• Road to riches

    Taxpayers keep funding structures with big plans but who knows what efficacy, says Mandi Smallhorne.

  • Don't fall for Ponzi scams

    An expert unpacks the tell-tale signs to watch out for.

  • Inside Labour

    A smokescreen of misleading rhetoric won't make SA's problems go away, says Terry Bell.

See More

Economic balancing act

Jan 26 2012 07:19 Reuters

Related Articles

Obama touts manufacturing to restore economy

Obama seeks $1.2 trillion debt limit rise

It's the economy, stupid

Romney: Don't turn US into Europe

Obama signs spending bill, avoids shutdown

Obama: Iran's economy a 'shambles'


Washington - President Barack Obama threw red meat to his political base on Tuesday with a promise to do the nearly impossible: solve the problem of widening US income inequality.

Faced with the very real possibility of losing the White House in November, Obama used his State of the Union address to demand a tax increase for millionaires and launch an aggressive campaign arc built upon economic fairness.

"No debate is more important," Obama said early in his hour-long speech before a joint session of Congress.

"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, and everyone does their fair share, and everyone plays by the same set of rules."

In recent months, Obama had made clear he would mine the vein of resentment in America over the growing income gap, the source of inspiration for last year's Occupy Wall Street movement that highlighted the concentration of wealth among 1% of the population.

But by choosing to make it the cornerstone of his annual speech to the nation, he cemented the theme of working for the 99% as his campaign battlecry for the next 10 months.

He could not have chosen a better day to contrast his populist ideas with his possible Republican challenger.

Mitt Romney, one of the wealthiest presidential candidates in history, released tax returns on Tuesday that showed he and his wife paid an effective tax rate of 13.9% in 2010 and expect to pay a 15.4% effective tax rate for 2011.

Obama proposed a minimum tax rate of 30% for people who make $1m or more a year, a clear shot at his would-be rival, even though he was unnamed in the speech.

"I think it's one of the best cards he can play, especially given that Mitt Romney released his tax returns today," said Henry Brady, dean of the Goldman School of Public Policy at the University of California, Berkeley.

"People are worried about fairness in the tax code. So it seems to me that this is something where he has the rhetorical advantage."

Senior administration officials said the 30% figure was established long before Romney's tax rate was made public.

One noted, however, that not all wealthy people kept their money in accounts on the Cayman Islands, a dig at the former Massachusetts governor, whose advisers said his holdings included amounts in funds based in the Cayman Islands and other overseas entities.

Populist strategy

Obama's tax reform proposal, made on one of the biggest campaign stages of the year, is the latest in a series of moves the president has made to appeal to the middle class and to present a populist message.

The president's autumn deficit reduction proposals and recent appointment of a director to lead the consumer financial protection agency that is unpopular with Republicans have raised the temperature and highlighted the contrasts between him and the opposition party.

Nevertheless, the president knows he has almost no chance of getting his millionaire tax proposal through a divided Congress.

But the issue gives him a strong talking point to energise his political base, much of which has been disenchanted with his record.

"It's a great issue for President Obama. It's something that his base has been waiting for," said Democratic strategist Bud Jackson. "He has started to move to a more combative approach in terms of contrasting himself with Republicans ... and I also think that dovetails nicely with Mitt Romney or Newt Gingrich or whoever the nominee will be."

The president will take the message on a five-state, three-day trip beginning on Wednesday.

The state choices are not coincidental. He is going to Iowa, Arizona, Nevada, Colorado, and Michigan - all battlegrounds that could help decide the general election.

Officials said he would release more details about his business, energy, and college affordability proposals during the trip.

Supporters are eager to have more details - and more red meat.

"I did particularly like that he described income inequality and the support of the middle class as the defining issues of our time," said James Catalano of Tampa, Florida, who attended a party with other Democrats to watch the speech.

"I thought it was really moderate and reasonable, which was a little frustrating."

barack obama  |  us economy  |  us elections 2012


Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
1 comment
Add your comment
Comment 0 characters remaining

Company Snapshot

We're talking about:


Johannesburg has been selected to host the Global Entrepreneurship Congress in 2017. "[The congress] will ensure that small business development remains firmly on the national agenda and the radar screen of all stakeholders, the Small Business Development minister said.

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

People who fall victim to Ponzi scams are:

Previous results · Suggest a vote