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Obama’s chance to drive inequality debate

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Published : 2014-01-28 19:30
Updated : 2014-01-28 19:30

Much of the substance and tone of President Barack Obama’s State of the Union address this week are predictable. So is the reaction: It won’t change many minds or political stands.

The speech is potentially significant, nonetheless, in shaping the agenda and dialogue of this U.S. election year. Income inequality, with the emphasis on enhancing opportunities and intergenerational mobility, will be centerpieces; how effectively the president raises these issues will affect politics, and possibly a few legislative achievements.

Even before the inevitable, self-serving leaks, it is safe to assume that:

― It will be neither a seminal speech that changes the political dynamics nor a bad one. Politics are too polarized for seminal moments; with polished writers and an articulate speaker in a historic venue, it isn’t possible to bomb. Memorable phrases ― Bill Clinton’s election-year “the era of big government is over” or George W. Bush’s simplistic “axis of evil” ― are usually designed for short-term political gain, not as substantive markers.

― Members of Congress will carefully rehearse their reactions, which will be pegged to their partisan interests, both during the speech and after.

― The speech will be long. In 1986, Ronald Reagan spoke for 31 minutes. Clinton’s rhetorical appetite changed things; his messages all exceeded an hour, and a few approached an hour and a half. Obama has averaged a little more than an hour.

The president’s plans to stress income inequality already are drawing criticism: Some centrist Democrats complain that economic populism is a loser; conservative Republicans contend that it’s class warfare.

The facts suggest otherwise. Income equality was a central fact of the post-World War II boom in the U.S. Then conditions started to worsen in the 1970s. The last five years have been cataclysmic. Corporate profits are soaring as the poverty rate rises; capital gains and dividends rebounded from the economic crisis, but wages are stagnant.

The average income of the top 1 percent of earners increased about 31.4 percent from 2009 to 2012, while wages for the other 99 percent essentially stood still. The proportion of economic gains going to the very wealthy under the Obama administration is greater than it was under George W. Bush.

The rich-poor gap in the U.S. is now greater than in any other industrialized country. Upward mobility, a staple of the American Dream, is eroding compared with more than a few nations.

Income inequality was a top concern last week at the World Economic Forum in Davos, Switzerland, hardly a hotbed of radical economic thinking. It’s bad for the economic and business climate.

Prominent Republicans such as House Budget Committee Chairman Paul Ryan and Senator Marco Rubio are floating anti-poverty ideas. To be sure, they have profound differences with the White House; compromises on tax revisions or either expansions or cuts of big social-welfare programs aren’t on the table.

Still, some accords may be possible, if not likely. Republican opposition to raising the minimum wage, a notion that is popular with voters, is softening a little. There also could be some consensus on early-childhood education.

Maybe the president will belatedly focus on an expansion of the earned income tax credit, which goes to the working poor. It is one of the most effective anti-poverty programs and a gateway to the middle class. Tea Party conservatives need to be reminded that Reagan supported the credit for working families.

There is an opportunity to begin a serious discussion on the difficulties of economic mobility: For example, why is upward mobility easier in some parts of the U.S. than in others, as a recent study showed? Framing such issues is what presidential megaphones are for.

By Albert R. Hunt

Albert R. Hunt is a Bloomberg View columnist. ― Ed.

(Bloomberg)

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