Obama on State of the Union: Tax wealthy, help middle class

Refusing to bend to the new Republican Congress, President Barack Obama unveiled Tuesday night an ambitious State of the Union agenda steeped in Democratic priorities, including tax increases on the wealthy, education and child care help for the middle class and a torrent of veto threats for the GOP's own plans.

In a shift from tradition, Obama's address to a joint session of Congress was less a laundry list of new proposals and more an attempt to sell a story of a national economy emerging from the "shadow of crisis." He appealed for "better politics" in Washington and pledged to work with Republicans, but he showed few signs of curtailing or tweaking his own plans to meet GOP priorities.

Instead, the president vowed to use his veto pen to strike down the Republican leadership's efforts to dismantle his signature accomplishments, including his health care and financial reform laws.

"We can't put the security of families at risk by taking away their health insurance or unraveling the new rules on Wall Street or refighting past battles on immigration when we've got a system to fix," Obama said in his hour-long address. "And if a bill comes to my desk that tries to do any of these things, I will veto it."

The president sought out more common ground on foreign policy, pledging to work with Congress on a new authorization for military action against the Islamic State group in Iraq and Syria, as well as legislation to guard against cyberattacks. In a rare move away from his own party, Obama also renewed his call for fast-tracking free trade agreements with Asia and Europe, generating more applause from pro-trade Republicans than skeptical Democrats.

Obama's address marked the first time in his presidency that he stood before a Republican-controlled Congress. Yet the shift in the political landscape has also been accompanied by a burst of economic growth and hiring, as well as a slight increase in Obama's once-sagging approval ratings — leaving the White House to see little incentive in acquiescing to Republicans.

After ticking through signs of the rising economy, the president turned toward Republicans sitting in the chamber and said with a wink, "This is good news, people."

The centerpiece of Obama's economic proposals marked a shift away from the focus on austerity and deficit reduction that has dominated his fiscal fights with Republicans. In a direct challenge to GOP economic ideology, Obama called for increasing the capital gains rate on couples making more than $500,000 annually, to 28 percent.

The president's tax plan would also require estates to pay capital gains taxes on securities at the time they're inherited and slap a fee on the roughly 100 U.S. financial firms with assets of more than $50 billion.

Much of the $320 billion in new taxes and fees would be used for measures aimed at helping the middle class, including a $500 tax credit for some families with two spouses working, expansion of the child care tax credit and a $60 billion program to make community college free. He also has called for expanding paid leave for workers and moved on his own to lower a mortgage insurance premium rate that could attract new homebuyers.

"Will we accept an economy where only a few of us do spectacularly well?" Obama asked. "Or will we commit ourselves to an economy that generates rising incomes and chances for everyone who makes the effort?"

The president's proposals seemed more about giving his party a platform in the 2016 election than outlining a realistic legislative agenda. Even before the president's address, Republicans were balking at his proposals and painting a far less rosy picture of the economy.

"We see our neighbors agonize over stagnant wages and lost jobs. We see the hurt caused by canceled health care plans and higher monthly insurance bills," said Iowa Sen. Joni Ernst, who delivered the Republican response. "But when we demanded solutions, too often Washington responded with the same stale mindset that led to failed policies like Obamacare. It's a mindset that gave us political talking points, not serious solutions."

With an eye on a swirl of foreign policy challenges, Obama defended his decision to return to military action in Iraq and also authorize airstrikes in Syria. He said Congress could "show the world that we are united in this mission" by passing a new resolution formally authorizing the use of force against the Islamic State group.

As the U.S. eyes a March deadline for a framework agreement with Iran on its disputed nuclear program, the president vowed to veto any effort by Congress to pass new sanctions legislation. Such a step, he said, "will all but guarantee that diplomacy fails — alienating America from its allies and ensuring that Iran starts up its nuclear program again."

The president also heralded his unilateral move last month to normalize diplomatic relations with Cuba after a half-century of animosity, and he urged lawmakers to follow his lead by lifting the economic embargo on the communist island. Yet the guest boxes in the House chamber underscored the sensitive politics that hang over efforts to overhaul the long-standing U.S. policy toward Cuba.

Among the guests sitting with first lady Michelle Obama was Alan Gross, the American man who spent five years in a Cuban prison and was released as part of the deal to end the freeze between Washington and Havana. In a nod to the concerns of Cuban dissidents and pro-democracy advocates, House Speaker John Boehner's guest was Jorge Luis García Pérez, who spent 17 years in a Cuban prison. Florida Republican Sen. Marco Rubio brought Rosa Maria Paya Acevedo, whose father was a well-known Cuban dissident who was killed in a car accident that his family believes was suspicious.

Obama appeared at ease throughout the address, adlibbing at times and responding to the audience reaction. As he neared the end of his speech, he declared, "I have no more campaigns to run." As Republicans erupted in laughter, Obama retorted, "I know, because I won both of them."