In my column for The Week, I discuss how Obama’s speech on income inequality fell short:
The Kansas speech was composed of two main parts: a critique of the performance of the U.S. economy over the past generation, and a program for “rebalancing” in the years ahead.
The trouble is that the more convincing you find the critique, the less convincing you will find the proposed solution.
Obama’s critique attacks the increasing inequality in American society, and blames the 2008 crisis, at least in part, on this inequality:
Long before the recession hit, hard work stopped paying off for too many people. Fewer and fewer of the folks who contributed to the success of our economy actually benefited from that success. Those at the very top grew wealthier from their incomes and their investments — wealthier than ever before. But everybody else struggled with costs that were growing and paychecks that weren’t — and too many families found themselves racking up more and more debt just to keep up.
Now, for many years, credit cards and home equity loans papered over this harsh reality. But in 2008, the house of cards collapsed. We all know the story by now: mortgages sold to people who couldn’t afford them, or even sometimes understand them. Banks and investors allowed to keep packaging the risk and selling it off. Huge bets — and huge bonuses — made with other people’s money on the line. Regulators who were supposed to warn us about the dangers of all this, but looked the other way or didn’t have the authority to look at all
There’s a lot missing from that story. But still … close enough for government work.
So what exactly does the president propose as a policy response to this generational economic disappointment?
The program he proposes is hazy, but seems to include four main elements:
1) Increased spending on education intended to upgrade American skill levels
2) Higher taxes on upper-income earners to decrease inequality
3) More government investment in infrastructure, both as a source of jobs and in hope of supporting a more middle-class economy
4) Stricter financial regulations
Now how exactly is any of this supposed to address the challenge the president himself described?