The President on Inequality


New York Times
By: The Editorial Board
December 4, 2013

The issues that have obsessed Washington for the last few months -- the government shutdown, the broken health care website, the unrelentingly bitter tone of a stalemated Congress -- mean very little to most Americans. For a broad swath of the country, what matters hasn't changed since the recession, and it is economic anxiety. Six in 10 workers in a Washington Post poll last week said they were worried about losing their jobs, the highest number in decades. Many of the millions who are unemployed have reached new depths of despair.

On Wednesday, in one of his strongest economic speeches, President Obama pushed past all the distractions of his opponents and addressed the core of those fears. He will spend the rest of his presidency, he said, on "the defining challenge of our time:" reducing economic inequality and improving upward mobility.

"I am convinced that the decisions we make on these issues over the next few years," he said, "will determine whether or not our children will grow up in an America where opportunity is real."

An American child born into the lowest 20 percent income level has a less than a 1-in-20 chance of making it to the top, as Mr. Obama pointed out. But one born in the top 20 percent has a 2-in-3 chance of staying there. And the top 10 percent now takes half of the national income, up from a third in 1979. That's a level of inequality on par with Jamaica and Argentina, and such concentrated wealth leads to more frequent recessions, higher household debt and growing cynicism and despondency.

That cynicism is often expressed in a lack of faith in government's ability to do anything about the problem. This view ignores how much inequality has been made worse in the past few decades by government decisions. The emphasis on cutting taxes and spending that began in the Reagan years is a direct cause of economic insecurity now. It has led, for example, to education cuts that have harmed children in low-income school districts. Reversing those decisions can still have an enormous impact.

Mr. Obama did not reveal a sheaf of new ideas in his speech. But he did remind listeners of the many good ideas he has proposed about inequality over the years, most of which have been blocked by Republican opposition. A higher minimum wage would have an immediate effect on the buying power of millions of workers, stimulating growth and employment. Greater spending on high-quality preschool, a new emphasis on career and technical education and affordable higher education would all help to lower the barriers to economic mobility. Stronger collective-bargaining laws and nondiscrimination protections would help restore a balance in workplaces now tilted strongly toward employers.

And the Affordable Care Act, as Mr. Obama said forcefully, has enhanced security for millions of people who were previously uninsured or who lived in fear of losing their policies because of illness. "This law is going to work," he said, "and for the sake of our economic security, it needs to work." It will reduce personal bankruptcies, he said, cut sick time and keep children healthier and performing better in school.

What he should have added was the need to raise tax revenue, which is crucial to making the kinds of investments big enough to have a real effect on growth. The tax code must be overhauled to eliminate the absurdly generous breaks given to those at the very top -- an idea that Mr. Obama has campaigned on but rarely brings up, given the implacable Republican opposition. But the president did issue a clear challenge to his opponents. Where are the Republican ideas for reducing the income gap? Most in the party don't even recognize it as a problem. "You owe it to the American people to tell us what you are for," he said, "not just what you're against." The silence from Republicans explains why economic inequality is rising.

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This page contains a single entry by CFED published on December 5, 2013 4:01 PM.

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