Backing a tax increase on the wealthy, President Obama used the State of the Union address Tuesday night as a platform to voice his plan to build up a shrinking middle-class.
Since Obama’s arrival in the White House in 2009, the economy has made a resurgence. The Washington Post reports that 11 million private sector jobs have been created over 58-straight months. This is quite notable for an economy that is still growing and trending upward.
Even stock prices have reached new heights. The stock market has boomed — Standard & Poor’s 500 stock index reported a 142 percent higher value than it was the day Obama took office. The Dow Jones Industrial Average reports that it has doubled since then, and the Nasdaq Composite index shows a gain of nearly triple the value of its stocks.
As far as unemployment is concerned, 2014 was one of the best years of job growth in presidential history. The Bureau of Labor Statistics annual report shows that nearly 6.4 million more people in the United States are employed since Obama took office. The official unemployment rate is 5.6 percent, 2 percentage points lower than it was when Obama took office, and it is also under the historic national average.
With all the above being taken in to account, there are certainly areas that are in need of improvement under the Obama administration in its remaining tenure.
Most notably, government spending has been an issue that Obama wishes to confront and improve. The deficit spending used to fund the resources that have caused the above to flourish, whether it is has been more available jobs or government-aided job-training programs, has to be paid back in a timely manner.
To pay this government debt, a tax increase will likely be used to raise $320 billion over a 10-year period. Looking at this on paper, this $320 billion goal is simply not enough needed to even put a noticeable dent in the government debt. However, the important number to keep in mind in the short term is the national deficit, the difference between the revenue the government takes in and what it spends. In 2014, that was $483 billion, much lower than in recent years (in 2009, the deficit was $1.41 trillion). Yet, with projected increases in spending on budget goliaths, this isn’t a trend that’s expected to continue.
For this plan to be significant in reducing the national deficit, while also supporting the middle class, Obama’s proposed tax increases will focus primarily on the wealthy and big-money firms.
While in a vacuum this seems like an easy process, shifting the capital from the extremely wealth to pay a big portion of the national deficit, it will be quite difficult to pass a bill such as this in a U.S. Congress dominated by Republicans in the Senate and the House. It is hard to believe that the majority vote could ever be reached with the current political atmosphere on Capitol Hill.
Most likely, a compromise for a bill to increases taxes on the rich will be extremely difficult to reach. In his speech, Obama said, “we need to do more than do no harm,” when the latter half of that statement has been the credo of the GOP since Reagan’s presidency. For a Congress controlled by conservatives, cuts in overall spending will most likely have to be included before a bill even hits the table for discussion. This tax plan is symbolic as just the first of many ideological problems Obama will need to solve in the next two years, and it will likely to be a big factor in his legacy and the stability of the country at large.
