Obama plays populist card to start re-election bid

US President Barack Obama used his last State of the Union speech before the November election to paint himself as the champion of the middle class, by demanding higher taxes for millionaires and tight reins on Wall Street.

Taking advantage of a huge national platform to make the case for his re-election, Obama defiantly defended his record after three years in office and laid blame for many of the country’s woes at the feet of banks and what he called an out-of-touch Congress.

He proposed sweeping changes in the tax code and remedies for the US housing crisis, setting as a central campaign theme a call for greater economic fairness.

He mentioned taxes 34 times and jobs 32 times during his hour-long speech, emphasising the two issues at the heart of this year’s presidential campaign.

While the biggest proposals in Obama’s speech are considered unlikely to gain traction in a deeply divided Congress, the White House believes the president can tap into voters’ resentment over the financial industry’s abuses and Washington’s dysfunction.

But even as he called for a “return to American values of fair play and shared responsibility”, Obama seemed to put no blame on himself for a still-fragile economic recovery and high unemployment that could trip up his re-election bid.

With polls showing most Americans disapprove of his economic leadership, he still faces the challenge of convincing them that the candidate who was swept into the White House in 2008 promising hope and change deserves another term.

Standing before a joint session of Congress, Obama unleashed a partisan attack over taxes and vowed no return to “the days when Wall Street was allowed to play by its own set of rules”.

“Washington should stop subsiding millionaires,” Obama declared as he proposed a minimum 30% effective tax rate on those who earn €1m or more.

Obama said he would ask his attorney general to establish a special financial crimes unit to prosecute those parties charged with breaking the law and whose fraud contributed to the 2007-2009 financial crisis.

Obama’s message could resonate in the 2012 campaign following the release of tax records by Mitt Romney, one of the wealthiest men ever to run for the White House, who pays a lower effective tax rate than many top wage-earners.

A new proposal outlined by Obama to ease the way for more homeowners to get mortgage relief — and to pay for the plan with a fee on banks — also struck a populist note.

Democrats have hammered Republicans for supporting tax breaks that favour the wealthy. Republicans staunchly oppose tax hikes, even on the richest Americans, arguing they would hurt a fragile economic recovery.

“No feature of the Obama presidency has been sadder than its constant efforts to divide us, to curry favour with some Americans by castigating others,” Indiana governor Mitch Daniels said in the Republican response.

House of Representatives speaker John Boehner, the top congressional Republican, said the election would be a referendum on the president’s “failed” policies.

The US unemployment rate was 8.5% in December. No president in the modern era has won re-election with the rate that high.

Obama’s rhetoric and his audience’s response was more overtly partisan than last year, when both sides sought a tone of civility in the aftermath of an assassination attempt on Democratic Arizona lawmaker Gabrielle Giffords. In the most emotional moment of the evening, Obama warmly embraced Giffords as he made his way to the podium. The congresswoman announced on Sunday she was retiring from Congress.

Democrats rose en mass to cheer, and Republicans stayed seated in stony silence, when Obama vowed to “oppose obstruction with action”. But both sides applauded when Obama called for developing all domestic energy sources.

Obama used the speech to revive his call to rewrite the tax code to adopt the so-called “Buffett rule”, named after the billionaire Warren Buffett, who says it is unfair that he pays a lower tax rate than his secretary.

Those making more than $1m a year would pay an effective tax rate of at least 30% and their tax deductions would be eliminated.

Castro’s criticism

* Fidel Castro has lambasted the Republican presidential race as the greatest competition of “idiocy and ignorance” the world has ever seen.

“The selection of a Republican candidate for the presidency of this globalised and expansive empire is — and I mean this seriously — the greatest competition of idiocy and ignorance that has ever been,” said the retired Cuban leader, who has duelled with 11 US administrations since his 1959 revolution.

Earlier this week, the presidential hopefuls outdid each other in their response to a debate question on the potential death of the Cuban revolutionary icon, hailing his demise. Republicans are desperate to woo the important Latino voting bloc, which includes the Cuban immigrant community, many of whom fled Castro’s regime.

Asked his reaction should Castro die and a wave of Cubans seek refuge in the US, Mitt Romney said: “Well, first of all, you thank heavens that Fidel Castro has returned to his maker.”

Newt Gingrich disagreed on Castro’s final resting place: “I think he’s going to go to the other place.”

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