WASHINGTON — Barack Obama this week will lay the foundation for the last two years of his presidency. Helping middle- and lower-income households will be the cornerstone.
Obama is trying to shore up his legacy and help Democrats seeking to win the White House in 2016 with policies intended to aid Americans who have failed to benefit from the economic recovery.
On Jan. 17, the White House said Obama would propose new taxes on the wealthiest Americans to fund expanded tax credits for higher education and child care and create a new break for two-earner couples, policies that will aid the middle class.
From expanded health coverage to broadening a tax credit for workers, the president also wants to put more money in the pockets of lower-income earners. In the run-up to his State of the Union address Tuesday night, he has been unveiling initiatives including one for paid family leave and another to make community college free. His plans face opposition from the Republican-run Congress, which wants to cut taxes and spending.
“Now that the economy’s in a stronger place than it’s been in a very long time, we need to double down on our efforts to deal with wage stagnation and declining economic mobility,” Dan Pfeiffer, a senior adviser to Obama, said Sunday on CBS’s “Face the Nation.” “In divided government, each side should lay out their agenda, what they think is in the best interest of the country. And then we can figure out if there are things in the middle we agree on.”
Many Americans have continued to lose ground since the recession ended. Median household income fell 3.9 percent to $51,939 in 2013 compared with 2009, when Obama took office, U.S. Census Bureau data show. The poorest fifth fared even worse, with incomes dropping 5.9 percent to $20,900.
The latest plan, released Saturday, would increase the top tax rate on capital gains and dividends to 28 percent from 23.8 percent and impose capital-gains taxes on asset transfers at death. That would fund a $500 tax credit for married couples when both spouses work, and triple the maximum tax credit for child care to up to $3,000 for children under 5. That credit could be claimed by families making as much as $120,000.
Obama also would consolidate several education tax breaks into a single tax credit worth up to $2,500, and is proposing to end taxation of some student loan debt forgiven under income-based repayment plans.
This month, he announced that the Federal Housing Administration would cut its mortgage-insurance premiums by about 37 percent, enough to save most borrowers $900 a year on their loan payments. The Department of Housing and Urban Development predicted the move will bring 250,000 first-time buyers into the market.
The administration’s home ownership focus provides little relief to poor renters, Calabria said. For low-income households, “first and last, the biggest expense is housing, and that cost has not moderated on the rental side,” Calabria said. Median asking rent climbed to $756 in the third quarter 2014 from $716 for the same period in 2009, based on Census data.
Homeownership policies would benefit poor Americans only if they can earn enough to pull themselves up — and the outlook isn’t good. Wage growth remains tepid, and falling gas prices, a boon to the middle class, have done little to help low-income Americans, who often don’t drive.
Obama last year proposed expanding the earned income tax credit for childless, unmarried workers and raising the minimum wage.
Such measures wouldn’t be enough to alleviate pain for many of America’s poor. About 45.3 million Americans were in poverty in 2013. Of prime-age adults, just 10.7 million of the impoverished worked.
About the speech
President Barack Obama’s 2015 State of the Union address will be televised live at 7 p.m. MST Tuesday on C-SPAN, CNN and other channels.
