On Wednesday morning, President Obama left the White House and made a six-mile drive from the center of the richest city in America to the east side of the Anacostia River, where nearly half of the children are poor. It was an appropriate location for a speech on the American economy, and in particular for Obama’s announcement that he would devote the remaining three years of his presidency to income inequality and declining social mobility, which he called “the defining challenge of our time.”
“The idea that so many children are born into poverty in the wealthiest nation on Earth is heartbreaking enough,” the president said. “But the idea that a child may never be able to escape that poverty because she lacks a decent education or health care or a community that views her future as their own—that should offend all of us. And it should compel us to action.”
The actions Obama laid out included several progressive policies (although none of them new), including an increase in the minimum wage. The speech was another indicator that inequality will be the issue that animates Democratic Party politics in coming election cycles.
Contrary to what John Cowan and Jim Kessler of the dubiously Democratic think tank Third Way say, there are many signs that economic populism is the right message. However, it’s one thing to assume the language; it’s another to live up to its demands. As many others have pointed out in recent weeks, confronting economic inequality exposes the dilemmas of a party that has grown close to business interests.
To really reverse the cycle of economic and social stratification, to significantly increase investment in schools, infrastructure and institutions, means big changes to the tax code—way bigger than closing loopholes in exchange for lower corporate tax rates, as Obama proposed in his speech. It means taking on Wall Street, not promoting bills written by banks to undercut financial reform. It means reconciling the lip service Democrats pay to labor and education with attacks on teachers and, broadly, the undermining of the public education system. It means a firmer rejection of austerity. It means, in effect, stabbing the Big Money that all politicians have come to rely on in the post—Citizens United era in the back.
Obama’s speech exemplified some of the quandaries within his party. He called for several specific progressive policies that have broad Democratic support, including a raise in federal minimum wage, universal pre-K, the Employee Non-Discrimination Act, extending long-term unemployment insurance and ensuring that women are paid equal wages for equal work. He called for stronger collective bargaining laws “so unions have a level playing field to organize…for a better deal for workers and better wages for the middle class.” All of these policies are needed, and overdue. They’re also popular among voters, and the fact that congressional Republicans are likely to prevent them from being enacted is fodder for Democratic candidates.
But in an apparent pitch for the middle, Obama gets a lot wrong. Closing loopholes in the tax code is great, but there is little evidence that swapping them for a lower corporate tax rate will trickle down in the form of many well-paying, middle-class jobs. Obama himself said as much earlier in the speech when he outlined the history of policy decisions that have steadily widened the gap between rich and poor: “As the trickle-down ideology became more prominent, taxes were slashed for the wealthiest while investments in things that make us all richer, like schools and infrastructure, were allowed to wither,” he said. “So the basic bargain at the heart of our economy has frayed.”
Obama also mentioned his “trade agenda that grows exports and works for the middle class,” although so far the free-trade agreement he brokered with South Korea has cost 40,000 American jobs, many in manufacturing. The Trans-Pacific Partnership Obama is seeking fast-track authority for could be even worse. And while some Democrats like Elizabeth Warren are calling for an expansion of Social Security benefits to support seniors still reeling from the dissolution of their retirement savings during the financial crisis, Obama spoke vaguely of “reforms that actually strengthen these programs and make them more responsive to a twenty-first-century economy,” which sounds a lot like conservative euphemisms for cuts.
Still, in a time when faith in government is ultra-low and deficit hand-wringing high, Obama did offer an important defense of government spending. “These programs are not typically hammocks for people to just lie back and relax. These programs are almost always temporary means for hardworking people to stay afloat while they try to find a new job, or going to school to retrain themselves for the jobs that are out there, or sometimes just to cope with a bout of bad luck,” he said. “A relentlessly growing deficit of opportunity is a bigger threat to our future than our rapidly shrinking fiscal deficit.”
He also took on the racial undertones of the attacks on the social safety net, rejecting the “false notion” that the economic inequality “is an issue exclusively of minority concern.” He asked viewers to “reject a politics that suggests any effort to address it in a meaningful way somehow pits the interests of a deserving middle class against those of an undeserving poor in search of handouts.”
And Obama offered a strong challenge to the GOP, one that bears repetition, again and again: “If Republicans have concrete plans that will actually reduce inequality, build the middle class, provide moral ladders of opportunity to the poor, let’s hear them,” he said, and went on to address conservatives directly: “You owe it to the American people to tell us what you are for, not just what you’re against.”
So Obama delivered another great speech, rhetorically. There’s momentum for a few of the policies he called for, particularly raising the minimum wage. But what remains, immediately, are millions of people who don’t have jobs to begin with, a “post-policy” GOP in control of the House and a Democratic party split between the people and its patrons.
Fast-food employees in 100 cities are striking for higher wages this week. Allison Kilkenny reports.