Obama challenges Republicans in State of Union speech

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By Tami Hoey By Tami Hoey

WASHINGTON (AP) -- President Barack Obama says it's time to turn the page after years of economic hardship at home and wars overseas. But Republicans in charge of Congress say the voters already took care of that last November - and they're the proof.

"Much of what he did tonight ... new taxes, new spending is sort of the same old thing that we've heard over the last six years," said newly installed Senate Majority Leader Mitch McConnell of Kentucky, not long after the president wrapped up a State of the Union speech studded with veto threats and challenges to newly empowered congressional Republicans.

"What I had hoped was the president was going to focus on areas of possible agreement. There are a few: trade, tax reform, infrastructure," added McConnell, who was on the receiving end of a presidential barb about climate change.

House Speaker John Boehner, McConnell's partner atop the leadership of the new, Republican-controlled Congress, agreed. "Finding common ground is what the American people sent us here to do, but you wouldn't know it from the president's speech tonight," he said.

The two Republican leaders spoke after Obama declared the "shadow of crisis has passed," with the economy growing and joblessness falling. He unfurled an agenda on taxes, spending, social programs, energy and foreign policy notably at odds with Republican priorities, although he ended with a plea for the two parties to "debate without demonizing one another" and find compromise where possible.

The speech was the sixth State of the Union address of Obama's presidency, and the first with Republicans holding majorities in both houses of Congress.

That produced a split-screen sort of response in which Democrats seated on one side of the House chamber repeatedly rose to their feet and applauded the president, while Republicans who intend to vote down his proposals sat silently. And when Obama promised to send Congress a budget "filled with ideas that are practical, not partisan," a disbelieving snicker swept through the rows of Republicans.

Boehner wasn't the only Republican who said Obama had not taken the results of last fall's election to heart.

"We're not going to raise taxes. He knows we're not going to raise taxes. So I'm kind of surprised he paid lip service to that," said Wisconsin Rep. Paul Ryan, the chairman of the tax-writing House Ways and Means Committee.

The centerpiece of Obama's economic proposals was an increase in the capital gains rate on couples making more than $500,000 annually, to 28 percent, coupled with higher taxes on some estates and a fee on the roughly 100 U.S. financial firms with assets of more than $50 billion.

Much of the $320 billion that would be raised would be ticketed for the middle class, in the form of a $500 tax credit for some families with two working spouses, expansion of the child care tax credit and a $60 billion program to make community college free.

For that, Obama drew condemnation from the most junior Senate Republicans, and from the most senior.

"Calling for expanding the death tax and raising the rates on capital gains, like the president did tonight, makes clear this White House is more about redistribution and populist class warfare than about actual bipartisan tax reform," said Sen. Orrin Hatch, the Utah Republican who chairs the Senate Finance Committee and will have a key role in negotiations on any tax overhaul legislation in the next two years.

Sen. Tom Cotton, who defeated a Democratic incumbent last fall to win his seat in Arkansas, said, "The policies and ideas he put forth are from the same tax and spend playbook he's been using for the last six years."

Georgia Republican Rep. Tom Price, who chairs the House Budget Committee, said Obama was "stuck in the past."

But the president said it was the other way around.

He said he will work to close the U.S. prison at Guantanamo Bay in Cuba, urged lawmakers to begin ending the trade embargo with Cuba that he said was "long past its expiration date" and threatened to veto legislation imposing sanctions on Iran while nuclear talks are underway.

The president's list of domestic differences with Republicans was at least as long, if not longer. Veto showdowns already loom on several of them, including legislation he said would take away health insurance, unravel new rules in place on Wall Street and undo new immigration policies that have removed the threat of deportation from more than 4 million immigrants in the country illegally.

He also urged Congress to act against climate change.

"I've heard some folks try to dodge the evidence by saying they're not scientists. ... Well, I'm not a scientist, either," he said, before adding that "the best scientists in the world are telling us that our activities are changing the climate."

He didn't say so, but McConnell was among many Republicans in last fall's campaign who sidestepped questions about climate change by saying they were not scientists.

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State of the Union: Highlights from Obama's address

By JOSH LEDERMAN, Associated Press

WASHINGTON (AP) -- President Barack Obama called for higher taxes on wealthy Americans and new initiatives to boost the middle class as he urged Americans to turn the page on years of economic woes and hard-fought wars in his sixth State of the Union address before Congress. Some highlights from Obama's proposals:

-TAX HIKES: Raise the top capital gains rate on couples with incomes above $500,000 to 28 percent, the rate under President Ronald Reagan. Impose a fee on roughly 100 massive financial firms with assets exceeding $50 billion. Eliminate a tax break on inheritances. The administration estimates these changes would generate $320 billion over a decade.

-TAX BREAKS: Create a $500 tax credit for families where both spouses work and have an annual income up to $210,000. Expand the child care credit to up to $3,000 per child under age 5. Offer the Earned Income Tax Credit to childless workers and noncustodial parents. Consolidate six overlapping education tax breaks into two.

-EDUCATION: Offer two years of free community or technical college. Students would need to go to school at least half-time, maintain a 2.5 grade point average and make progress toward a degree. The White House estimates that would cost $60 billion over a decade.

-PAID LEAVE: Call for federal and local laws allowing workers to earn up to a week of paid sick time a year. Urge Congress to give federal workers an additional six weeks of paid parental leave. Call for more than $2 billion from Congress for paid family and medical leave programs.

-HOME OWNERSHIP: Cut insurance premiums for government-backed mortgages by half a percentage point to .85 percent. The White House says the reduction would save new home buyers and those who refinance $900 a year compared to current rates.

-RETIREMENT SAVINGS: Boost retirement savings by automatically enrolling people without access to a workplace retirement plan in an Individual Retirement Account. Expand access to employer plans for certain part-time workers.

-MIDDLE EAST: Urge Congress to pass a new authorization for use of military force against the Islamic State group and militant extremists in the Mideast. Until now, Obama has been relying on 9/11-era war powers.

-CUBA: Seek support for normalizing diplomatic relations with Cuba. Obama wants Congress to lift the economic embargo on Cuba, though the White House doesn't expect Congress to take that step quickly.

-IRAN: Vow to veto new sanctions on Iran while world powers pursue nuclear talks.

-TRADE: Ask Congress for so-called "fast track" trade promotion authority to allow an up-or-down vote on trade pacts. Obama wants to secure two major trade agreements - one with the EU, and one with Asia-Pacific nations.

-CYBERSECURITY: Call for legislation enabling information-sharing between the private sector and U.S. agencies like the Homeland Security Department. Companies would qualify for targeted liability protection if they comply with certain privacy restrictions.

-NO GOING BACK: Threaten to veto congressional attempts to roll back Obama's executive actions on climate change and immigration and existing laws on health care and financial reform.

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President Barack Obama delivers State of the Union address

WASHINGTON (AP) -- President Barack Obama has used his first State of the Union Address to a GOP-controlled Congress to say that the nation's economy is emerging from the "shadow of crisis."

The president listed positive economic indicators including higher employment and a lower national debt. After finishing the rundown, he joked "This is good news, people." Obama also pushed proposals he said will benefit the middle class including lowering the cost of child care and junior college.

While saying there are areas of agreement where cooperation is possible with Republicans, he also warned that he'll veto any efforts to roll back the Affordable Health Care Act and regulations that reigned in Wall Street after the economic collapse.

He'll undoubtedly run into staunch opposition with a tax plan that would also require estates to pay capital gains taxes on securities at the time they're inherited and slap a fee on the roughly 100 U.S. financial firms with assets of more than $50 billion.

On foreign policy issues, Obama defended his decision to return to military action in Iraq and also authorize airstrikes in Syria. He called on Congress to pass a new resolution formally authorizing the use of force against the Islamic State group.

Republicans offered their strongest applause when Obama said he had no more campaigns to run. As Republicans erupted in laughter, Obama jokingly shot back, "I know, because I won both of them."

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