Obama’s Risky Strategy on Closing the Income Gap
Policy + Politics

Obama’s Risky Strategy on Closing the Income Gap

Weakened by problems with his health-care initiative, President Obama turned back to the economy last week to rebalance his presidency with a speech about income inequality. He said he would devote much of his remaining time in office to the issue, calling it the “defining challenge of our time.” The bigger issue is how much he can or will do about it.

Income inequality has been growing for years, as wages and incomes for most Americans have stagnated. The problem has become even more acute amid the after-effects of the 2008 recession. So it’s no surprise that the gap between rich and poor — or between the super-rich and everyone else — has become a ripe topic for political debate, even if it defies easy solutions.

Related:  Obama Takes Aim at America's Growing Inequality Gap 

Obama has talked about the issue before. His advisers can draw a direct line from his speech in Osawatomie, Kan., in December 2011 through the 2012 campaign, when he made middle-class concerns the centerpiece of his message against Mitt Romney. Jon Favreau, one of his former speechwriters, said in an e-mail that those same themes were part of his speech at the Democratic National Convention in 2004. But he has rarely been as direct or as pointed about the problem as he was at a community center in Southeast Washington last week.

Meanwhile, others have done as much, or more, to raise the issue’s visibility. The Occupy movement that sprang up in the fall of 2011 put new language into the political lexicon— the 1 percent vs. the 99 percent — that continues to frame the debate. New York Mayor-elect Bill de Blasio made inequality the central plank in his “tale of two cities” campaign and was rewarded with a landslide victory last month. Pope Francis, in a recent papal exhortation, drew global attention to the issue as he decried an economic system that he said was built on exclusion and inequality.

Geoff Garin, a Democratic pollster, sees issues of economic insecurity and inequality as centrally important to voters, with appeal across party lines. People may not talk about income inequality per se, he said, but sentiment is widespread that something is fundamentally wrong with the way the benefits of the economic system are distributed.

Related:  The Fed Is Widening the Income Gap ... and That's a Good Thing

“There is certainly a very deep feeling of resentment about the privileges that the people at the very top enjoy and that we have a system that is geared to gilding the lily to people at the top, as opposed to rewarding hard work and effort by middle-class and working-class Americans,” he said. “I think there is a deep desire in the country to unstack the deck economically.”

How potent is the issue politically? Larry Bartels of Vanderbilt University, one of the nation’s leading political scientists, looked at the 2012 election, which was fought over many of the themes and issues Obama highlighted again last week. Bartels concluded that the broad issue of inequality added 2 to 3 percentage points to Obama’s share of the overall vote and about 1 point in the battleground states.

But his findings came with a caveat: Obama benefited less because of the specific economic policies he championed than because many voters saw Romney as an out-of-touch plutocrat. Romney’s infamous comments that 47 percent of Americans feel “dependent on government” and will not take personal control of their own lives reinforced those perceptions of the Republican nominee. He came to personify the argument.

Bartels concluded that Obama did not have a decisive edge in terms of the policies designed to deal with inequality. In fact, he argued, on some of them Obama may have lost more votes than he won.

“The results of my analysis,” he wrote, “suggest that the impact of inequality in 2012 had much less to do with concrete policy preferences — or even with broad social and political concerns about inequality — than with the specific, widespread perception that the Republican nominee cared more about wealthy people than about poor (or, for that matter, middle-class) people.”

He added: “If this was a ‘class war,’ it was a circumstantial battle reflecting the background and image of the Republican nominee — not a frontal assault by the American electorate on ‘the defining issue of our time.’ ”

Some Democratic centrists are squeamish about a full-throated populist economic message. Even before Obama spoke Wednesday, a squabble had broken out among Democrats over the advisability of making it the centerpiece of the party’s campaign in 2014 or 2016.

Writing in The Wall Street Journal, Jon Cowan and Jim Kessler, officials in the centrist Democratic group Third Way, said “nothing would be more disastrous” for the Democrats than to follow the path highlighted by de Blasio and Sen. Elizabeth Warren (D-Mass.), who is the scourge of Wall Street and the financial community.

Separately, Al From, the founder of the Democratic Leadership Council in the 1980s, which was for a time the leading centrist advocacy group in the party, has reprised the argument the DLC advanced during its heydays in his new book, The New Democrats and the Return to Power. “Class warfare offers politically appealing rhetoric,” he writes, “but it divides our country and provides no real solutions to our nation’s problems.”

Warren and others on the left will not be slowed by such rhetorical warnings. Right now, they have the momentum in the debate. Warren countered Cowan and Kessler by writing to major banks to ask them to divulge their contributions to think tanks, a thinly veiled way of questioning the degree to which groups like Third Way depend on funding from the very sources she has attacked.

Garin, meanwhile, argued that the failure to hold banks more accountable for the collapse in 2008 remains perhaps “the biggest unscratched itch” in American politics. But as Obama’s speech illustrated, the gap between the problem and the potential solutions available is almost as large as the gap between rich and poor. Narrowing that gap should be where the debate goes next.

This article originally appeared in The Washington Post

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