Overnight Finance: GOP preps for tax fight

Happy MLK Day. TOMORROW STARTS TONIGHT - - GOP TO OBAMA: YOU'RE ROBIN HOOD, NOT REAGAN. Republicans are hitting back against President Obama's economic pitch that he'll formally unveil during tomorrow night's State of the Union Address. Obama's economic plan has virtually no shot of passing in the new GOP-controlled Congress. Obama wants to raise the capital gains tax on Americans earning more than $500K annually to 28 percent -- a five percentage point increase from the current 23 percent rate. He wants to charge fees to financial institutions with more than $50 billion in assets, while creating tax credits for lower-income Americans. It's all part of his plan to collect $320 billion in new taxes. Justin Sink for The Hill: http://bit.ly/1wlwqln -- GROVER NORQUIST, president of the conservative Americans For Tax Reform: "Reagan was taking capital gains tax rates down, Obama is taking them up... There's no comparison. They were headed in two different directions."  -- GOP HITS BACK AT REAGAN COMPARISON. Democrats are saying that Obama wants to return the capital gains tax to the same rate under the Reagan administration. "President Reagan fought to lower tax rates and spur economic growth. This president is doing the opposite," Brendan Buck, spokesman to Rep. Paul Ryan (R-Wis.), tells me. Don Stewart, deputy chief of staff to Senate Majority Leader Mitch McConnell (R-Ky.) adds: "In order to implement this tax hike, they'd have to undo bipartisan tax relief, including a rate signed by President Clinton." THIS IS OVERNIGHT FINANCE, and it's a big week for policy wonks. You ready? Tweet: @kevcirilli; email: kcirilli@thehill.com; and subscribe:http://thehill.com/signup/48. Let's get it started... FLASH POLL - - OBAMA APPROVAL AT 18-MONTH HIGH. Obama is heading into tomorrow's SOTU with high approval ratings. Sink reports on the new ABC/WaPo poll: "Half of all Americans say they approve of the president’s handling of his job, while 44 percent disapprove. That represents a striking 9-percentage-point jump in approval from December."http://bit.ly/1ABJMMx MEANWHILE, Obama is also heading into tomorrow's speech with Americans' confidence in the economy improving, too. Rebecca Shabad has that story here: http://bit.ly/1sV2EIX HOW WILL GOP FIGHT BACK AFTER SOTU? Rising Republican star Sen. Joni Ernst (Iowa) will deliver the GOP response to Obama's SOTU. Financial Services Roundtable president and CEO Tim Pawlenty tells OVERNIGHT his thoughts regarding Obama's economic pitch: "The President’s tax increase will make it harder for American families to send their kids to college, to buy a home or to start a small business.  Instead of raising taxes on job creation, retirement, housing and education, he should focus on ways that we can grow our economy by fixing our broken tax system." -- AARON KLEIN, financial services director for the Bipartisan Policy Center to OVERNIGHT, on Obama's SOTU economic pitch: "This is not a new proposal. This administration had proposed a similar tax on bank liabilities as part of its recoupment proposal when it was thought that TARP was going to cost taxpayers far more than it did (TARP made a profit for taxpayers in its dealings with banks). The idea of a tax on bank size is consistent with Dodd-Frank's general attempt to create penalties to size and try to let the market decide whether those penalties offset the benefits of size." TALK OF THE TOWN: SCALISE PRAISES MLK AMID CONTROVERSY. Cristina Marcos reports: "House Majority Whip Steve Scalise (R-La.) on Monday praised the legacy of slain civil rights leader Martin Luther King, Jr. amid controversy over a speech to a white supremacist group while serving as a Louisiana state legislator. Scalise had only praise for King, albeit four hours after The Hill originally asked for comment... "Scalise's comments stood out, however, given that the holiday coincides with multiple race-related controversies over his career prior to entering Congress. For one, Scalise opposed making King's birthday a state holiday in 2004 while he served in the Louisiana legislature, as well as making it a school holiday in 1999. The Hill also reported last week that Scalise voted against a resolution in the Louisiana state legislature apologizing for slavery. He later supported a version that only expressed 'regret' for slavery." -- SCALISE STATEMENT: "Dr. King challenged our country to fulfill the promises of liberty, equality, and justice prescribed in the founding of our great nation. Leading by example, he stressed the teachings of tolerance, service, and love, regardless of race, color, or creed. Today, his writings and speeches continue to empower and inspire those who seek liberty, equality, and justice." Story: http://bit.ly/1BvhsRt TUESDAY NIGHT: SOTU OR STUMP SPEECH? My piece from yesterday for the hometown paper: "While Obama won't be on the ballot in 2016, his policy proposal [on taxes] comes at a time the Democratic Party is weighing how to handle a new GOP-controlled Congress and in which direction — left or center — to take the party heading into the new election cycle... 'Counterproductive,' said Rob Nichols, president and chief executive of the Financial Services Forum, which represents the CEOs of the largest U.S. financial institutions." My full story: http://bit.ly/1KWeoAE -- ROBERT SHAPIRO, former Clinton economic adviser, tells me: "In a period of extreme inequality, it positions Democrats on the side of the middle-class and challenges Republicans to either deal with the President and his proposal or present themselves, once again, as defenders of the wealthy and their tax preferences.  In this sense, it’s the Democrats first effort to frame the 2016 election... "The Republicans are looking for revenues to finance a lower corporate tax rate, without goring the deductions of particular industries. A smart play for them would be to take some of the revenues, and then split them between corporate reform and middle-class tax breaks. Having said that, the fact is, the tax burden on middle-class families is already historically low; and the problems with incomes and inequality do not involve taxes, but the way the economy operates in this period. In that context, the president’s community college initiative is more significant." GOP FINDS SECRET WEAPON, via Tim Devaney for The Hill: "Republicans believe they have identified a potent weapon in their fight against President Obama’s regulatory agenda. GOP lawmakers plan to employ the seldom-used Congressional Review Act (CRA), which gives lawmakers the power to formally disapprove of major agency rules, as they seek to ratchet up their attacks on federal red tape... "Senate Majority Leader Mitch McConnell (R-Ky.) began threatening to use the CRA to stop regulations last year, after the Environmental Protection Agency proposed a rule aimed at cutting carbon emissions from new power plants. While Obama can and likely will veto any efforts to undo regulations through the CRA, the threats carry more weight now that Republicans control both chambers of Congress." http://bit.ly/1DVmLL0 DEMS PREP NEW FIGHT AGAINST INVERSIONS, via Bernie Becker: "Congressional Democrats are preparing new efforts to curb the offshore tax deals that drew the ire of President Obama last year. Senate Minority Whip Dick Durbin (D-Ill.), Sen. Jack Reed (D-R.I.), Rep. Sandy Levin (D-Mich.) and Rep. Lloyd Doggett (D-Texas) will introduce legislation on Tuesday seeking to stop the maneuver known as inversions, in which companies can slash their tax bill by shifting their legal address abroad." The plan faces an uphill battle in the GOP-controlled Congress. Becker's story: http://bit.ly/1wmiur6 THIS WEEK IN CONGRESS - - Cristina Marcos with the schedule for the week: http://bit.ly/1uklieo CONNECT WITH THE HILL’S FINANCE TEAM -- Write us with tips, suggestions and news: vneedham@thehill.com; pschroeder@thehill.com;bbecker@thehill.com;rshabad@thehill.com; kcirilli@thehill.com. -- Follow us on Twitter: @VickofTheHill; @PeteSchroeder; @BernieBecker3; @RebeccaShabad and @kevcirilli.