The State of the Union, Hillary Clinton & Obama's "Piketty Moment"

"The Robbers of the Senate"

by Gaius Publius

I want to deal with President Obama's State of the Union address, but in pieces and in more than one pass, since there's a fair amount to deal with, from climate and taxes to oil and Iran. There are also the obvious yet invisible clunkers, like this:

My first duty as Commander-in-Chief is to defend the United States of America.

No, his first duty as anything related to his office is the oath he swore, to "protect and defend the Constitution." As a constitutional scholar, I assume he knows he's lying, if conveniently, given his forgiveness of torture, murderous use of the military, and its unconstitutional spy apparatus.

Or this horrifying explanation of the wonderful middle-class benefits of TPP:

21st century businesses, including small businesses, need to sell more American products overseas. ... But as we speak, China wants to write the rules for the world’s fastest-growing region. That would put our workers and businesses at a disadvantage. Why would we let that happen? We should write those rules. We should level the playing field. That’s why I’m asking both parties to give me trade promotion authority to protect American workers, with strong new trade deals from Asia to Europe that aren’t just free, but fair.

But let's look at some of his domestic proposals and ask, why is he asking for these things?

The Speech Has a Structure

Like many speeches in this category — highly rhetorical — the speech has a clear structure and a dependence on rhythm and repetition. After the introduction, we find this section:

It’s now up to us to choose who we want to be over the next fifteen years, and for decades to come.

Will we accept an economy where only a few of us do spectacularly well? Or will we commit ourselves to an economy that generates rising incomes and chances for everyone who makes the effort? ...

He asks a series of these questions, one each on the major proposal areas, the first being the economy. Then follows a tale of a typical ("focus-tested" is the phrase I'd use) American couple, which leads to a look back at his hopes for the country from the vantage point of his first election in 2008. (The section that follows — "We believed" ... "We believed" — is so deceptively framed as to deserve its own comment. So we'll pass for now.)

Redistributionist "Middle-Class Economics"

The mention of his typical American family, however, allows him to develop his main "money and jobs" theme — what he calls "middle-class economics":

So what does middle-class economics require in our time?

First — middle-class economics means helping working families feel more secure in a world of constant change. That means helping folks afford childcare, college, health care, a home, retirement — and my budget will address each of these issues, lowering the taxes of working families and putting thousands of dollars back into their pockets each year. ...

Which brings us to his tax proposals:

Where we too often run onto the rocks is how to pay for these investments. As Americans, we don’t mind paying our fair share of taxes, as long as everybody else does, too. But for far too long, lobbyists have rigged the tax code with loopholes that let some corporations pay nothing while others pay full freight. They’ve riddled it with giveaways the superrich don’t need, denying a break to middle class families who do.

This year, we have an opportunity to change that. Let’s close loopholes so we stop rewarding companies that keep profits abroad, and reward those that invest in America. ... And let’s close the loopholes that lead to inequality by allowing the top one percent to avoid paying taxes on their accumulated wealth. We can use that money to help more families pay for childcare and send their kids to college. We need a tax code that truly helps working Americans trying to get a leg up in the new economy, and we can achieve that together.

What he's proposing is, in fact, redistributionist. For all the Clintonian (and often junk) proposals — like sending people to community college for free so they can better compete for jobs (that don't exist) — this one is pretty dramatic. Here are some of the specifics:

During his State of the Union address on Tuesday, President Barack Obama will lay out a plan to extend tax credits to the middle class by hiking taxes on wealthier Americans and big banks, according to senior administration officials.

Under the plan, the capital gains tax for couples with income over $500,000 per year would be raised from its current level of 23.8 percent up to 28. The plan would also strip a tax break, known as a "step-up," that allows heirs to avoid capital gains taxes on large inheritances.

In addition, the plan would institute a new tax on the biggest financial institutions, basing the fee on liabilities in order to discourage risky borrowing. The administration says the fee would hit the roughly 100 banks that have assets of $50 billion or more.

The president's plan would use revenues from those tax code changes to finance credits aimed at the middle class, officials said. That includes extending the earned income tax credits to families without children, which would benefit an estimated 13 million low-income workers, while also tripling the maximum tax credits for child care in low- and middle-income homes.

"This proposal is probably the most impactful way we can address the manifest unfairness in our tax system," an administration official said.

In the same article, Rep. Jason Chaffetz of Utah is quoted as responding:

“The audacity, that he thinks the government has a right to people’s money? He wants to transfer wealth," Chaffetz said. "It’s one of the most immoral things you can do, is try to steal somebody’s inheritance, to steal it away from their family.”

And on one point, Chaffetz is right. "He wants to transfer wealth" — not much, but some, and transfering any wealth is anathema to the wealthy. Why is he asking for it, and why now?

Barack Obama's "Piketty Moment"

None of Obama's policy proposals (including TPP, I'm told) will pass. Most, in fact, don't have a prayer, in the new Congress or the old one. There are, for example, too many bought-and-paid Democrats to pass anything that taxes Wall Street one dime, the first penny, or the first tenth of a cent. And if something has not a prayer of passing — and is proposed by someone traditionally opposed to anti-One-Percent proposals — it starts to look oddly like an ad campaign, or an attempt to put an enemy on the defensive, or both.

As I've written elsewhere, I don't buy the idea that "this" Obama is "newly freed" Obama, someone who can express his true progressive beliefs. Obama was a free-trade, reform-Social-Security neoliberal in 2006; there's your "true Obama." If he was a secret progressive, he lied to Robert Rubin and Roger Altman to their faces, two years before he first ran for president.

So where is this new-found concern for the "middle class" coming from? Three things to consider:

▪ Legacy — Obama's major job for the next two years will be creating his post-presidential life. Has he chosen the Carter model or the Clinton model? You'll know as soon as he starts giving speeches for money. My money's on the Clinton model, and I'd bet any amount you want that I'm right.

▪ Clintonian legacy requires parting gifts to the already-wealthy. As noted above, Obama is promoting "free-trade" and TPP even as he's telling the old-old lie about "more jobs."

▪ But he can't appear to be handing out cash and prizes, giving the store to thieves, or his legacy as a closet progressive — touched with the Carteresque brush — won't pass muster. So he needs a cover story, one that many will buy. Aid for community college education, tax credits for child care, guaranteed sick and maternity leave, increased overtime pay, and the like help burnish that story.

It's not that those things are meaningless; they aren't. It's that they won't happen. But that won't stop him getting credit for saying them, and therein lies the beauty. Can anyone say, for sure, he's being insincere? Not many. (I can, but then, I've read the whole speech carefully. His left hand takes back what his right hand publicly offers.)

Still, guaranteed sick leave and the like can only advance the story so far. To put the icing on the cake, Obama needs a "Piketty moment" — yes, they're actually calling it that — because thanks to Elizabeth Warren, people finally get that the economic problem is structural, the rich have bought the game, and the solution is not a community college education. Whatever else it does, this speech offers Obama's Piketty moment.

Does This Speech Also Strike at Hillary Clinton?

Which brings me to something else. It's noted in many places, mainly on the Fox News right, that Barack Obama both distrusts and dislikes Hillary Clinton. I'm not buying it — there's so little current evidence — and stories like this from the left go back to the contentious 2008 campaign and don't proceed forward in time.

Yet this from David Frum caught my eye, mainly because Frum is not an echo and has, along with people like Steve Schmidt, been more or less ostracized from the Koch-bought modern Republican party. Here's his comment, published in The Atlantic:

The Real Target of Obama's Speech on Tuesday? Hillary Clinton

The president's proposals are designed to force his presumptive successor to campaign and govern on his terms.

There’s a subtext to President Obama’s slew of domestic policy proposals since the November elections: President Obama does not trust Hillary Clinton very much.

None of the president’s domestic-policy brainwaves has much chance of becoming law in the next two years: not free community college, not cash grants to selected middle-income households, and certainly not heavy tax increases on upper-income earners. The president knows these odds better than anybody. So why keep propounding such no-hopers? The intent, pretty obviously, is to box in his presumptive successor as head of the Democratic Party.

Every time the president advances a concept that thrills his party’s liberal base, he creates a dilemma for Hillary Clinton. Does she agree or not? Any time she is obliged to answer, her scope to define herself is constricted.

Hillary Clinton emerges from the Democratic Party’s business wing. Whatever her own personal views—still an elusive quantum after all these years in public life—she is identified in the public mind with her husband’s record, her husband’s appointees, and her husband’s donors. Not just in the public mind, but seemingly in the president’s mind, too. So as the clock runs down on his administration, he seems determined to set the post-Obama Democratic Party on a more leftward course than he himself had the strength to steer.

Is Frum carrying right-wing water with this comment? Possibly, though he's been known not to. Does he know something that only insiders know? Also possibly, but if so, he's the only one outside of the manufactured Fox News bubble saying it.

But Obama's motives aside, is what Frum says true? Does laying down a "Piketty" gauntlet pose problems for Hillary Clinton? Almost certainly. "Hillary Clinton emerges from the Democratic Party’s business wing," Frum writes, almost as an understatement. As its most recognizable national figure, she may just be the business wing, or at least its most recognizable feather.

Yes, she's trying her own brand of populist rhetoric, giving her own belated "Piketty" speeches — but she offers no Piketty proposals that could tie her hands. On this, Obama is tacking to her left, at least as a chess move. If you're asking if Obama's Wall Street tax proposal fills Warren's sails and challenges Hillary's, the answer is yes, it does. If you're asking if that was his intention, the answer may not matter.

GP