During last night’s State of the Union, President Obama unveiled a series of proposals aimed at addressing growing income inequality, a shrinking middle class, and abuses by the nation’s biggest banks. “We will not go back to an economy weakened by outsourcing, bad debt, and phony financial profits. Tonight, I want to speak about how we move forward, and lay out a blueprint for an economy that’s built to last,” Obama said. Here are five economic proposals Obama laid out that, though they don’t have high prospects of getting through the Republican House, would help achieve the goal of making the economy work for everyone:
– WIDESPREAD MORTGAGE REFINANCING: Obama called for a program to give “every responsible homeowner” the chance to refinance their mortgage at lower interest rates. The plan aims to expand a previous administration refinancing effort so that it applies to those homeowners with privately backed mortgages, instead of only those with government backed mortgages. “It’s going to help homeowners who are struggling and it’s likely to be a first step to really opening up the market to more normal credit standards,” said Columbia Business School professor Christopher Mayer. Incidentally, the ten districts that could benefit most from mass refinancing are all represented by Republicans.
– MINIMUM TAX FOR MILLIONAIRES: Due to the preferential treatment of investment income and the widespread use of tax deductions, loopholes, and tax havens, one quarter of millionaires are able to drive their tax rates down to a level below that of middle class families. In 2009, nearly 1,500 millionaires paid no income tax at all. To rectify this, Obama proposed a minimum 30 percent tax rate for millionaires.
– MINIMUM TAX FOR CORPORATIONS: Many of the country’s largest, most profitable companies have been able to avoid paying corporate income tax on billions in profits, driving corporate tax revenue down to historic lows. Though not as straightforward as simply eliminating the ability of multinational corporations to delay paying taxes on offshore profits, Obama’s proposed minimum tax would limit the ability of corporations to exploit low-tax havens like Ireland or the Cayman Islands.
– FINANCIAL FRAUD COMMISSION: Obama last night announced the creation of a commission, co-chaired by New York Attorney General Eric Schneidermann, to investigate and prosecute fraud committed by the financial industry. The administration had been taking some heat for its possible willingness to settle foreclosure fraud charges with the country’s five largest lenders, but this commission is a change of course (assuming it does more than the three year old Financial Fraud Task Force, which has done precisely nothing).
– BANK TAX TO FUND AID FOR HOMEOWNERS: The mortgage refinancing plan Obama proposed would be paid for in part by a fee on the nation’s biggest banks (those with more than $50 billion in assets), akin to the Financial Crisis Responsibility Fee that the administration had previously proposed, but dropped due to Republican intransigence.