Sounding a broadly optimistic note in his State of the Union Address on Tuesday night, President Obama urged the nation to turn the page on 15 years of war and economic deprivation and to usher in a new era of middle class prosperity, reported Inc.
The address, the president’s first before the newly Republican-led joint houses of congress, offered a bold vision that puts business, and middle class ownership of business, at the center of politics and the economy. In order to accomplish his goals, taxes would have to be raised for the wealthiest, and congress would have to rise above partisan rancor that has proven so detrimental to business, through events like the government shutdown in 2013.
“Know this, the shadow of the crisis has passed and the state of the union is strong,” the president said, in rhetoric that was both soaring and confident. “At this moment, with a growing economy and a shrinking deficit and bustling industry and booming energy production, we have risen from recession, freer to write our own future than any nation on earth.”
Drawing comparisons to policy changes made in the American economy around the era of World War II, which included the creation of Medicare, the president said he wanted to lay the groundwork for a more prosperous, middle class economy for generations to come.
Here’s a look at some of the key elements of last night’s speech:Taxes
In recent days, details of the president's tax plan have emerged. A cornerstone of the changes he proposes would include lowering the tax rate of middle class earners, while raising them for the wealthiest. Essentially, The president wants to return to the top capital gains tax rate to 28 percent for those earning $500,000 or more, the rate under former president Ronald Reagan. The president would also close loopholes, such as inversions, which allow some U.S. businesses to incorporate overseas and avoid paying federal taxes.Free Community College
The president would make two-year college education at community colleges free, just as a high school education is free for all U.S. citizens today. The goal is to train the American workforce to be more competitive and to meet the complex challenges of the new jobs of the 21st century. That’s a note that nearly every small business survey points to, the inability of owners to find qualified workers. “We need to up our game and do more,” Obama said. “By the end of this decade, two in three job openings will require higher education.”The Minimum Wage and Paid Leave
Citing the example of the 28 states that have already raised their minimum wages, the president urged congress to act to pass a law that would increase the federal minimum wage to $10.10 an hour. The president issued an executive order that raises the minimum wage for federal contractor workers to that amount in 2014. The president, who signed a memorandum authorizing six weeks of paid leave for new parents who are federal workers last week, said he wanted to formalize this into a national program for all workers. He's expected to ask congress to pass legislation requiring companies to give workers paid time off for illness, as well as create $2.2 billion in grants to states to help support the initiative.Cybersecurity
Following the international brinkmanship caused by North Korea’s alleged hack attack of the Sony Corporation in December, and the almost daily attacks of hackers against other businesses, the president proposed a plan that will nationalize the patchwork of laws that currently exist about company reporting obligations following a break-in. He would also enlist the help of businesses in sharing information about cybercrime and cyber attacks, and protecting online identities.Trade Agreements
The president wants to strengthen trade by passing pending trade agreements. These are the Trans-Pacific Partnership, being negotiated with 11 trading partners in Asia, and the Transatlantic Trade and Investment Partnership with the European Union. “Twenty-first century businesses, including small businesses, need to sell more American products overseas, and today we export more than ever, and exporters pay higher wages than ever,” Obama said. “Ninety-five percent of the world’s customers live outside our borders, and we can’t close ourselves off from those opportunities."Infrastructure
Building new infrastructure, including a state of the art national broadband network, and rebuilding old infrastructure to meet the demands of the 21st century will make us more competitive globally and will attract more business investment in the U.S., the president said. He urged Republicans to think beyond passing just the Keystone Pipeline for oil to a broader set of initiatives. “Twenty-first century businesses need 21st century infrastructure: modern ports, stronger bridges, faster trains and the fastest internet,” the president said. “Democrats and Republicans used to agree on this.”
For their part, some small business groups had mixed reactions to the president’s speech, generally applauding Obama's commitment to strengthen cybersecurity and global trade agreements, while questioning what might be a too limited overhaul of corporate taxes, which would leave in the lurch a majority of small businesses, which operate as pass-through entities and report taxes on an individual level.
“Corporate-only tax reform is a nonstarter for small business,” Todd McCracken, the president and chief executive of the National Small Business Association, an advocacy group, said in a statement. “Eighty-three percent of small businesses are pass-through entities and therefore not only will they not benefit from corporate-only tax reform, there is a chance they could lose some current deductions, resulting in a higher effective tax rate.”