Tonight, President Obama will deliver one of his last State of the Union addresses and it will be a show to remember. Tonight will be remembered as the moment when the fight between Democrats and Republicans over Tax Reform began. Although not the most eye-catching of topics, The President’s Tax Reform Initiative could have huge implications on Americans….and who takes the White House in this year.
President Obama sailed into office on the promise of hope, change, and compromise. But tonight, that won’t be his message. Instead, The President will want to remind the nation that Democrats represents the working-class while Republicans represent the wealthy after his party’s lose of the Senate this past year. President Obama wants the GOP to be the party that doesn’t seem to care about 47% of Americans. He wants them to be the ones who are out of touch so that Democrats have a shot at keeping the White House in this year. So his message tonight will take a populist, every person tone: Let’s close the tax loopholes that only make the rich, richer and get wages back up so struggling Americans can feel like they have a shot once again.
Over the last week, the White House announced a package of policy proposals to create new tax credits for the middle class, tripling the child tax credit, increase the capital gains taxes, increase fees to discourage big banks from risky borrowing practices, and most notably make community college tuition free. These ideas are a way to make President Obama, and the Democratic Party at large, as a fighter for the middle-class. And this rebranding will surely help Hillary Clinton in this year if she decides to run for the Presidency.
Interestingly enough, Republicans are also staking out a more populist tone to combat the caricature the President is trying to draw. Mitt Romney, who recently announced that he is considering a third run for the White House, is promising to focusing on eradicating poverty. This past Friday, Governor Romney spoke to Republican National Committee members about Obama’s failings to stop wage stagnation and help the middle class: “Under President Obama, the rich have gotten richer, income inequality has gotten worse and there are more people in poverty than ever before.” For a man who didn’t seem to show care for 47% of American, becoming a populist warrior might be too great of challenge for Romney. But, it does show how worried the GOP is of being casted as out-of-touch people whose policies only help CEOs.
White House officials don’t really believe that Obama’s new proposals will be passed now that Republicans control both the Senate and Congress. But, thats not really the point. The reality is that the President wants to stake out a positioning in case both Republicans and Democrats can work on a bipartisan proposal to update the tax code. Although both sides are interested in tax reform, Democrats and Republicans have major differences. Republicans want individual taxes lowered for all while Democrats want to tax the wealthily more. These key differences, which will be a huge challenge to overcome, will mostly likely stall any sort of negotiations.
Obama is trying to make it politically difficult for Republicans to explain why they don’t support policies which will directly benefit the working-class. And, in many ways, the President is poking fun at the GOP. One of the biggest sources of money for Obama’s new initiatives would be increasing the dividend tax rate from 20 percent to 28 percent. And guess what? That’s the same rate people paid when Ronald Reagan lived in the White House.
The focus on dividends rates by the upperclass is throwback to the 2012 election. Democrats attacked Mitt Romney over his low tax rate. Governor Romney was hammered debate after debate by Obama for not caring about the middle-class, and for hiring accountants to figure out ways for him to avoid certain taxes. Needless to say, this did not go over well with voters and Obama won by a landslide.
President Obama’s earlier economic proposals were mostly focused on recovery after the 2008 bailouts. Now, the White House will emphasize Obama’s successes like the rebounded economy, high job creation numbers, and low gas prices. Instead of playing defense, Obama will be in a solid position to play offense and attack Republicans for doing little to better the economy.
The future 2015 war between Republicans and Democrats will start tonight. Although a year away, the issues are starting to define themselves and the two parties are trying to seem more welcoming to the average voter. With the defining issues in this year most likely to be income inequality and the economy, both Republicans and Democrats will be going to war over which party offers the cures to the ailments of their constituents. Their fight won’t be pretty and it won’t be fun to watch. But, this fight will help decide the next President Of The United States.
Author Bio: Austin Kruger is a Junior at Boston University and Consulting Associate at Argopoint.com. He is looking forward to writing more on politics, campaigns, and business.