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Obama’s State of the Union Financial Proposals Draw Praise, Criticism

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Industry trade groups and lawmakers were quick to weigh in with their praise and criticism of issues raised in President Barack Obama’s State of the Union address — namely cybersecurity, the Dodd-Frank financial reform law, taxes and entitlement reform.

In his Tuesday evening speech, Obama said that he would send in two weeks to the new Congress a “budget filled with ideas that are practical, not partisan,” and noted that he would veto any bills that seek to water down the Dodd-Frank financial reform law.

Policies currently in place “will continue to work as long as politics don’t get in the way,” Obama said. “We can’t slow down businesses or put our economy at risk with government shutdowns or fiscal showdowns. We can’t put the security of families at risk by taking away their health insurance, or unraveling the new rules on Wall Street.”

Said Obama: “If a bill comes to my desk that tries to do any of these things, I will veto it.”

Rep. Maxine Waters, D-Calif., ranking member on the House Financial Services Committee, praised Obama’s pledge to veto any Dodd-Frank rollback legislation as “even more critical in the aftermath of recent Republican efforts to chip away at the law and return to the lax policies that brought our economy to the brink of collapse.” It’s clear, she said, that “the president understands that the best way to ensure we continue to make positive economic progress is through strong oversight of Wall Street and an even stronger consumer watchdog.”

However, Rep. Jeb Hensarling, R-Texas, chairman of the House Financial Services Committee, said in a statement that “if the president is really concerned there is too much risk in the financial system, then clearly Dodd-Frank isn’t working as he intended and is thus yet another administration failure.” The financial reform law, he said, is “400 regulations [that] are stifling the Main Street economy.” Hensarling added that lawmakers should “cooperate on reforms that will work to make our financial system more stable without hurting those on Main Street who had absolutely nothing to do with causing the financial crisis.”

Senate Finance Committee Chairman Orrin Hatch, R-Utah, noted his “disappointment” that Obama “still refuses” to engage in a discussion about entitlement reform. “With Social Security facing $25 trillion in unfunded liabilities, the failure of the president to even engage with Congress in dialogue is a true disappointment.”

Hatch said that he would be working to “bring forward bicameral and bipartisan legislation to motivate dialogue and begin to confront Social Security’s financial challenges in this Congress.” Such a bill, he said, “will require that my friends on the other side at the very least take up my offer to engage in dialogue, something that, thus far, they have been unwilling to do.”

On cybersecurity, Obama said he urged the new Congress to “finally pass the legislation we need to better meet the evolving threat of cyber attacks, combat identity theft, and protect our children’s information. That should be a bipartisan effort.” Hatch noted that while the president’s “long-awaited proposals on cyber-threat information sharing are a step in the right direction, we need a comprehensive strategy,” which includes “providing incentives to encourage the private sector to work with us in this effort.” Such measures, he continued, “must also strike the right balance between protecting our nation’s computing infrastructure and protecting individual privacy rights.”

The Securities Industry and Financial Markets Association applauded Obama’s focus cybersecurity, noting that cyber attacks are “increasingly a major threat to national security and the U.S. financial system.” SIFMA president and CEO Kenneth Bentsen Jr., called for a “robust partnership between the private sector and government” as the “most effective way to mitigate cyber threats.”

Said Bentsen: “The time is right for Congress to pass cybersecurity legislation that strengthens our nation’s cyber defenses by codifying liability protections that promote enhanced information sharing between the industry and government while balancing the need for important privacy protections for individuals.”

Hatch derided Obama’s tax overhaul after his Tuesday evening speech, stating that “a $320 billion tax hike to fuel more government spending is not going to promote a healthy economy or improve the standard of living for working Americans and their families.”

Hatch also said that “calling for expanding the death tax and raising the rates on capital gains … makes clear this White House is more about redistribution and populist class warfare than about actual bipartisan tax reform. In fact, if anything, these misguided proposals would only further clutter up the tax code and make it more confusing for taxpayers.”

Hatch noted in a Tuesday speech before the U.S. Chamber of Commerce that he and Sen. Ron Wyden, D-Ore., ranking member on the Finance Committee, appointed last week leaders to five tax reform working groups and tasked them with studying various areas of the code to “find solutions and offer proposals for reform.” 

The five working groups are: Individual Income Tax; Business Income Tax; Savings and Investment; International Tax; and Community Development and Infrastructure.

“The purpose of this endeavor with the working groups is produce bipartisan tax reform legislation that will be introduced and marked up in the Finance Committee later this year,” Hatch said. “My only goal when it comes to tax reform is to make new law.”

Hatch stated to reporters after his speech that his goal is “comprehensive” tax reform, not piecemeal reform.

— Check out Congress Needs to Do Its Bit for Economy on ThinkAdvisor.


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