President Obama apparently has decided on the theme of his reelection campaign. Rather than defend his record, or talk about pressing issues like $1.2 trillion deficits or unemployment in the region of 9%, he has elected to campaign against an economic and demographic phenomenon that has evolved over several decades: income inequality.
In this, I think he is attempting to channel the national angst awoken by the Occupy Wall Street protesters, who, as of this writing, have pretty well disbanded due to cold weather or municipal sanitation codes. As I understand it, their next expression of purpose will be to try to shut down a series of busy ports on the West Coast, thereby making life as difficult as possible for the 99%-ers who work in the ports or buy goods passing through them. This is indeed a finely-honed political movement.
Nevertheless, the president has evidently decided that their mantra is “the defining issue of our time.” And so in his speech in Osowatomie, Kansas last week, President Obama invoked Theodore Roosevelt to decry the gap between rich and poor.
There are lots of statistics indicating such inequality, and many of them are misleading. For instance, it is often mentioned that household income has stagnated over the last few decades; what is seldom also mentioned is that households themselves have not stagnated. They are in fact smaller than in years past, due to increasing levels of divorce, later marrying, and the like, so that even though income per household is flat, income per person has actually grown.
Similarly, the seemingly relentless accretion of wealth by the top end is also subject to interpretation. For instance, the Congressional Budget Office created a stir when it recently released a report showing that “the share of income of the top 1% grew from about 8% in 1979 to over 17% in 2007.” Lost in the media outcry that ensued is the fact that since then their incomes declined to something more like 11%. Why? Because much of that income came in the form of capital gains. The wealthy are individual owners of shares, and when the market is booming, and capital gains taxes are low, they take profit. This is good for the economy, since it frees up capital to seek productive investment.
When the economy is lousy, however, and market gains are scant, that source of income dries up. The OWS folks may not be impressed, but this recession and weak recovery have decimated the incomes of the 1%. Terrible economic times are great for income leveling – although I doubt if that’s Obama’s plan.
Moreover, Obama seems to take the mere fact that these folks are rich – and make no mistake, rich they are – as evidence of society’s injustice. In his speech, he makes precisely one perfunctory nod toward the success of free enterprise, and then goes on to excoriate the “breathtaking greed of a few” (I’m thinking he was not talking about Jon Corzine) and “irresponsibility” as being the causes that have sent the economy into a spin. No mention here of the irreplaceable role that bad government policy had in the financial crisis of 2008, nor of course of its role in our continuing malaise.
He did, however, indulge in his now-familiar caricature of Republican policies: “we are better off when everyone is left to fend for themselves and play by their own rules.” In an earlier speech, he said the Republican plan is “dirty air, dirty water, fewer people with health insurance.” This is like the mother who says, “eat your broccoli or you’ll go blind.” The kid scoffs, of course, as do the voters. Why does Obama say stuff like that?
He went on to describe how income inequality is what keeps families from providing their families with the things they need (like brand-new iPads, the sales of which continue to set records). In fact, to the extent that families are struggling, it is not because of income inequality. Albert Pujols recently signed with the Angels for over $20 million a year – did that prevent anybody else from putting food on the table?
The real cause of economic suffering in this country is stagnant economic growth. I don’t see how ensuring that some big fraction of Pujols’ millions ends up in somebody else’s pocket helps that cause.
Indeed, the thing that is least coherent about Obama’s speech was that he used the inequality issue as a prop for his favored policies of tax increases and more public spending on things like education and infrastructure. Neither of those things will do anything in the short or medium term to address income inequality. So why bring it up, and why raise it to the level of the “defining issue of our time”?
It’s politics, of course, but politics of a dangerous sort. As the Wall Street Journal’s Daniel Henninger points out, it is more in keeping with the rants of Hugo Chavez to vilify the well-to-do than with the traditional American politics of optimism and uplift.
Voters in this country do not respond to anger or to blame merchants. If President Obama persists in declaring the wealthy of this country personae non grata, he may motivate many among his liberal base to get out and vote, and even some of the OWS folks might bestir themselves. But the middle of the country, the ballast for our political system, will not respond to the kind of claims that Obama appears to be increasingly comfortable in making.
Roosevelt’s New Nationalism was a precursor to 20th-century liberalism, which had a philosophical kinship with fascism: statism, concentration of power, and control of the the untidy urges of the general populace. Obama probably doesn’t intend to go quite that far, but it seems in tune with his sympathies. It’s a rather frightening prospect, actually.