Obama Casts Election as Fight to Rescue Economy From Wealth Gap

President Barack Obama cast himself as the vessel of fairness in an age of anger, saying he would be the bulwark against a growing wealth gap and Republican policies that he said would widen the disparity.

Burdened by a slow recovery, Obama framed his re-election bid in last night’s State of the Union address by portraying his economic policies as a foundation for growth and opportunity.

“We can either settle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by,” Obama said. “Or we can restore an economy where everyone gets a fair shot, everyone does their fair share, and everyone plays by the same set of rules.”

He made the appeal against the backdrop of a struggling economy that has left many voters unforgiving. While trending downward, the unemployment rate stood at 8.5 percent in December, compared with 7.8 percent when he took office.

His words hearken back to those his Democratic Party employed over the decades to win over middle-class voters. He put the criticism of income inequality that has energized Occupy Wall Street protesters and party activists into the political language of fairness that runs back to Republican President Theodore Roosevelt’s “Square Deal” and Democrat Franklin Roosevelt’s “New Deal.”

Obama coupled that with a demand that the wealthy pay more in income taxes, calling for a minimum rate of 30 percent for those with incomes of $1 million or more a year. He has dubbed the idea of such a tax “the Buffett Rule,” based on billionaire Warren Buffett’s observation that he pays a lower rate than his secretary. Obama underscored the point by seating Buffett’s secretary in the gallery of the U.S. House chamber.

Romney’s Returns

Obama offered his tax proposal hours after one of the leading Republican presidential candidates, former Massachusetts Governor Mitt Romney, disclosed that he paid an effective rate of 13.9 percent on his 2010 income of $21.6 million, largely because of preferential tax treatment for investment proceeds. Obama didn’t refer to Romney in his remarks.

While the speech was full of specific proposals -- on bolstering education, shoring up the nation’s infrastructure, promoting manufacturing and clean energy -- few are likely to pass a Congress in which Republicans control the House and hold power to stop legislation in the Senate. Partisan gridlock has stymied most of the president’s agenda for the last year.

Yet the State of the Union message for presidents facing re-election typically functions more as a preview of campaign themes than as a legislative program, said Kathleen Hall Jamieson, a professor at the University of Pennsylvania’s Annenberg School for Communication in Philadelphia.

‘Largest Audience’

In an election year, the address “performs a different function,” Jamieson said. “It’s the largest audience a president is going to reach, unless there’s a crisis speech, until the nomination acceptance speech.”

In Obama’s case, he amplified a theme set in Dec. 6 remarks that he delivered in Osawatomie, Kansas, saying the nation is at “a make-or-break moment for the middle class.”

That moment comes with the economy regaining fewer than 2.7 million of the 8.7 million jobs lost since the recession began in December 2007. More than 22 percent of U.S. homeowners owed more on their mortgage at the end of the third quarter of last year than the property was worth, according to CoreLogic Inc.

Obama’s job-approval rating of 44 percent on a Gallup tracking poll for Jan. 21-23 is below the 50 percent threshold incumbents usually seek going into an election.

Holding Down Losses

If he’s to be re-elected, he must hold down his losses among white working-class voters. Obama’s Democratic allies surrendered control of the House in the 2010 midterm elections with a 30-percentage-point loss among white working-class voters, defined as those without college degrees. Obama won in 2008 by keeping the party’s losses among that group to 18 points and winning among minority groups and college-educated whites.

Romney, a former private-equity executive, has attacked Obama’s competence as an economic manager and assailed him for practicing the “politics of envy.” Former House Speaker Newt Gingrich, another Republican presidential candidate, has accused Obama of promoting dependency over work and dubbed him “the food-stamp president.”

Obama offered the country a reminder of the scale of the economic calamity he inherited as he took office months after the September 2008 collapse of Lehman Brothers and an ensuing financial crisis. He described the economy under his Republican predecessor as “a house of cards.”

No Return

“I will oppose any effort to return to the very same policies that brought on this economic crisis in the first place,” Obama said.

Instead, he reached for a slogan once used to sell trucks by General Motors, a company that benefited from his 2009 automobile industry bailout, promising an economy “built to last.”

The phrase, which the White House quickly moved to reinforce with handouts on its economic proposals entitled “An America Built to Last,” offers “implicit indictments” against Republican rivals and his predecessor, Jamieson said.

“Built to last positions them against Mitt Romney,” Jamieson said. It sets up a contrast with criticism of some of the leveraged buyouts Romney presided over while at Bain Capital LLC, and “it’s an attack on the MBA mentality where you seek short-term gains,” she said.

It also invites comparison with Gingrich’s speakership, which unraveled within four years amid dissent from within his own party, she said.

Battleground States

For voters in potential Great Lakes battleground states such as Ohio, Michigan, Pennsylvania and Wisconsin with ties to the auto industry and its suppliers, the origin of the slogan serves as a reminder of Obama’s rescue of the carmakers, which his Republican challengers opposed.

The president begins the election year with an economy that has rebounded from fears of a double-dip recession just a few months ago. Growth is accelerating, with the median forecast anticipating a 3.1 percent rise in gross domestic product in the final quarter of 2011, up from 1.8 percent the previous quarter, according to a Bloomberg survey of economists.

Still, more than two years after the recession ended, the recovery remains fragile and vulnerable to a shock such as the European debt crisis. Economic conditions when voters go to the polls in November may depend as much on what happens in Berlin and Paris as in Washington.

Helping Homeowners

Obama’s offer of help to “millions of innocent Americans who’ve seen their home values decline” could resonate in states that have been hard hit by the collapse in real estate prices.

Nevada had the highest portion of homeowners with “underwater” mortgages at 58 percent of all mortgaged properties, followed by Arizona at 47 percent, Florida at 44 percent and Michigan at 35 percent, according to CoreLogic data for the third quarter.

Obama said he would send Congress a plan “that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage by refinancing at historically low rates.”

He also spoke to the aspirations of many Hispanics, an expanding population that he carried with 67 percent support in 2008, according to exit polls.

He called on Congress to pass legislation that would allow illegal immigrants who came to the country as children to become citizens if they graduate college or serve honorably in the military.

To contact the reporter on this story: Mike Dorning in Washington at mdorning@bloomberg.net.

To contact the editor responsible for this story: Steve Komarow at skomarow1@bloomberg.net.

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