rather than electioneering.

For instance, the last Democratic president, Bill Clinton, who, in his last two years in office in 1999 and 2000 faced a wholly-Republican Congress, won landmark congressional approval in October 2000 for so-called Permanent Normal Trade Relations with China. In between those two unscripted remarks was a litany of liberal policy prescriptions – none of them new, and almost all of them opposed by Republicans. This is the status given to key US trading partners, which are eligible to receive low tariffs and other concessions in exchange for similar benefits. But, by making the proposal, Obama is likely setting the stage for a major debate as the United States heads into next year’s presidential election to pick his successor.

Private-sector employers added an average of 280,000 in each of the past three months, roughly double the monthly rate since the 2009 end of the recession. And in contrast to last year’s State of the Union, which was packed with veiled threats about overriding the legislature, Obama steered clear of talk about executive authority.

The survey of policy priorities underscored another trend that doesn’t bode well for bipartisan cooperation: On all but a handful of issues, such as job creation and infrastructure repair, the poll found big disparities in the interests of the two parties. The president agreed to their request Tuesday evening, telling assembled lawmakers: “I call on this Congress to show the world that we are united in this mission by passing a resolution to authorize the use of force against [ISIS].” The devil is in the details: Should Congress authorize force targeted just at ISIS or broaden it to include other terrorist groups? Clinton was also commander-in-chief of US forces during the several-month long Nato bombing campaign against Serbia during the Kosovo conflict in 1999. These include congressional approval of a controversial oil pipeline from Canada to the central U.S., as well as changes to undercut the health care reform law and Wall Street financial restrictions.

This military action, in concert with diplomacy with Russia, created the pathway that led to Yugoslav president Slobodan Milosevic losing power in 2000. But his promises to veto whole swathes of potential GOP legislation – and the absence of any significant olive branch for Republicans – left some opponents visibly fuming.

The job market is finally looking stronger, but wages aren’t rising, and while employers are posting more job openings, they are still taking their time in deciding whom to hire. That Obama finished his address by extolling the need for Republicans and Democrats to quit “arguing past each other” and “break out of these tired old patterns” led to complaints of presidential chutzpah. “It was like he had two different speechwriters,” Colorado’s newly-elected Republican senator, Cory Gardner, told the Guardian. “In the first part of his speech, the president put forward policies that he knows we won’t support. Labor’s share of income (as opposed to the share of income that goes to capital) has steadily eroded over the years, while capital’s share of income (that is, income to investments like stock) has grown. In the second part of the speech, he talked about the need to work together.” One of the first to emerge from the House chamber was Florida senator and potential Republican presidential contender Marco Rubio, who was visibly incensed at the president’s call to lift the Cuban embargo. “I don’t know of a single contemporary tyranny that’s become a democracy because of more trade and tourists,” he said, chased by reporters into an elevator. “China is now the world’s richest tyranny. In particular, he held two key summits with Soviet leader Mikhail Gorbachev in Washington in 1987, where the Intermediate-Range Nuclear Forces Treaty was signed, and Moscow in 1988.

Vietnam continues to be a community tyranny.” Cuba was just one of dozens of issues on which Republicans reiterated their disagreements with the president, whom they said appeared unwilling to compromise from behind the podium. The writers often shared thoughts how their lives have improved during the country’s economic recovery, or benefited from immigration and health care policies supported by Obama. Republicans in the so-called “spin room” opposed Obama’s approach to nuclear negotiations with Iran, rejected his interpretation of the science of climate change and opposed his redistributive tax policies. “He wasn’t trying to find areas of agreement in genuine fashion,” said Wisconsin senator Ron Johnson. “The speech was partisan in content. Obama has said he would veto legislation that would force approval of the $8 billion pipeline to carry oil from Alberta, Canada, through the U.S., bypassing an administration review.

For instance, post-March’s Israeli election, the president may well seek one last push by his administration towards a new peace initiative between the Palestinians and Israelis. He mentioned companies including CVS Health Corp. (CVS) and United Parcel Service Inc., lauding them for paying for education benefits, and Tesla Motors Inc. and Google Inc. for creating jobs of the future.

While the odds would be against a breakthrough, it should be remembered that the last time such peace talks appeared to come close to potentially significant agreement was in the final summer of Clinton’s presidency, at the Camp David Summit in 2000. Also in the Middle East, Obama wants to significantly deplete the territorial foothold and capabilities of Daesh (the so-called Islamic State of Iraq and the Levant). Republicans have long argued that creating economic opportunity is a matter of letting business do its thing — cut taxes on job creators, and opportunity will follow.

And there remains the possibility of a comprehensive, permanent nuclear agreement with Iran, which would help consolidate Obama’s broader desire to enhance global nuclear security. Still, they have held out some hope of getting tax reform done this year—if the president’s messages of tax hikes for the wealthy is merely a starting point for negotiations rather than his end goal. “There’s great interest, among out members, on tax reform,” Sen. The revenue raised — $320 billion over 10 years — would be used to expand tax credits for higher education and child care and create a new break for two-earner couples.

Republicans, for their part, have at times championed some parts of this redistributive framework — some Republicans advocate expanding the EITC, for example. Obama’s address also touched on the battle against Islamic State and other extremist groups and securing the nation’s computer networks against cyber-attacks.

After hacking attacks on companies including Sony Corp., Obama last week said the U.S. is stepping up its international cooperation on cybercrime. “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,” Obama said while asking Congress to pass a cybersecurity bill. This would represent the largest regional free trade and investment agreement in history with the US and Europe accounting for more than 50 per cent of the world’s GDP. Obama has proposed a bill that would give companies legal protections for sharing information about hacking threats with each other and the government. More recently, Europe has been rocked by deadly attacks carried out by extremists in Paris and the hunt for accomplices from Belgium to Greece. “We will continue to hunt down terrorists and dismantle their networks, and we reserve the right to act unilaterally, as we’ve done relentlessly since I took office to take out terrorists who pose a direct threat to us and our allies,” he said. Last year, the then-Democratic-controlled Senate Foreign Relations Committee voted in favor of a resolution that prohibited the use ground troops and would have expired after three years, provisions that the administration and some Republicans criticized as too restrictive.

To contact the reporters on this story: Mike Dorning in Washington at mdorning@bloomberg.net; Angela Greiling Keane in Washington at agreilingkea@bloomberg.net To contact the editors responsible for this story: Jodi Schneider at jschneider50@bloomberg.net; Joe Sobczyk at jsobczyk@bloomberg.net Joe Sobczyk, Justin Blum

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