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State of the Union: Obama's Economic Proposals Add to Growing 2016 Debate

Obama's calls for free community college and paid sick leave are setting policy markers that 2016 candidates must react to.

With both parties in Washington fixated on finding new ideas to help America's middle class, President Barack Obama in his State of the Union Tuesday called for universal, free community college, guaranteed paid sick leave and more tax hikes on the wealthy, using his bully pulpit to set policy markers that presidential candidates in both parties must now react to.

In his first six years in office, Obama has been dogged by criticism over the economy, with Republicans and even some centrist Democrats suggesting his policies were ineffective in helping the country recover from the recession.

Now with the federal deficit dropping and huge job growth over the last year, Obama is articulating proposals that reflect a country no longer in an economic crisis. His speech Tuesday included many ideas targeted at middle-class Americans who have not benefited from the economic growth, including his proposal to offer seven days of paid sick leave for workers who don’t get it now.

Those plans are unlikely to get any traction in the GOP-led Congress but Obama provided an opening salvo in a coming debate over tax reform and domestic politics that will impact both his last two years in office and the 2016 campaign.

With a stronger economy, Republican candidates will now have to grapple with Obama’s notion of "middle class economics," and they will no longer be able to dismiss all of his ideas as emanating from a job-killing administration.

And with the president articulating unabashedly liberal proposals, like creating a new tax on Wall Street firms, progressive activists in the Democratic Party will be challenging Hillary Clinton both to embrace Obama’s ideas and go further.

"We now are in a place where we can see that the steps we've taken are working, and we want to build on those steps, where with the crisis behind us we can begin to tackle the challenge that has been around for decades of wage stagnation, declining economic mobility and we can do what we can to help the middle class right now," said White House Senior Adviser Dan Pfeiffer.

Only one 2016 candidate, former Virginia Sen. Jim Webb, a Democrat, has officially even formed an exploratory committee. But more than a dozen Republicans are considering runs, as are Clinton and a handful of others on the Democratic side.

These candidates will face a much different environment than even two years ago, when Mitt Romney unsuccessfully challenged the president.

The economic recovery will make it more difficult for Republicans to adopt their approach of 2012 and 2014: Simply bashing the president at every turn, while offering few specific ideas of their own.

"Tonight, we turn the page," the president said in his speech. "Tonight, after a breakthrough year for America, our economy is growing and creating jobs at the fastest pace since 1999. Our unemployment rate is now lower than it was before the financial crisis."

In an interview with the conservative website Newsmax before the speech, Carly Fiorina, the former Hewlett Packer CEO and Republican who is considering a 2016, grudgingly acknowledged the economic gains.

"He will apparently declare victory on the economy tonight, but of course, whatever life there is in the economy is not due to his policies, it's in spite of his policies," she said.

Stagnant wages are a much different problem than high unemployment, and the candidates will have to adjust.

Launching the website for his new political action committee, likely 2016 GOP candidate Jeb Bush sounded like liberal Democrat Elizabeth Warren, writing, "while the last eight years have been pretty good ones for top earners, they’ve been a lost decade for the rest of America." In a speech on Friday, Romney, considering a 2016 run, spoke of "helping lift people out of poverty" as one of his main policy goals, a phrase he rarely used in 2012.

For Republicans, the challenge will be how to offer compelling ideas that don’t cost too much money or increase the size of government, both verboten among conservatives.

"The president's plan for free community college sounds good in theory, but it's entirely irresponsible," said former Arkansas governor Mike Huckabee. "Once again, he fails to recognize that hard working taxpayers foot the bill for all of his liberal giveaways."

For Clinton, the issue is different. Her husband distanced himself from Democrats of the past by declaring "the era of big government is over" and looking to find solutions in the political middle on many issues. Both Clintons have strong ties to business interests, including Wall Street.

The Obama agenda involves creating new entitlement programs and mandates that conservatives oppose. And embracing some ideas in Obama’s agenda — such as his sick leave proposal, which would require businesses to change their practices — could make it harder for Clinton to run as a less partisan Democrat than Obama, as she has hinted she would like to do.

At least on Tuesday, she embraced Obama's direction.

"@BarackObama #SOTU pointed way to an economy that works for all. Now we need to step up & deliver for the middle class. #FairShot #FairShare," she said in a Twitter message.