US News

Obama strikes populist tone with calls for fair economy

By Anne K Walters Jan 25, 2012, 4:00 GMT

US Justice Anthony Kennedy (L), US Chief Justice John Roberts (2-L) and US Secretary of State Hillary Clinton (2-R) listen to US President Barack Obama (C) as he delivers his State of the Union. EPA/SAUL LOEB / POOL

Washington - US President Barack Obama in his last State of the Union address before he faces re-election called for an economy that provides opportunity for all Americans to get ahead and in which everyone contributes their fair share.

Keeping the American dream alive is the 'defining issue of our time,' he told Congress. 'No challenge is more urgent. No debate is more important.'

'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,' the president said.

'What's at stake are not Democratic values or Republican values, but American values,' he said. 'We have to reclaim them.'

Obama, a Democrat, laid out an economic 'blueprint' focussing on US manufacturing, energy, workers' skills and a renewal of US values. Among his key proposals was an increase in taxes on the wealthiest Americans, insisting that millionaires pay no less than 30 per cent of their incomes in taxes.

'Let's never forget: Millions of Americans who work hard and play by the rules every day deserve a government and a financial system that do the same,' Obama said. 'It's time to apply the same rules from top to bottom: no bailouts, no handouts, and no cop-outs. An America built to last insists on responsibility from everybody.'

To illustrate his policies, Warren Buffett's secretary sat alongside first lady Michelle Obama in the balcony with other honoured guests.

Debbie Bosanek, Buffett's longtime assistant at Berkshire Hathaway, has been held up by the billionaire businessman as an example of unfair tax policies that the billionaire investor said have his secretary paying taxes at a higher percentage of her income than he does.

Obama has in the past called for tax reforms that would have millionaires contributing a greater share in taxes. Currently, many wealthy Americans pay a lower effective tax rate because much of their income comes from investments, which are taxed at a lower rate than the highest 35-per-cent rate for income.

He attempted to cut off likely Republican criticism of the proposal. 'You can call this class warfare all you want, but asking a billionaire to pay at least as much as his secretary in taxes? Most Americans would call that common sense.'

As the president faces a tough re-election fight against a yet-to-be decided Republican challenger, he insisted that his policies were already creating jobs even if more needs to be done.

'The state of our union is getting stronger, and we've come too far to turn back now,' Obama declared in his third State of the Union address at the US Capitol.

He focused on bolstering US manufacturing and energy production, calling for ends to tax breaks for companies that ship jobs overseas and investigation of unfair trade practices by China.

But Obama has a tough task ahead as he works to persuade a sceptical US public to again put its trust in his economic policies and win over a Republican-dominated Congress that has been intent on halting his efforts over the past year.

Republican Speaker of the House of Representatives John Boehner already dismissed the president's remarks before he had even taken the podium.

'It sounds like we're going to see a rerun of what we've heard over the last three years: more spending, higher taxes and more regulations,' he said.

In the Republican response to the address, Indiana Governor Mitch Daniels called for a simplification of the tax code and lower tax rates.

'No feature of the Obama presidency has been sadder than its constant efforts to divide us, to curry favor with some Americans by castigating others,' Daniels said. 'As in previous moments of national danger, we Americans are all in the same boat. If we drift, quarreling and paralysed, over a Niagara of debt, we will all suffer, regardless of income, race, gender or other category.'

Amid an 8.5-per-cent unemployment rate, the most recent job approval ratings for Obama released by the pollster Gallup showed 46 per cent of Americans disapprove of his performance, among the lowest ratings for a US president in the third year of his presidency.

Obama could struggle to win a second term in November elections as the opposition paints his economic policies as failures.