Welcome to the new Independent website. We hope you enjoy it and we value your feedback. Please contact us here.

Obama's formula for fairness: 'No bailouts, no handouts, no cop-outs'

Tax reform for rich is major theme as speech starts re-election bid
  • @dusborne

President Barack Obama served notice last night that he plans to seek re-election by drawing a bright line between his commitment to create an America that will give everyone a "fair shot" and the Republican alternative where, he said, "a shrinking number of people do really well".

Buoyed by new stirrings in the economy and the inability of the Republicans to coalesce around a candidate to challenge him in November, Barack Obama used the annual State of the Union speech to a joint session of Congress to signal fairness and defence of the middle class as the main themes of his coming campaign. "It's time to apply the same rules from top to bottom: No bailouts, no handouts, and no copouts," he said.

The speech, passages of which were released in advance by the White House, was set to lay out a series of broad initiatives on reforming the tax code to strip away some of the breaks currently available to the very rich more fair, tackling the housing slump more aggressively and spurring job creation.

More importantly, the address, which normally draws a primetime television audience of over 40 million, was Mr Obama's opportunity to set the tone of his re-election bid even as the Republicans continue to fumble for a candidate to face him. In cadences both optimistic and populist, he evoked a future "where we're in control of our own energy, and our security and prosperity aren't so tied to unstable parts of the world. An economy built to last, where hard work pays off, and responsibility is rewarded.

"The defining issue of our time is how to keep that promise alive. No challenge is more urgent. No debate is more important." Jabbing Republicans he said: "We can either settle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by. Or we can restore an economy where everyone gets a fair shot, everyone does their fair share, and everyone plays by the same set of rules."

This morning, the President begins a five-state tour to sell the main planks of his speech to voters. Going forward he plans to castigate Congress, which is deeply unpopular, and the Republican majority in the lower chamber in particular for taking the path of obstructionism, notably when it comes to altering tax codes for the rich. "I intend to fight obstruction with action, and I will oppose any effort to return to the very same policies that brought on this economic crisis in the first place," he said in the speech.

"We will not go back to an economy weakened by outsourcing, bad debt, and phony financial profits," he went on, insisting his was a "blueprint for an economy that's built to last, an economy built on American manufacturing, American energy, skills for American workers, and a renewal of American values."

That blueprint, much of which will meet resistance in Congress, was to include changes to the tax code and in particular an end to tax cuts for the rich introduced by George Bush. Mr Obama is also looking at tax incentives for US manufacturers to bring back jobs they have shipped overseas.

On the tax issue, Democrats believe they can hold up the case of Mitt Romney, who they still believe is likely to emerge as the Republican candidate this autumn, as Exhibit A as to why tax reform is necessary.

Tax filings released by the Romney camp yesterday showed the former Governor of Massachusetts had paid taxes at a rate of only 13.9 per cent in 2010.

State of the Union: Key ideas

* Tax breaks to reward companies for keeping jobs in the United States while eliminating tax benefits for those that outsource jobs overseas.

* A call to rewrite the tax code to adopt the so-called "Buffett rule," named after billionaire Warren Buffett who says it is unfair that he pays a lower tax rate than his secretary.

* Ideas to help the troubled home mortgage market and incentives for alternative energy development.

* Incentives to encourage lenders to refinance "underwater" mortgages, where the home value has fallen to less than the amount still owed.