President Barack Obama delivers his penultimate State of the Union on Tuesday night and will attempt to achieve two central goals: further associate himself with the recovering U.S. economy and tilt the Democratic Party toward a populist platform for 2016 that embraces higher taxes on the wealthy designed to boost middle-class incomes and chip away at economic inequality. The specifics of Obama's proposals—from the bank tax to the capital gains hike—don't matter so much as the Republican Congress will almost certainly reject them.
But the broad themes matter very much—both to Wall Street and the broader political system—as the 2016 presidential race takes shape. Democrats hope to harness the positives of the Obama economy—lower unemployment and faster growth—while putting together a plan for the negatives, which include stagnant median incomes and a shrinking labor force. The speech, scheduled for 9 p.m. EST, is intended to put the GOP on the back foot on taxes and the economy and force them to come up with alternatives that are not just more across the board tax cuts.
So far at least, it does not seem like Republicans have a strong answer to Obama's proposals, which the White House strategically put out over the weekend to dominate coverage leading up to the speech.