It’s time for the State of the Union address – again. And President Obama is wooing the middle class – again.
The middle class has been the focus of the president’s speeches – especially the State of the Union addresses – for several years now. In 2013, Obama described the recreation of a thriving middle class as “our generation’s task”, and laid out ways to address inequality, including a minimum wage hike to $9.
Last year, the president described his annual address as one that would include “a set of concrete, practical proposals to speed up growth, strengthen the middle class, and build new ladders of opportunity into the middle class.”
These included making loans to small businesses, pushing for a patent reform bill, reducing tax benefits for fossil fuel industries in favor of renewable energy sources, overhauling employee training programs – and yes, boosting the minimum wage. This time, he issued an executive order requiring that federal contractors pay their employees at least $10.10 an hour.
This year, Obama is featuring the middle class again, with two of his five bragging points for the State of the Union centered on taxes. Obama has also infuriated Republicans by proposing a new set of tax pledges that Thomas Piketty would love: raising the capital gains tax to 28%, taxing trust funds at a higher rate, and fining banks to create $325bn that can be a tax cut to the middle class.
This is on top of Obama’s other tax plans for the middle class in the past, including raising gains taxes on high earners to 20% from 15%, which paired with a 3.8% tax on investments and a 0.9% tax on income for those same high-earning households to fund the Affordable Care Act. Obama also raised the tax rate for households earning more than $400,000 to 39.6%. The passel of tax increases was the first tax hike for wealthy households in years.
And Obama has already provided a preview of other aspects of this year’s speech. He celebrated the revival of the US housing market at a Ford Motor Co plant in Michigan, and went on to Phoenix. While there, he announced a 0.5% cut in the annual insurance premiums that homebuyers pay when borrowing from the Federal Housing Administration. That would be a boon for many first time buyers, cutting their average mortgage payment by about $900 a year and helping them win entry to the middle class.
After that, Obama introduced his plan to make two years of community college free, giving students a jump-start on the road to middle class prosperity.
The president is backing a Congressional bill sponsored by two Democrats that would give American employees as many as seven days of paid sick leave each year; he’s also supporting state and local action on family and medical leave initiatives.
Look for these middle-class-boosting initiatives to make an appearance in the State of the Union address, along with others like them – and more references to the minimum wage. Even as states and municipalities have begun to boost minimum wages, the federal wage has remained fixed at $7.25 an hour in spite of the president’s annual appeals to Congress to raise it.
The president has demonstrated that he has a good sense of what the middle class needs: better wages; a more secure retirement; financially accessible post-secondary education; affordable home ownership (without the risk that a financial institution is going to sell them a toxic mortgage product) and healthcare.
The problem is that the middle class doesn’t feel that they have been the biggest beneficiaries of the economic recovery that Obama described so vividly in Michigan earlier this month. True, unemployment has shrunk – but wages have stagnated. Americans may find it easier to get a job, but may need more than one to make ends meet. All but a tiny fraction of the benefits of the economic recovery have gone to the country’s wealthiest individuals and to its corporations. Corporate profits now account for a larger share of total US economic output than ever before.
Ironically, although it is the middle class to whom Obama addresses his appeals and from whom he draws his support, it is the group most likely to have been short-changed in his presidency. The rich have grown richer. Poll respondents gave Obama a failing grade on his support for the middle class back in 2013, agreeing that Wall Street and health insurance companies have benefitted more than the average family from the economic recovery.
But they don’t always blame the president. Many place the blame on Congress for blocking the policies and proposals Obama lays out during State of the Union addresses and on other occasions.
Congress certainly needs to shoulder its share of the blame for the struggles of the middle class, even though the language of self-reliance we often hear from elements of the Republican Party suggests that the middle-class simply should be more self reliant. When Mitt Romney, making a newly announced 2016 presidential run, spoke to a Republican audience about lifting Americans out of poverty, there was “no applause”, Politico noted pointedly. Populist Elizabeth Warren jeered at Romney on Twitter, asking “are corporations still people, Mitt?”
The White House page that trumpets the president’s achievements with respect to the middle class doesn’t mention the problems with Congress.
“The President overcame furious lobbying by big banks to pass the most far reaching reform of Wall Street in history, which will provide the excessive risk taking that led to the financial crisis,” the page proclaims.
True enough. But let’s not forget the systematic attacks by the banking industry on those reforms that in the last two months have finally succeeded in rolling back some of the measures designed to safeguard the financial system. Some of the new rules were even drafted by the banks themselves.
The Affordable Care Act – Obamacare – is under assault, too, as the newly-elected Congress seeks to redefine the average workweek to enable employers to describe more workers as being part-timers in order to deny them health care coverage.
If anything, rather than find an audience in Congress ready to listen and work with him on some of his new proposals, the president may end up having to re-fight some battles he thought he had already won.
None of which is encouraging news for those of us in the middle class.
