5 Policies to Watch For From State of the Union Address

by InvestorPlace Staff | January 25, 2012 1:04 pm

investorpoliticsletters2 5 Policies to Watch For From State of the Union Address[1]President Barack Obama’s State of the Union address [2]may have been lacking in big ideas[3], but there was no shortage of policy proposals in the president’s annual speech. Washington Post writer Ezra Klein points out five of these policies[4] we should be looking out for in 2012 and beyond.

1. The Buffett Tax

It wasn’t by coincidence that Warren Buffett’s secretary was a member of the audience for the SOTU address. Buffett has famously said that it is unfair that his secretary pays a higher percentage tax rate than he does. In effect, Obama proposed making the effective tax rate for millionaires at least 30%, by wiping out non-charitable tax breaks and deductions. This was one of the few points that Indiana Gov. Mitch Daniels agreed with when giving the Republican rebuttal, saying we should “stop sending the wealthy benefits they do not need, and stop providing them so many tax preferences that distort our economy.”

2. Global Minimum Tax

The idea behind this policy is to charge a minimum tax on multinational corporations who attempt to shelter their income in low-tax countries, such as the Cayman Islands. Companies who moved their money to countries with a tax rate lower than the minimum tax rate would have to pay the difference between that country’s rate and the minimum rate to the U.S. Treasury.

3. U.S. Infrastructure Spending

Obama proposed taking half of the money that will be saved by ending the wars in Iraq and Afghanistan and putting it towards the U.S. infrastructure. With the war in Afghanistan still winding down, it may be some time before this money, and therefore this policy, can be put forward to Congress.

4. Home Refinancing

While Obama has limited power to affect home refinancing through Freddie Mac and Fannie Mae, Congress can pass legislation that would expand the power of Fannie and Freddie to allow more homeowners to refinance. Whether or not Congress would pass such legislation, and what Obama would do with his current power to influence Fannie and Freddie if such legislation does not pass, remains to be seen.

5. The Filibuster

Much of why Congress has been able to accomplish so little recently stems from the filibuster. Heavy usage of the delaying tactic by members of the minority parties in both the House and Senate have made it nearly impossible to pass any bill without having enough votes to break the filibuster and force a vote. Obama wants all nominees to get up-or-down votes within 90 days, and he wants legislators to actually have to hold the floor and talk continuously, a la Mr. Smith Goes to Washington.

Whether the president can get any of these ideas put into practice will depend on whether or not both he and Congress can rise above fractious election-year politics to get things done. Do you think any of the president’s proposals have a chance of being implemented?

– Benjamin Nanamaker, InvestorPlace Money & Politics Editor

The opinions contained in this column are solely those of the writer.

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  1. [Image]: mailto:letters@investorplace.com
  2. State of the Union address : http://investorplace.com/investorpolitics/president-obama-state-of-the-union-address-transcript-2012/
  3. lacking in big ideas: http://investorplace.com/investorpolitics/obama-misses-opportunities-in-state-of-the-union-address/
  4. points out five of these policies: http://www.washingtonpost.com/blogs/ezra-klein/post/wonkbook-five-policies-to-watch-from-obamas-state-of-the-union/2012/01/25/gIQAn95tPQ_blog.html

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