In laying out his plan for helping middle-income Americans, whose incomes and living standards remain stalled despite economic growth, President Obama essentially challenged Republicans to produce their own plans.

Even before the State of the Union address, Republicans rejected the president's plan to make the wealthy pay a fairer share of taxes and use the money to provide tax breaks for working people

Republican philosophy trends in a far different direction, envisioning across-the-board rate cuts that conservatives contend will put more money in everyone's pockets and kick-start the economy. Higher taxes on the rich, they warn, only damage job creators.

With Republicans now in control of both the Senate and House, but with a Democratic president who can block with a veto most any policy he does not like, what happens next will be critical. Will there be serious attempts at finding compromise and some common ground? Alternatively, will it be business as usual, both sides staking out positions for the 2016 presidential election as the age of the perpetual campaign continues and the business of helping the American people goes ignored.

The president's gamesmanship is clear. He wants to position the Democratic Party as the proponents of the middle class and depict the Republicans as the protectors of the privileged class.

President Obama's plan would boost the top rate on capital gains to 28 percent from 23.8 percent (raising it back to the level when Reagan was president, the White House notes). That is the rate paid by the top 1 percent of earners, married couples making more than $500,000, for example. His tax policies would also impose a capital-gains tax on inherited assets, which the administration depicts as closing a loophole. The administration notes that currently someone who inherits $50 million in stock from a portfolio that started at $10 million escapes paying taxes on the $40 million capital gain.

With the money from higher taxes on the wealthy, estimated at $210 billion annually by the White House, the president proposes creating a new $500 tax credit for middle-income households in which both spouses work, with the full credit available for incomes up to $120,000. He would triple the child-care tax credit to $3,000 per year.

An increase in the earned-income tax credit would reduce taxes on low-income workers. And to encourage more people to save for retirement, the president proposes requiring businesses with more than 10 workers to provide individual retirement accounts if they don't offer a traditional pension plan, providing a $3,000 tax credit to offset associated costs to the businesses.

Though Republicans reject most of this, there is potential for negotiation, if the two sides in this ideological fight have any interest in such a thing. Republicans have traditionally backed expanding the earned-income tax credit and might be willing to talk about enlarging the child-care tax credit.

However, Republicans talk of cutting, not boosting, the capital gains tax as the best means to encourage economic growth. And they have always argued the inheritance tax is unfair. Still, the president's tactic on taxation could encourage a bipartisan discussion about comprehensive tax reform, a discussion that Sen. Orrin Hatch (R-Utah), new chairman of the Senate Finance Committee, said he is willing to have with the president.

That discussion could include a Republican priority, lowering the 39.1 percent corporate tax rate, highest in the world, to encourage more investment domestically. The World Bank says the effective U.S. corporate tax rate is 27.9 percent, still higher than the 24.1 percent average in the 34-country Organization for Economic Co-operation and Development (OCED).

The economy is improving, with unemployment at 5.6 percent and continuing to trend lower. Dramatically lower oil and gasoline prices are providing a tailwind. Sensible, comprehensive tax reform, in which both the president and Republicans have to accept things they don't like, could supercharge the recovery, boosting the middle class that both parties claim is their priority.

On the other hand, the politicians can again retreat to their ideological islands, fire up their bases for another election, leaving the rest of us to hope that the economy continues to improve despite Washington's paralysis.