The 2015 State of the Union Address (scheduled for Tuesday, Jan. 20 at 9:00 p.m. EST) has investors across the country awaiting President Obama's new tax policy.
The new tax plan is without question the biggest issue tonight. The president is reportedly looking to raise an additional $320 billion in taxes.
Aside from taxes, other big topics on the table include U.S. markets and unemployment. Since last year's State of the Union Address, the Dow Jones is up 6.4%. The jobless numbers have gone from a 6.6% unemployment rate in January 2014 to 5.6% as of December 2014.
Also to be discussed will be new cybersecurity plans, income inequality policies, and retirement planning.
This is President Barack Obama's sixth State of the Union - but it's the first time he'll deliver the speech to a Republican-controlled Congress. There's no doubt he'll hear less applause from Congress than he has in his five previous addresses.
Here are the top seven things for investors to watch in the 2015 State of the Union Address...
Our List of Must-Watch Topics in the 2015 State of the Union Address
- Billions in Tax Hikes: The biggest SOTU story to watch is the proposed tax increases for America's top earners. This new tax policy will almost certainly draw the ire of Republicans in Congress...President Obama is expected to raise the capital-gains tax rate on couples earning more than $500,000 a year from 23.8% to 28%. The increase would raise an additional $320 billion over 10 years.The stat that Republicans will focus on is that when President Obama entered office, the capital gains rate was 15%."Slapping American small businesses, savers, and investors with more tax hikes only negates the benefits of the tax policies that have been successful in helping to expand the economy, promote savings, and create jobs," Chairman of the Senate Finance Committee and Republican Orrin Hatch said this weekend. "The president needs to stop listening to his liberal allies who want to raise taxes at all costs and start working with Congress to fix our broken tax code."Meanwhile, Democrats will point out that the U.S. had a 28% rate during Ronald Reagan's presidency.
- Attempts to Fix Income Inequality: President Obama also wants cheers for middle class financial support. That means you can expect to hear about tax credits.One tax credit will be for middle-class families with working parents. Families that earn less than $210,000 per year - and where both spouses work - will receive a $500 credit. These families can also expect a break for childcare expenses. Finally, those paying for higher education will get a break."What you're seeing here is really dedicated middle-class tax relief to really get at that problem of middle-class wage stagnation," the Center for American Progress's Director of Fiscal Policy Harry Stein told Bloomberg.
Not a Money Morning Member? Take a couple of seconds to sign up to see the five other must-watch topics in today's SOTU. Membership is completely free...
- Pat on the Back for Economic Recovery: During the 2014 mid-term elections, fellow Democrats criticized the president for not taking enough credit for economic recovery. According to the Department of Labor Statistics, the unemployment rate in the United States dropped to 5.6% in December. That's the nation's lowest rate since 2008.Democrats thought the White House's cautious attitude toward victory gave Republicans an advantage.
But in 2015, President Obama has already been more vocal about these accomplishments.
"America's resurgence is real, and we're better positioned than any country on Earth to succeed in the twenty-first century," President Obama said last week.
Expect that tone to continue in tonight's address.
- Cybersecurity Emphasized: Last week, President Obama previewed a new cybersecurity plan that encourages private companies to cooperate with federal agencies like the Department of Homeland Security. He hopes the increased cooperation will help federal officials and private firms prevent attacks before they happen.Major breaches like the Sony hack in November have once again brought this topic to the forefront. This is a profit alert for investors - major cybersecurity stocks like Palo Alto Networks Inc. (NYSE: PANW) and Fortinet Inc. (Nasdaq: FTNT) are already up 98% and 44% in the last year.
- Big Bank Fees on the Rise: Approximately 100 financial firms in the United States with assets over $50 billion will be subject to additional fees. Exact details have not been announced yet, but it's clear the president wants big banks to pay more.
- Retirement Savings Options: Last year, President Obama unveiled the myRA plan. It's a retirement plan for workers who are not provided an IRA plan by their employers. It's also a plan that Money Morning experts say is just another government scheme to finance their debt.Tonight, he's expected to announce a new plan. In it, almost every employer that does not offer a retirement savings plan will need to enroll their employees into an IRA. Companies that already offer IRAs should receive additional tax cuts.
- A Brief Defense Update: President Obama should mention the situation with ISIS in Iraq tonight. More than 2,000 U.S. troops are currently serving in Iraq, and the president will almost certainly give an update on the fight against ISIS. However, military and defense spending will not be a major topic.
More from Washington: The battle over the Keystone pipeline has become one of the foremost issues in Washington today. And that's the problem. The great fallacy of the Keystone XL pipeline is that whether it gets built or not is much less important than the craven politicians would have you believe. This six-year-long battle is a perfect example of Washington at its worst...
Related Articles: