December 05, 2013
Turning his attention yet again to the economy, President Obama on Wednesday zeroed in on the “defining challenge” of this generation — growing income inequality between the richest 1 percent and the rest of America.
But the president didn’t unveil any grand proposals to tackle the problem; instead, he repeated a laundry list of initiatives centered on many familiar themes: economic growth through government investment; job training and education reform; stronger protections for labor unions and paycheck fairness legislation; ato the minimum wage; and a revamped approach to how Americans save for retirement in private accounts and in government programs such as Social Security.
Although his speech was short on specific ideas, it was big on ambition. The president talked in broad terms about how the greatest nation on earth must not allow the middle class to stagnate and the poor to get poorer as rich Americans’ net worth grows.
“I believe this is the defining challenge of our time — making sure our economy works for every working American. That’s why I ran for president,” Mr. Obama said at an event in Southeast Washington hosted by the left-leaning Center for American Progress. “It drives everything I do in this office. I know I’ve raised this issue before and some will ask why I raise the issue again right now. I do it because the outcomes of the debates we’re having right now, whether it’scare, or the budget, or reforming our housing and financial systems, all of these things will have real practical implications for every American. I am convinced the decisions we make on these issues over the next few years will determine whether our children grow up in an America where opportunity is real.”
Pointing out widening income disparities is not new for Mr. Obama, who spoke of the issue often during both of his presidential campaigns. Indeed, it has become a focal point of politics in the U.S. and led some leaders such as former Sen. John Edwards, North Carolina Democrat, to declare there are “two Americas” — one for the rich and another for everyone else.
The question isn’t whether income inequality should be addressed,say, but how the problem should be approached. On that front, they say, Mr. Obama simply is offering more of the same.
“What I heard was the same old, very broad brush strokes: We need to help the middle class, we need to raise the minimum wage and we need to do more infrastructure projects. More spending,” said Lance Roberts, CEO of STA Wealth Management who has more than 25 years of experience in private banking,and venture capital.
“Let’s throw money at it,” Mr. Roberts said of the administration’s approach to income disparities and a generally poor economy. “If it doesn’t work, it’s because we didn’t throw enough money at it. We’ve done five years of this.”
In those five years, income inequality has hit a record level, according to a September report from the University of California, Berkeley. The study shows that income gaps continue to grow despite the administration’s intentions.
From 2009 to 2012, the top 1 percent of incomes in the U.S. grew by more than 31 percent, while the bottom 99 percent went up by 0.4 percent. During the same period, the top 1 percent of earners captured 95 percent of all income gains.
In 2012, as Mr. Obama neared the end of his first term that imposed massive governmentthrough his stimulus package, the top 1 percent of American incomes rose by nearly 20 percent while the bottom 99 percent of incomes grew by just 1 percent, according to the Berkeley report.
Republicans seized on the president’s remarks and framed them against the backdrop of such grim income statistics.
“The American dream is certainly more in doubt than in decades, but after more than five years in office, the president has no one to blame but himself,” said Brendan Buck, a spokesman for House Speaker John A. Boehner, Ohio Republican.
The president’s approach is “more stimulus, more government programs and more government intervention into the job-creating private sector,” Mr. Buck said. “By now, and by the president’s own admission, it should be clear that is not the solution.”
Income inequality usually is framed in purely economic terms, but the president cast it in a broader light and said it poses a fundamental threat to American democracy.