PRESIDENT OBAMA declared Tuesday night that “we have risen from recession freer to write our own future than any other nation on Earth.” Economic indicators — jobs, growth, gas prices — are indeed more favorable. And yet his State of the Union address was Mr. Obama’s first to a joint session of Congress controlled by Republicans. The progress on Mr. Obama’s watch did not translate into success for his party in November.
From that turn of events, Mr. Obama appears to have learned that Democrats need to rebrand themselves as the party of “middle-class economics” to recapture an electorate dangerously susceptible to Republican messages — and that the newly buoyant economy provides the opportunity for measures aimed at easing inequality and shoring up the rewards to work.
The emphasis on domestic issues was striking, given international developments in the past year. A year ago, Mr. Obama spoke of taking the country off its “war footing”; since then, he has sent thousands of troops to Iraq and launched airstrikes against the Islamic State.
This time Mr. Obama asked Congress for formal authority to continue the war, which he said would “take time” and “require focus.” But his ambivalence about the effort was evident in the relatively short shrift he gave to the fight against Islamic extremism. He underlined the end of the U.S. combat mission in Afghanistan, though the war rages on and the Afghan government is losing ground to the Taliban.
Whatever their political impact, some economic proposals Mr. Obama outlined seemed well tailored to his policy goals. The president is pitching tax increases on wealthy individuals and the financial sector that would raise $320 billion over the next decade, $175 billion of which would go to fund an enhanced and streamlined set of middle-income tax credits for child care and education. (The rest of the money would pay for community college tuition, other new programs and deficit reduction.) The key proposed hikes are an end to the rule that lets heirs inherit assets free of capital gains tax on their accumulated increase in value and a 0.7 percent charge on the liabilities of financial institutions with assets exceeding $50 billion, to compensate for the systemic risk embedded in such huge portfolios.
The bank tax resembles a proposal in a tax plan unveiled last year by the then-chairman of the House Ways and Means Committee, Dave Camp (R-Mich.). Even so, the potential of bipartisan agreement on either tax is basically zero, since the GOP has made clear that it won’t consider major tax-code adjustments except in a broader tax bill — and especially not if the proceeds get spent on Democratic projects like college tuition.
That doesn’t mean Mr. Obama should hold his fire; he’s right to make his case. He was right to rebuke climate-science deniers and vow to do as much as he legally can to slow climate change, even if Congress does not cooperate.
It does mean, though, that Tuesday’s speech, despite the president’s peroration on national unity, was mostly about heightening the contrast between the two parties, not converting the economic upturn into momentum for bipartisan action. What little hope remains in that regard has to do with trade. On that, Republicans applauded as Mr. Obama vowed to push for market-opening deals with Pacific Rim nations and Europe.