There are two planks of President Obama’s State of the Union speech that could stand a reasonable chance at pumping more life into the economy sometime soon, albeit probably not before the November election: a $200 billion infrastructure program--classic Keynesian spending--and an effort to soothe the housing market by helping underwater homeowners refinance their mortgages.
Neither of those plans stands much chance of passing Congress this year. Which is almost beside the point, because the speech was about political framing, not economic action.
Remember the protesters who commandeered New York City’s Zuccotti Park and clashed with Oakland, Calif., police this fall, in the name of the “99 percent”? Tuesday’s speech was arguably their greatest accomplishment yet, as the president called economic fairness “the defining issue of our time.”
Last year, Obama all but begged U.S. corporations to play nice and spend their piles of sidelined cash. (They didn’t; profits and stockpiled liquid cash both hit record highs last quarter.) This year, he proposed new tax structures, which would push manufacturers to move jobs from foreign shores to America, and which would force millionaires to pay more than double Mitt Romney’s effective 2010 tax rate.
"If you’re earning a million dollars a year, you shouldn’t get special tax subsidies or deductions," Obama said. "On the other hand, if you make under $250,000 a year, like 98 percent of American families, your taxes shouldn’t go up. You’re the ones struggling with rising costs and stagnant wages. You’re the ones who need relief. Now, 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."
It’s the populist theme Obama is most comfortable with, dating back to a 2007 campaign speech at the Brookings Institution. The Occupy Wall Street protesters can claim credit for nudging him back toward it.