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How fighting income inequality became Obama’s driving force

By Zachary A. Goldfarb,November 23, 2012

(Page 2 of 3)

The White House is sensitive to the notion that the president could be called a “redistributionist” — an idea that fuels the animosity of Obama’s conservative opponents but also stirs uncomfortable feelings among many Americans who generally approve of greater fairness but object to programs that look like mere government handouts. “The idea was to promote opportunity and mobility and not equality of outcomes,” Jared Bernstein, a former White House economic adviser, told me in a conversation about Obama’s approach. “Where inequality came into the mix is the recognition that we’ve gotten to the point that inequality is blocking opportunity.”

Faced with a divided Congress that imposes significant limits on what he hopes to accomplish, it may seem, in 20 years, that Obama only tinkered at the margins. Several of the nation’s leading experts on inequality say that although he has pushed in the right direction, he may have to push much harder if he wants to make a significant mark. As University of Arizona sociologist Lane Kenworthy has written, that may mean universal child-care and preschool programs, designed to start children on an early path to the skills they will need to succeed while freeing parents to earn more. At the other end of the educational spectrum, Obama would need to go further to reduce the escalating cost of college. Either measure would require substantially more tax revenue, which would presumably be collected from the wealthy.

“Obama’s proposals are not strong enough, per se, to undo the very large inequality increase the U.S. has experienced since the 1970s, particularly when it comes to the incomes at the very top,” Emmanuel Saez, an economics professor at the University of California at Berkeley and one of the world’s top experts on the subject, told me. “To really make a dent, you would need to consider more radical policies.”

Saez noted, for example, that Obama’s policies do not match those of Franklin D. Roosevelt during the New Deal. By the end of the 1930s, the wealthiest 1 percent of earners were paying more than double the taxes they did at the beginning of the decade, said Elliot Brownlee, a history professor at the University of California at Santa Barbara. By contrast, according to the Tax Policy Center, Obama’s wish list of tax policy changes would require the top earners to pay 15 percent more.

Obama is the first president in the modern era to focus so much on economic inequality. Democratic predecessors concentrated more on poverty, such as Lyndon Johnson’s “Great Society” and Bill Clinton’s tax credit for the working poor. But Johnson also lowered taxes on the wealthy, and Clinton, having increased taxes early in his term, cut capital gains taxes in his second term, benefiting richer Americans who had substantial income from investments.

When Obama discusses this subject — as he often has over the years — he sometimes begins his narrative in the period right after World War II. In late 2011, he delivered a seminal speech on income inequality in Osawatomie, Kan., where Teddy Roosevelt had proclaimed his progressive agenda a century earlier.

Obama expressed nostalgia for the post-war America of his grandparents’ generation, when incomes were rising remarkably fast, especially at the bottom of the economic ladder, when people could get decent-paying jobs as file clerks or factory workers. “They believed in an America where hard work paid off, and responsibility was rewarded, and anyone could make it if they tried — no matter who you were, no matter where you came from, no matter how you started out,” he said. “These values gave rise to the largest middle class and the strongest economy that the world has ever known.”

That common prosperity was coming to an end about the time Obama arrived in Chicago as a community organizer in the 1980s. He saw firsthand how workers were displaced from good jobs in the once-vibrant Chicago steel mills.

Working in that hotbed of black politics, he might have been tempted to focus exclusivelyon racial inequalities, the crusade of an earlier generation. But class was rising to the forefront of his thinking. In “Dreams From My Father,” Obama recounts a conversation he had in the late 1980s with his now-estranged pastor, the Rev. Jeremiah Wright. Obama was telling him that the church could do more to reach out to working-class blacks. Wright was disagreeing.

“It’s not about income, Barack,” the pastor responded. “Cops don’t check my bank account when they pull me over.”

Reflecting later on his conversation, Obama wrote in his book, he wasn’t convinced. “Wasn’t there a reality to the class divisions?” he wondered.

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