Obama talked in detail about the “Buffet rule”, according to which a household earning more than $1 million per year would have to pay a minimum federal income tax of 30%. These households would not be able get any deductions for mortgage interest, health care, retirement savings or even child-care benefits. But contributions made to charities would still qualify for tax breaks. Obama’s critics see this as him pandering to the anti-Wall Street sentiment in the country.
The other initiatives that Obama outlined in his address were:
• American companies will now have to pay a minimum tax on profits earned in their overseas locations.
• Companies will not be able to deduct costs associated with shifting their operations to foreign locations.
• Companies that bring jobs back to the U.S. will get a new tax credit to help with their relocation costs.
• Manufacturing companies will be given more tax breaks, especially firms involved in hi-tech industries.
• Around $200 billion will be spend on building and improving roads and bridges, with part of the expenses being paid for by winding down the military operations in Iraq and Afghanistan.
• Universities that raise their rates too high will get reduced financial aid.
• The number of federal work-study jobs will be doubled in universities.
• Farm subsidies for millionaires will be eliminated.
• Insider trading by members of Congress will be banned.
• More federal land will be available for natural gas extraction, but companies will have to disclose what chemicals they are using in the fracing process.
• Also proposed is a new financial crimes unit in the Justice Department to track down large-scale financial fraud.
The Republican response was given by Gov. Mitch Daniels of Indiana. Sticking to the familiar Republican points, Daniels said that the Obama Administration’s borrowing had put the country on a fiscal path; which if left uncorrected, will put America into the same situation that Greece and Spain are in today. Calling the current government size as “big and bossy”, Daniels said that America was not a nation of “haves” and “have nots”, but a nation of “haves” and “soon to haves”. He also accused Obama of trying to cause class –envy.
Daniels ended his speech with another Republican talking point about how intrusive the government had become by saying “In word and deed, the President and his allies tell us that we just cannot handle ourselves in this complex, perilous world without their benevolent protection. Left to ourselves, we might pick the wrong health insurance, the wrong mortgage, the wrong school for our kids; why, unless they stop us, we might pick the wrong light bulb!”
