The President Needs to Talk About How We Got Economic Inequality

On Tuesday night, President Barack Obama is going to give his fifth State of the Union address. The president is likely to call for policies that will help working people, like an increase in the minimum wage and the extension of unemployment benefits to the long-term unemployed workers.

But what will his larger message be? In December, he gave an exceptionally blunt and powerful speech about economic inequality. But the speech had two serious problems. He described inequality as a problem affecting the poorest Americans, while in reality the majority of America’s workers are no longer advancing economically. Second, the president described inequality as something that just happened without anyone making it happen—a piece of bad luck or an act of God.

But for the kind of people who pay the bills in Washington, the fact that the president used the word “inequality” is too much, and the chorus of insiders urging the president to back off is growing.

So the president faces a choice of rhetoric on Tuesday night—but that choice is not just about political gamesmanship. It will have serious policy implications. But there is also an issue of simple credibility. The American people are watching, and they are furious about inequality. Large majorities in poll after poll want a more progressive tax system, accountability for bankers, less power in public life for corporations and the rich and, most of all, higher wages.

The public’s anger shouldn’t be a surprise—anyone whose eyes are open who lives in today’s America knows that inequality doesn’t just happen. The 1 percent make it happen.

Just look around.

This week, as the president drafted his speech, Jamie Dimon, the CEO of JPMorgan Chase got a 74 percent raise, taking his salary from $11 million to $20 million. Since much of his compensation is in the form of stock and stock options, he will pay 20 percent taxes on those gains, less than the marginal tax rate for many middle-income Americans.

Jamie Dimon runs a bank that just paid the largest civil penalty in American history for a single company, for misconduct in the mortgage markets. Nonetheless, Dimon and his colleagues at JPMorgan Chase appear as of now to have avoided all criminal penalties and all personal responsibility for their actions.

And meanwhile since 2008, 10 million families have been thrown out of their homes and more than 3 million Americans have been incarcerated, the majority for nonviolent offenses involving sums and social consequences a bit smaller than what went on at Chase.

Then there is Walmart. Walmart is the largest employer in the country—1.4 million people work for Walmart. Last summer, Walmart associates went on strike, demanding that Walmart pay a minimum of $25,000 a year. Walmart is majority owned by the Walton family, the richest family in the world. Walmart has responded to its employees’ exercising their legal right to ask for a wage barely enough to keep a family of four out of poverty by firing people brave enough to stand up to them. The National Labor Relations Board has issued formal complaints against Walmart, but our labor laws are so weak the Walton family is much less worried than Dimon that making money by breaking the law might actually come back to haunt them.

Finally, there is the actual policy agenda of America’s elites—measures that will put more downward pressure on wages. Every trade agreement we have done since The North American Free Trade Agreement (NAFTA) has been based on the same template, and the cumulative effect has been a huge trade deficit that saps our economy, loses millions of jobs and continues the relentless downward pressure on wages. Yet the Obama administration is using that same template again in drafting the Trans-Pacific Partnership, the biggest trade deal the United States has ever done, and the implementing the same process, fast track, that gave us NAFTA with no questions asked.

When it comes down to it, what is a speech like the State of the Union for a second-term president leading a gridlocked government? It is a chance to speak to the people directly, and to gain what political momentum may be gained by telling the truth, by speaking to the experience of the people the president represents.

What would that sound like? It might sound like this.

“Since 1997, all the gains in income in our country have gone to the top 10 percent. Our workforce is dramatically more productive, but our real wages have fallen.

“This isn’t an accident, or an act of God. People with power in America made decisions that led to this result. The key decision was to use the power of the government to help corporate America push wages down. Falling wages drive grotesque inequality. So any serious effort to deal with inequality has to begin with restoring workers’ bargaining power, not just for the poorest workers, but for all workers. It’s that simple. If we care about inequality, we must raise wages.

“It’s time we made different decisions. Because the survival of the American Dream is at stake.

“Grotesque inequality kills the American Dream because the American Dream is not the fantasy that we can all be rich, or the fact that a few of us will be rich. It’s about what happens for the vast majority of people who work hard, who contribute to the life of our country, who will never get rich but who deserve lives of economic security and dignity, who should get their share of the vast wealth they produce. Our economy used to do just that, and now it doesn’t, but it can again if we choose to make it so.”

President Obama has the power to begin to fix what has gone wrong in America, even if not to solve it entirely within the next three years. Everything he’s said suggests he very much wants to try. He should begin by telling the truth about what the 1 percent have taken from the 99 percent. That much is certainly within his power to do.


This originally appeared on the AFL-CIO Blog.

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