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Groundhog Day could not have been a more fitting day for President Barack Obama to release his annual budget. Just like in past years, Obama unveiled his ideas, and Republicans almost universally rejected them.

But the tussle over Obama's budget serves as a preview of the 2016 election debate over income inequality, in which Republicans and Democrats are arguing with each other—and among themselves—over how to close the wealth gap.

This budget, Obama's list of priorities for the federal government’s new fiscal year in 2016, is arguably his most populist yet. And at the heart of it is an emphasis on making things easier for what he calls the “middle class,” including new tax breaks and tax increases on wealthier Americans that will help pay for things like infrastructure, paid leave, and education.

"Our tax code is full of loopholes for special interests—like the trust fund loophole that allows the wealthiest Americans to avoid paying taxes on their unearned income," Obama said in a speech Monday at the Department of Homeland Security. "I think we should fix that and use the savings to cut taxes for middle-class families.  That would be good for our economy."

The Obama administration’s plan, which he has dubbed “middle-class economics,” would expand the child tax credit, the earned-income tax credit, and create a new “second-earner” tax credit, aimed at families in which both spouses work.


But according to one analysis, Obama’s proposals are less about middle-class economics and more about aiding the poor.

The nonpartisan Tax Policy Center looked at Obama’s tax proposals after his State of the Union address late last month. The center found that the poorest 20 percent of Americans would see their after-tax income increase by about 1.2 percent. They would see an average tax cut of about $616.

Every other income group’s after-tax income would either stay mostly stagnant or increase. The “middle class,” according to the TPC, would see no change in after-tax income at all.


Here’s a table from the TPC that lays out the effects of the major tax provisions in Obama’s plan for each income group. The top 20 percent would see the biggest change in their tax bills:

What’s more, it’s not even clear how much of the middle class as one might traditionally think of it remains. The share of the nation's wealth going toward the middle 20 percent of households has steadily declined over the past five decades.


Growth in households earning between $50,000 and $90,000 in current dollars was practically zero over the past decade, while households incomes both below and above that level grew considerably.


What is left of the middle class is clearly anxious. According to a recent Gallup poll, just 50 percent of Americans earning between $48,000 and $90,000 said they feel “pretty good” about the amount of money they have to spend.

Brett LoGiurato is the senior national political correspondent at Fusion, where he covers all things 2016. He'll give you everything you need to know about politics, with a healthy side of puns.

Rob covers business, economics and the environment for Fusion. He previously worked at Business Insider. He grew up in Chicago.