President Obama delivered a State of the Union address last night that included the expected calls for a hike in the minimum wage, lowering unemployment, and increasing the economic mobility for low-to-moderate income Americans. He inaugurated his call for ‘a year of action’, by indicating that he would use his executive authority to raise the minimum wage to $10.10 an hour for federal contractor employees covered by new or renegotiated services and construction contracts.
Of particular interest to FEI members are the President’s calls on Congress for reforms in the tax code, increasing the nation’s global competiveness, and movement on immigration and energy policies.
The President reiterated past proposals to reform the corporate tax code. "Both Democrats and Republicans have argued that our tax code is riddled with wasteful, complicated loopholes that punish businesses investing here, and reward companies that keep profits abroad," the President said.
"Let's work together to close those loopholes, end those incentives to ship jobs overseas, and lower tax rates for businesses the create jobs here at home.”
The President also revived a proposal to eliminate oil and gas tax preferences, calling for "a smarter tax policy that stops giving $4 billion a year to fossil fuel industries that don't need it, so that we can invest more in fuels of the future that do.” He took a softer approach on immigration, and didn’t specifically mention a pathway to citizenship, calling for immigration reform that will contribute to the economy and make America more attractive place for businesses.
On the individual side, President Obama pushed for an expansion of the Earned Income Tax Credit (EITC) for workers without children and announced plans to direct the Treasury Department to create a new retirement investment product called a “MyRA,” for workers without 401K plans, which the administration described as a “starter savings account” backed by the U.S. government.
In response to the address, FEI’s President and CEO, Marie Hollein, said, “In last night’s State of the Union, I was pleased to hear President Obama appeal for cooperation from Congress on priorities including tax reform, immigration and trade. These are issues of importance to FEI’s membership who work to enhance America’s business climate each day, and we share the goal of increasing America’s global economic competitiveness.”
However, the President's approval ratings are poor and Congress' remain at an all-time low. There is little political capital to push a big agenda, especially with the entire House of Representatives and one-third of the Senate up for re-election in November.
With historically high partisan tensions, ‘a year of action’ may be confined to executive orders and initiatives with the private sector.