john harwood joins us now live from washington with some of the details of that plan. n. >> hi sue. you know the debate over what to do about stagnant middle class incomes is accelerating, both on the 26th presidential campaign and on capitol hill. president obama came out with a plan to make the first two years of community college free for everybody. today, chris van hollen the ranking democrat on the house budget committee came out with a plan to link worker pay to executive pay. >> if a corporation is doing well enough to give its executives big bonuses, it should be giving its employees a raise. it's very simple. no raise for workers, no corporate tax breaks for executive bonuses. >> now, specifically the van hollen democratic plan would do these following things. first of all it would say, if corporations claim a deduction for compensation in excess of $1 million, then its incentive compensation profit sharing, stock options, that sort of thing, the same sort of options have to be required to workers and worker pay raises have to be linked to rises in productivity

john harwood with more in washington tonight. >> reporter: the things to watch for in the president's speech tonight is the tax proposals to lift middle class incomes. the tax side grazed $320 billion over ten years through two main methods. one is to adjust the capital gains tax system raising the top rate to 28%, taxing for the first time the appreciated value of assets passed from one generation to the next. he would also oppose a fee, seven basis points on the liabilities of the 100 largest financial firms with assets of $50 billion or more. he would use that money to provide new tax benefits for working families a two earner tax credit an expanded child tax credit and income tax credit for workers who don't have children. he would also fund his proposal for two years, tuition-free of community college. all that would total $235 billion over ten years. look for the extra money to be spent in other ways in the president's budget which comes out in a couple of weeks. the people who would be subject to these new taxes could relax a little bit, not likely to pass in this congress but

>> john harwood, thank you very much. appreciate it. kevin, continue your thoughts. sorry for the interruption breaking news. we were talking about whether or not you would be able to then interrogate and find out whether or not these were lone wolves or part of a larger cell. >> right. that's a situation where the operators have to make a split second decision based on what they are seeing and the rules of engagement and of course they want to try to capture these guys but sometimes that's up to the bad guys actually. >> kevin, the timing of the assaults by the special forces was right before dusk. is it comparatively easier to make that action while there is still daylight out there or does the advantage go to the special forces when it's darker because they presumably have night vision capabilities? >> yeah i would agree with you advantage being to the government after dark and they can manipulate things like the electricity inside the building and other things like that. but we just don't know what precisely was going on inside the situation, and it could have be

john harwood joining us from washington now. john let's start with the efforts to roll back or postpone i guess, some of the provisions of the dodd frank law. what does today's house vote try to do here? >> well what they're trying to do is delay by two years the imposition of the boca rule. this was something that originally wasn't in the dodd frank bill so this was added during the legislative process. you could have members of the financial community arguing that this was marginal to the importance of dodd frank and republicans agree with that argument. they're trying to roll it back. the administration has drawn a line and said no they accepted some weakening of dodd frank in legislation at the end of 2014 but they put a veto threat on this bill. elizabeth warren and democratic liberals. it's future in the republican-led senate where dmats have a little more power because the power of the minority in doubt. >> it's almost d.o.a. is there some hope? >> well there's a whole lot, as you know of lobbying going on by wall street t

. >> john harwood is in washington with more on this proposal and why is the president pushing this? this is a very popular instrument for people of all different economic brackets john? >> reporter: well the president is trying to target federal resources to the people he thinks are most in need. so while curbing the tax benefits of these 529 plans which the administration said 70% of the assets in those plans are held by people with incomes over $200,000 a year he's dramatically increasing the tax credit up to $2500 per student for families making less than $180,000 a year. it's a matter of priorities and it's redistribution and to give money to a group that he thinks is more deserving he's taking some from people who make more money. >> let's talk a little bit, if we can, it gets real murky real fast really into the weeds but if i have an existing 529 plan that portion would be segregated and not subject to tax on withdrawal for use in educational expenses but any deposits i added to the existing account or any new accounts i would open would be? >> yes, new deposits. the earnings

john harwood joins us tonight from washington. john what are these new sanctions and who specifically are the targets? >> reporter: well bill there were two executive orders that president obama signed. one targeting the government of north korea. the other targeting the main political party there. also three distinct entities and 10 individuals. the challenge is that most of these people or organizations are already severely affected by the sanctions been in place for many years. the question is whether or not the united states government might be able by sanctioning them specifically and ten people by name to convince other countries not to do business with some of the people. >> with any economic sanctions against a foreign entity, the question comes up. will they have any real impact. what do you think? >> not a whole lot. the north korean economy is pretty small. their economic relations with the world are small. it's kind of like what happened when the internet was shut down in north korea. only 1,000 ip addresses in the enti

john harwood i'm sure is not. he joins us now from washington. keystone has fairly broad support, some of it welcome back the within the president's own party. would it be tactical or on principle? >> reporter: it would be tactical. the president's point would be don't rush the process. you know obviously it's been delayed over a long period of time. still have a court decision awaiting from nebraska on routing, you still have a recommendation coming from john kerry, the secretary of state. the president has not indicated that he is against the pipeline but he doesn't care that much about it one way or the other and since republicans want it so badly, he's trying to put it off and invite them to bargain with him on things they might do for him on energy. >> do the record lows in oil prices help the administration in their case? it seems it might. >> reporter: no question about it sue. in fact there's some question whether the pipeline would be finished under current circumstances because how low the prices are and expensive that makes the tar san

john harwood joins us now from washington with more. the president already said he will veto any keystone legislation if it passes congress but could today's ruling by nebraska's supreme court either change that promise or flip some wavering democrats, particularly in the senate to the side of voting in favor of it? >> i don't think so. i think the nebraska supreme court was simply a delay in the process. i don't think it was something with the substantiative outcome likely to -- it was anybody's vote one way or the other. today, you had a vote in the house well short of what you need to override a presidential veto. we expect the senate vote will also be short of that number. so republicans can put pressure on the president through this vote. they can't make him do it. however, because the president and i think we've talked about thef taylor is not outright opposed to the pipeline. i believe what's likely to happen is a period of negotiation in which the president says you want keystone? what are you going to do for me? >> well what wo

john harwood joining us from washington. air in a moment to remind you we have a big interview today, the ceo of jpmorgan, jamie dimon. push your enterprise and you can move the world. ♪ ♪ but to get from the old way to the new you'll need the right it infrastructure. from a partner who knows how to make your enterprise more agile, borderless and secure. hp helps business move on all the possibilities of today. and stay ready for everything that is still to come. >>> good morning. 8:00 a.m. at netflix headquarters 11:00 a.m. on wall street. "squawk alley" is live. ♪ ♪ >>> and welcome to "squawk alley" for a wednesday, joining us this morning, be jon fortt, kayla tausche here at post nine. interesting market day setting up. a lot of headline risk. bank of canada cutting rates. rumors about the ecb move tomorrow. the secretary general of opec saying oil prices will

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john harwood is in washington to explain why and get to him in just a moment. first we get to sharon eperson with some of the details on that. >> hi, sue. the changes are of interest of millions of families whose college savings strategy could be affected. the 529 plans, both college savings plans and prepaid tuition plans, have grown sharply in the past decade. there are over 12 million accounts in circulation with an estimated $240 billion in total assets at the end of last we're. that's according to strategic insight. now, about seven million families have 529 plans, and they find the most attractive for this reason. the after tax money that you put into a 529 plan can be withdrawn tax-free to pay for tuition, room and board, and other qualified education expenses. and under obama's proposal it's this key benefit that will change. now, 529 plan money in the parents' name also has less impact on financial aid since it's assessed as a lower rate than a student's asset, and 529 plans have become an important financial planning tool because they help families ea

before we get to those markets we have breaking news with john harwood regarding north korea. john? >> we've had the treasury department announce a new set of sanctions on both the government of north korea, the workers party of korea, ten individuals, three entities prohing

before we get to those markets we have breaking news with john harwood regarding north korea. john? >> we've had the treasury department announce a new set of sanctions on both the government of north korea, the workers party of korea, ten individuals, three entities prohibiting u.s. financial institutions from doing business with them. now, this is the second stage of the u.s. response at least that we know about. we remember after the sony hack in advance of the release of "the interview" movie. the internet went dark in north korea for awhile. the u.s. government did not deny that it was responsible. jack lew said in a statement this is part of a range of responses the united states is making to try to show north korea that it's not going to tolerate the kind of incursions into cyber space affecting u.s. businesses and we will see what the response from the north koreans is to this. >> but john here's the thing. north korea is already one of the most impoverished and isolated countries. number one with there's not a lot of sanction. number two, it feels like wherever there are sa

this exchange of spending will go both ways. >> john harwood, thank you so much. appreciate it. and today four high ranking secret service officials forced out of their jobs. each with more than 30 years experience. this following numerous security lapses like this one from last october, when a fence jumper with a knife made it deep into the white house. upper management in the secret service has been essentially gutted. this means six of the eight top leaders will soon be gone. two others recently having resigned. joining us now with more, nbc news white house correspondent kristen welker. what did joseph clancy say about these changes? >> reporter: he essentially said it's time for change. this is a major overhaul at the secret service, krystal, we'll go through who the folks are, four assistant directors named as dale pupelo and jane murphy governor and public affair and mark kapansy, important to point out they are being reassigned to other positions either within the see kretdcret service acting director clancy saying change is necessary to gain a appreciate perspective on

let's get to john harwood in washington d.c., who did make it into the newsroom and perhaps maybe spending the evening there. swron. >> it does have mostly good news about the economy and the budget deficit. the cbo says the deficit will be $468 billion this year. 2.6% of gdp. that's the smallest since 2007. the cbo says that falling oil prices will raise gdp by .3% this year. >> if mart pause of the critics of the labor supply. the cbo attribute that is to the retirement of baby boomers, which we expect, which will drive up future deficits for medicare and social security. also, because of some of the negative snent is in obama care. that is, the phase-out of subsidies at higher income, which may curb some people's ain't to supply their labor. >> all right, john harwood. we do appreciate it. stay safe, my friend. appreciate it. >> wells are being drilled, but not fractured. they're not getting everything out of the ground that they can, if at all, and cost cuts as we record a few weeks ago, are being demanded. as you said, received. it is a message the market may have also already receive

well, cnbc's john harwood is here to explain the details. is nothing sacred anymore, john? >> no. nothing is sacred, mandy. look, if you want to redistribute income in this country, and president obama does want to do that, have you to take some some to give to the others. therefore, part one of education redistribution obama style is subjecting for the first time at the passes the appreciated gains in 529 plans to taxation capital gains tax whz they come out of those plans. now, the administration justifies that by saying 70% of the assets in 529 plans are with families who earn more than $200,000 a year. now, in return they would increase the tax benefits, part two of redistribution obama style, is increasing the tax benefits for the american opportunity tax credit. that provides up to $2,500 per family capped at families that make at least $180,000 a year. josh ernest, the white house press secretary, said the second part of that is critical to why they go after the 529 plans. >> the reforms that the president has proposed for the 529 program are reforms that he would consider

let's bring in john harwood at the white house.to imagine top of the agenda has to do with the situation in paris and the situation we face in terms of the terrorism threat around the world? >> no question the economic issues between the two countries are taking a back seat here. there are some including the trade deal that is now being negotiated by u.s. and european counterparts which the administration hopes to get completed before president obama leaves office but right now, terrorism is the number one issue on the agenda. expect david cameron to press the president or to have pressed him in the meeting they've been having on trying to increase vigilance in terms of surveillance and, in fact, trying to push the president into a place that's uncomfortable given the nsa disclosures that david cameron has been advocating for a back door access for government to some social media sites which have become very controversial in the wake of the nsa disclosures. also as you mentioned the cyber war games which are being played to test ou

john harwood at the white house.report says that the president after that tape ended whether or not that cyber attack represents a new kind of threat. the president did not answer that question. wrapping up quickly with credit suisse on the upgrade at apple so many things seem to be working, whether it's iphone sales, competition with samsung, now this capital program that you envision, what's the downside risk? >> i don't think it's really significant the near term outlook for this company with all the supply chain coming out of asia ins past two months looked supportive. we highlight this morning our apple watch estimates of gross margin estimates on the fact that we don't assume any new significant products or services probably means our number for next year while it looks aggressive where the consenses are, in the end will probably prove conservative. i don't see downside. i think in the worst case, downside to $100 but that makes the risk/reward quite favorable here. >> bullish case you make. thanks for your tim

. >> john harwood joins us from washington on the new cybersecurity, and identity theft initiative that the president now plans to outline in his state of the union address. we know john that the timing of this new white house plan could not have been i guess more ironic. what's in it? >> well the white house essentially is trying to make sure that everyone has maximum information about what's happening to their identity. so it places requirements on businesses to notify customers if their identityies or information has been compromised. that's where you may see some of the political disagreement over how much onus is going to be put on business as opposed to on consumers themselves. i do think this is a promising area for bipartisan compromise because everyone is seeing what happened to sony pictures. everyone's seen the stories about target walmart, and where customers' data has been hacked. i think the president seizing on this is one way he might be able to find a place to work with the republican congress. >> john can i turn you back to the keystone pipeline. has there been any mov

cnbc's chief washington correspondent john harwood has more details. talk about the poll john.tedly from a low bar, this is a very optimistic poll for once. >> that's right, simon. what we've seen is that the american public has turned a corner from the pessimism that accompanied the great recession and financial crisis now they're looking ahead. take a look at these numbers reflecting that rising optimism. you see just since august when we were in the middle of the midterm election campaigns president obama at his low point in popularity. we've seen a ten-point gain in the proportion of americans who say they're satisfied with the economy. nine-point game in number of people who say that the nation's headed in right direction. six-point game in president obama's approval. here's how he wants to use that rising optimism. he wants to tax people at the top, $320 billion by raising capital gains rate to 28%. by taxing the appreciation in inherited assets which hasn't been tax sod far, he wants to use that to benefit the middle class, 235 billion over 1 years new tax benefits for c

john harwood is live with that story. >> hey, carl.ation about those 529 plans to show who would have been affected by that plan. now first of all, if you look at 529s they've had tremendous growth in the last ten years. in 2001 when the bush administration enacted tax cuts that allowed capital gains to be tax free when pulled out, you only had a little over a billion dollars in those plans nationwide. by 2011 there was almost $10 billion in those plans. now who has 529 plans? only 3% of american families have them. of them 47% make more than $150,000 a year. most make under $150,000 a year. but if you look at the median benefit from the plans, this what is the administration was looking for, families under $100,000 had a median benefit of a little over $500 when they pulled money out. families earning over $150,000 their benefit was median was $3,000. now, the argument from the administration is that even though most of the plans individually are held by people at lower income levels, most of the assets in those plans and therefore th

. >> john harwood at the white house where we have been listening to an hour-long press conference by president obama and british prime minister david cameron devoted entirely to security issues. it closed on a note of discussion about where the boundaries should lie between security and privacy. the president said we do not need a pendulum swing in the wake of the paris attacks towards security concerns over previousty, but he said we need to modernize and adapt to keep pace with technology and prevent a situation where the united states government doesn't have the technical ability to penetrate a known plot that might have been uncovered in an earlier point. the president defended himself and david cameron against the idea that their policy on secure had less space for the development of further extremism and the training of foreign fighters to come back to europe or perhaps the wraits and then finally, prime minister cameron and president obama were united on the opposition that they share to -- for additional sanctions against iran. they both held out the possibility that this cou

john harwood, it has to do with the meeting the president had with congressional leaders and what was said about possible military action against the islamic state. can you clarify that? >> yes, bill. it was a completely routine and expected statement that the president and the white house put out in their read out after this meeting with congressional leaders. the administration is going to send, as has been previously discussed and expected language to the hill for an authorization to use military force against the islamic state. these operations are already under way but it was agreed by both members of congress as well as the administration that the existing authorization of force that was enacted during the bush administration after 9/11 was not adequate for this situation, which, of course involves some operations in syria including training syrian troops. now, this is not boots on the ground, and the administration -- i mean there are some troops on the ground already, but the administration doesn't anticipate at this moment a departure -- a new ground war into syria and iraq.

john harwood, when's happening?and politico that mitt romney told a group of donors in manhattan that he's considering a run in 2016. now, i'm not sure what to make of this report because i think it is highly unlikely that mitt will enter. we are in a period where jeb bush stepped forward and really sort of galvanized the race and all of a sudden gotten other people anxious about how their role in the republican firm is changing. i just got off the phone with a top political adviser to mitt romney and asked about this possibility. adviser said i don't have any guidance. when i talked to mitt this doesn't come up. on the other hand i wouldn't be totally shocked if he ended up running. so i will just say, kelly, i will be shocked if he runs and i think the fact that they haven't been talking about it is some evidence it's unlikely. >> john, stay right there. i'd love to know, chuck todd, if you're surprised by this and if you think mitt romney is running. >> look. i am not surprised by this. he'd been sort of toying -

i'm john harwood in washington. i just got off the phone with a white house official who confirmed that the bobama administration is dropping its plan to tax the capital gains. 529 college savings accounts that so many families have turned to. the administration announced as an effort to -- as part of the effort to pay for its middle class economics program to provide tax benefits for people lower on the income ladder. the problem was that many people who consider themselves middle class who make more money who benefit from 529s believe that was unfair. there were complaints from democrats and complains alike. the obama administration is responding and they are not going to include that proposal which raised $1 billion over ten years in their budget which is to be released next week. >> i'm sure a lot of parts are giving him a high five. yahoo! announcing a spinoff of its remaining stake in ali baba. bob, this seems like good news. stock up sharply. but why do you think the core business would stick with the japan s

john harwood, stick around. larry is not terribly happy about this, and he is with me here, of course. very good to see you. simon hobbs at the new york stock exchange. i want to bare down on one thing that is part of this. apart from raising the -- >> it helps the middle class homeowners, and it helps the middle class -- >> if you are taxed on the asset that passes to you, you might have to sell that let's head outside. >> that is corrects. >> to pay the tax. >> you might even have to sell your small business to pay the tax. i think it's a lousy idea. generically, raising taxes on investments will damage the middle class. in pi opinion, okay? here's how it works. i'll be real simple here. investment is required to start a business. businesses create jobs. jobs create income. income creates family spending. if you attack investment at the margin, you are attacking the very heart of our business capital free market process. that's why this doesn't work. i can lead the rhetoric you know, class warfare, redistribut

john harwood and michael scherer. good to see you. thanks a lot. we want to update you on a developing situation in the netherlands. a gunman broke into the studios of a national broadcaster. it's approximately 20 miles east of amsterdam. the man interrupted the news broadcast with a list of demands, including he asked to speak on air. minutes later he was arrested by police. >> fortunately no shots were fired and no reports of injuries. according to the ap one reporter who spoke to the man claimed to be from a hacker's collective. more than ten months after malaysia air flight 370 disappeared, officials are calling off the search for survivors. we will tell you why next. business owners get started. visit legalzoom today for the legal help you need to start and run your business. legalzoom. legal help is here. (woman) caring for someone with alzheimer's means i am a lot of things. i am his guardian. i am his voice. so i asked about adding once-daily namenda xr® to his current treatment for moderate to severe alzheimer's. it works differently. when

john harwood joining us. what do you make of the remarks? >> that's what you expect the u.s.nderate to sasident t. not a whole lot he do beside providing whatever assistance we can. this has been a huge domestic political issue in the united states is a security issue ever since 9/11. and there are times during his presidency in which president obama has seemed to be on the high side of that issue. but any time you have an apparent threat or something perceived by the american people as indicative of a rising threat to the united states like we saw with isis attacks, that is something that is not necessarily to the president and his agenda. because republicans have take an more aggressive posture than the president has. when he is pulling back u.s. forces and winding down on popular wars, that is one thing. but when people believe a clear and present danger is there, that is something that gives some impetus towards republicans who have a tougher posture on him. now there are a couple of immediate issues that come into play. one is that in february the budgeting for the depar

president obama delivering his state of the union address tonight, and john harwood seems to have a messagets more of the money of the wealthy doesn't he? >> he does. to give to the middle class, kelly. there have been a lot of proposals the president has laid out in the two weeks leading up to the state of the union but most of the attention especially from wall street is going to be on the tax and spending proposals he's going to lay out. first, let's look at the tax side. what he wants to do is raise the capital gains rate to 28%, the top rate. that applies to incomes over $500,000. he wants to eliminate the exemption for the appreciation in value of assets that are inherited from one generation from the previous one. and he also would impose a financial fee, seven basis points, on the 100 largest financial institutions that have more than $50 billion in assets. seven basis points on their liabilities. the theory is it would reduce risk. how would he spend that money? he would give money to the middle class. trying to deal with the problem of stagnant middle class incomes. $175 billion i