Industry trade groups and lawmakers were quick to weigh in with praise and criticism of issues raised in President Obama’s mid-January State of the Union address, namely cybersecurity, the Dodd-Frank financial reform law, taxes and entitlement reform.
While Obama’s plans include raising taxes for higher-income Americans—“let’s close the loopholes that led to inequality by allowing the top 1% to avoid paying taxes on their accumulated wealth”—limiting IRA contributions and a “step-up basis” reform of capital gains, political strategist Greg Valliere of Potomac Research noted in his mid-January commentary that “none of the populist tax proposals from Obama have any chance of enactment.”
In his speech, Obama said that he would send by early February 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.”
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.”
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.”
Hatch derided Obama’s planned tax changes as a “$320 billion tax hike to fuel more government spending.”
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 wants bipartisan tax reform legislation to be introduced and marked up in the Finance Committee “later this year.”
The Securities Industry and Financial Markets Association also said Obama’s planned $110 billion “targeted tax increase,” referred to as the “bank tax,” would be placed on “America’s most productive financial institutions” and could have “far-reaching unintended consequences that will curtail economic growth and job creation.”