Obama vows to rebuild economy to help middle class

U.S. President Barack Obama on Tuesday night is proposing middle-class economics in his State of the Union address, driving the debate in the 2016 election on income inequality and middle-class economic issues.

"With a growing economy, shrinking deficits, bustling industry and booming energy production, we have risen from recession. It' s now up to us to choose who we want to be for decades to come," the President said at his State of the Union speech that outlined his vision for his last two years in office.

In order to ensure everyone shares economic developments, Obama is proposing "middle-class economics, the idea that the country does best when everyone gets their fair short, everyone does their fair share, and everyone plays the same set of rules."

Within his middle-class economics agenda, the President is proposing to lower the taxes of working families, and continuing to push forward paid leave policies and minimum wage increases.

The new tax breaks Obama is proposing include tripling the child-care tax credit, creating a new credit for families in which both spouses work, consolidate and expand education tax breaks, and make retirement savings program available to more people. These tax breaks, together with other initiatives, will cost about 235 billion dollars over the next decade.

In his middle-class economics agenda, Obama is pushing for a new plan for free community colleges in order to help American upgrade their skills, encouraging more on-the-job training and apprenticeship opportunities, vowing to build the most competitive economy to keep churning out high-wage jobs for workers to fill in information technology and other growing fields, and planning to cut mortgage premiums to make home more affordable for middle class families. He also calls for a bipartisan infrastructure plan to provide modern ports, stronger bridges, faster trains and the fastest Internet connections and to create more jobs.

In order to fund these initiatives, Obama is proposing simplifying tax code and eliminating loopholes. The Obama administration proposes to reform tax rules on trust funds, as it allows the wealthiest Americans to avoid taxes on their inherited assets; it will raise the capital gains and dividends rates to 28 percent from 23.8 percent, and propose a fee on the biggest financial firms, making it more costly for them to borrow heavily. These tax increases will raise revenue by about 320 billion U.S. dollars over the next decade, according to the administration.

Obama's tax proposals are rarely welcomed by congressional Republicans, who now hold majorities in the House and the Senate for the first time in Obama's presidency.

Both Republicans and Democrats cite a stagnant middle class as the most challenging economic problem facing the country, but Republicans have long opposed Obama' s call for tax increases on the wealthiest to fund initiatives to benefit those at lower income levels. Endit