To Drive Economy Toward Equality, Obama Requests More Spending
President Obama revved up quickly for his economic victory lap.
"After a breakthrough year for America, our economy is growing and creating jobs at the fastest pace since 1999," President Obama said less than a minute into his State of the Union address Tuesday night.
The lap was fueled by cheap gas: "We are as free from the grip of foreign oil as we've been in almost 30 years," he said.
And then Obama pointed to where he wants to steer the economy — toward greater economic equality. He wants to get there by spending more on child care, education and infrastructure. He would pay for that by imposing more taxes on capital gains, inherited assets and big banks.
"This country does best when everyone gets their fair shot, everyone does their fair share and everyone plays by the same set of rules," he said.
But business groups and conservative economists questioned the touted fairness of the White House plans.
John Makin, an economist with the conservative American Enterprise Institute, said in a statement that Obama's tax plan was a "purely political package that modestly shifts the tax burden to higher-income households, or the ambiguously defined 'rich.' "
What Obama Wants
Before getting into the back-and-forth, let's first look at Obama's goals. He wants Congress to:
- Collect more taxes from wealthy individuals and major financial institutions.
- Create more tax credits to help pay for child care and community college.
- Build and repair more ports and bridges.
- Help lower-income workers with a higher minimum wage and paid sick days.
- Increase access to retirement savings plans offered by employers.
- Expand trade with other countries.
Obama said these efforts would help reverse the trend toward greater income inequality. He asked: "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?"
What Critics Say
Business responses generally ranged from the dismissive to the disdainful. Here's an example of the brush-off, this one aimed at the proposed fees to be imposed on financial institutions with assets of more than $50 billion:
Obama's plan is "political posturing — and not a serious policy proposal. In our view, chances of this proposal passing are low," according to an analysis by Keefe, Bruyette & Woods, an investment bank.
The National Center for Policy Analysis, a conservative research group founded by wealthy individuals, condemned efforts to raise the minimum wage and add paid sick days. "These additional costs to hiring will make employers less likely to hire," NCPA senior fellow Pam Villarreal said in a statement.
Not all of Obama's critics were conservatives. Many liberals object to Obama's call for expanded trade. For example, Bill Waren, a trade policy analyst for Friends of the Earth, said that if Obama were to win expanded trade authority, his administration would "push deals through Congress that would trade away strict environmental and health standards for the greed of corporate polluters."
What Supporters Say
Liberals cheered Obama's proposals for higher taxes, particularly for big banks. It would "make the financial system safer and more stable, reducing the risk of another crash and bailouts, which will benefit all Americans," Dennis Kelleher, CEO of Better Markets, a Wall Street watchdog group.
Christine Owens, who heads the National Employment Law Project, a group that advocates for low-wage workers, said Congress should follow Obama's lead and raise the federal minimum wage. "If 2014 was the year of putting people back to work, 2015 should be the year of raising their pay," she said.
What Others See
While Congress braces for battles over taxes and spending, the rest of the world looks on at U.S. economic problems that seem enviably small. European and Asian leaders are scrambling to fight off recessions and budget troubles that far outstrip ours.
On Tuesday, PricewaterhouseCoopers released its annual global CEO survey. Company bosses ranked the United States as their most important market for growth in the coming year — placing the U.S. ahead of China for the first time in five years.