We begin today's roundup with
John Nichols at The Nation, who says President Obama's focus on income inequality is a smart move:
At a point when there is broadening recognition of the social and economic perils posed by income inequaliy, the president is talking about taking simple steps in the right direction. Congress is unlikely go along with him, but the American people will—Gallup polling finds that 67 percent of likely voters are dissatified with income and wealth distribution in the United States. And as this country prepares for the critical presidential and congressional elections of 2016, the president’s clarifying of the terms of debate on taxes becomes vital. [...]
This is not a radical plan. It redistributes a very small amount of wealth, and most of that wealth will be steered right back into the economy by working families that—even as employment rates slowly improve—continue to struggle to make ends meet in an era of stagnant (or, at the very least, exceptionally slow) wage growth.
To get a sense of how modest the Obama proposal is, consider this: the capital gains tax rate increase he proposes will only return the rate to what it was when Ronald Reagan was president. So Obama is only undoing the damage done; he is not going anywhere near the robust rates seen under Richard Nixon and Gerald Ford. Nor is he even talking tax reforms that would return the marginal tax rate for the wealthiest Americans to 91 percent: the rate seen during the presidency of Republican Dwight Eisenhower, a period during which a booming US economy saw rapid expansion of employment and wages
Why is the president proposing something that has no chance of passing Congress?
Tim Mak looks at why President Obama's "Haily Mary" State of the Union has a specific policy and political purpose:
A Republican refusal to consider taxing the 1% and the things they say in the process can be used against them in future elections. He can try to influence a direction for his party and, simultaneously, define an advocacy role for himself in the years ahead,” said Wayne Fields, author of a book on presidential speechwriting, 'Union of Words: A History of Presidential Eloquence.'
And in previous State of the Union addresses, argued Greenberg, President Obama has laid out points of potential compromise—only to find the negotiating window shifting to the right when Republicans made stronger demands.
“Obama has made the mistake a lot over his initial years by opening with a compromise bid, and Republicans would counter with their maximum bid,” he said. “Obama may have finally figured out that it's better to open with your maximum bid.”
Much more analysis below the fold.
Sally Kohn at CNN breaks down the Republican response to the president's proposal:
Republicans, meanwhile, are already apoplectic about President Obama's plan. One of the more curious phenomena about Republicans is that their economic agenda is entirely independent of the facts of the moment. So when the economy is strong, Republicans demand tax cuts for the rich. When the economy is weak, Republicans demand tax cuts for the rich. When the economy is recovering, Republicans demand tax cuts for the rich.
But the massive tax cuts for the wealthy under President George W. Bush didn't stave off the recession and arguably precipitated or worsened the fall. Moreover, the nonpartisan Congressional Research Service has conclusively determined that tax cuts for the rich do not spur economic growth. To the contrary, there's evidence that tax cuts hurt growth. In fact, the only thing tax cuts unequivocally do, according to the study? Tax cuts increase economic inequality.
Want to know exactly how the new tax plan affects the rich?
Michael Hiltzik lays out the numbers at The Los Angeles Times:
The capital gains preference, however, is uncapped [unlike the mortgage deduction]. The larger the gain one reports, the greater the tax break--that differential between the 20% top cap gains rate and the 39.6% top marginal rate is gold, pure gold. In 2011, according to the IRS, the average net capital gain reported by those in the $75,000-to-$100,000 income range was $761. For those just at the millionaire level, it was $137,755. For those earning $5 million to $10 million, it was $1.8 million. And for those with income of $10 million or more, the average reported taxable capital gain was $12.6 million. That's the income club, remember, that claimed an average of only $13,898 in average annual mortgage deductions.
Which tax preference do you think the 1% will fight hardest to preserve? [...]
Then comes the biggest loophole of all, the so-called trust fund loophole. This allows capital assets to be passed on to one's heirs at their appreciated value: if you bought a share of stock for $100 decades ago and it's now worth $1,000, it's valued at the higher figure when your heirs inherit it. In other words, the accumulated capital gains tax liability is utterly extinguished. That's virtually unique in the tax world, where taxes typically can be deferred, but not eliminated.
Bloomberg's
David Knowles examines the data context of President Obama's new strategy, breaking down the numbers on jobs, income inequality, immigration and more:
A funny thing happened after Obama and the Democrats suffered a thumping in the mid-term elections: Obama's approval rating began trending upward. In fact, a Washington Post/ABC News poll shows Obama hitting 50 percent, a nine-point jump since December. One probable reason? The continued improvement of the nation's economy. Last year saw the strongest job gains since 1999. A total of 2.95 million jobs were added in 2014, leading to an unemployment rate below 6 percent and undercutting Republican attempts to paint Obama as a job killer.
Over at
The Denver Post, the editors praise the president's new populist strategy and make an excellent point to keep in mind as Republicans complain:
Republicans would be making a mistake to dismiss the idea of middle-class relief out of hand. In fact, they should come up with their own ideas if they dislike Obama's.
Yep.
Paul Waldman at The Washington Post has more on the GOP reaction:
Naturally, Republicans are not pleased.
But if you listen carefully to what they’re saying, you’ll notice that they are barely mentioning the proposals for middle-class tax breaks which are supposed to be the whole purpose of this initiative; instead, all their focus is on the increases America’s noble job creators would have to endure in order to pay for it.
[...]
One thing’s for sure: as the economy improves, both parties are now being forced to address the underlying issues of stagnant wages and inequality that have been an anchor around ordinary people’s lives for the last few decades. It’s fair to say this isn’t the debate Republicans want to have, and it’s easy to mock them for their insistence that they’re really the party with something to offer the middle class and the poor. But it’s a lot more productive to just take them at their word and see what they actually propose to do.
Jeff Ross at The Week jumps into the "are Democrats trolling the left" debate:
There’s also a larger historical and demographic context here, that intertwines with the country’s rising inequality. In the 1970s, the Democratic Party’s platform still boasted robustly left-wing economic populism, including a guaranteed job for every American and the eradication of poverty. But by the 1990s it was evolving towards centrist and Clintonite paeans to tax cuts, the private sector, and smaller government, even as the party became more aggressively and unapologetically liberal on many social issues, particularly since Obama’s election.
And it’s worth noting that the timeline for this shift in the party’s economic priorities lines up pretty well with the rise of inequality.
While we're at it, let's talk about the president's rising approval ratings.
Nate Cohn at The Washington Post breaks down historical trends:
There is a well-established relationship between the pace of economic growth and a president’s approval ratings, and Mr. Obama is clearly benefiting from signs of accelerating economic growth. For the first time since the start of the recession, more Americans believe the economic conditions are good or excellent than poor. Consumer confidence rose to an 11-year high last week, according to the University of Michigan consumer sentiment index.
The increase in Mr. Obama’s ratings also comes amid a flurry of executive actions or promised ones on immigration, climate change, Cuba and Internet policy. Mr. Obama’s immigration initiative may be at least partly responsible for his rebound. His rating among Hispanic adults jumped decisively, perhaps by as much as 15 percentage points, in the weeks after his decision to defer deportation and offer work authorization for up to five million immigrants who lack it. Still, there is not much evidence that liberal voters over all have become notably more supportive or energized as a result of a more active and progressive administration. Mr. Obama’s approval ratings did not increase by a disproportionate — or even notable — amount among Democratic or self-identified liberal voters, according to Gallup data.