The White House is signaling that one focus of President Obama’s State of the Union address on Tuesday will be on our extreme and rising levels of income inequality. He'll feature basic pocketbook issues like raising the minimum wage, extending unemployment benefits, paycheck fairness for women, workplace leave policies and investments in education, from preschool to college affordability.
Obama, of course, will address a Congress that has blocked any action on much of his agenda – investment infrastructure and new energy, progressive tax reform, preschool, the minimum wage and more. House Republicans have even refused to bring immigration reform to a vote.
So the president’s speech will be far more aimed at Americans who are watching than to the legislators arrayed before him. This is a tough audience. Most Americans think the country is on the wrong track. The economy and jobs are their biggest concerns, and they think Washington has failed them. The president’s approval ratings have plummeted, in part because of the botched roll-out of health care reform but largely because most Americans don’t feel much of a recovery.
The president will need to prove that he is on their side, that he is fighting for them, and is prepared to act even if the Congress stands in the way. Obama generally rises to these occasions, even though the burdens on any State of the Union address sabotage eloquence and simplicity. For this speech, the test for the president is whether he can paint a compelling argument for where we must go to make this economy once more work for working people.
Explanation is eloquence.
The president needs to grab this opportunity to explain to Americans how we got to an economy where the few are capturing virtually all the rewards of growth. Inequality did not just happen. It wasn’t fate or an act of God. It wasn’t ordained by globalization or technology. He should take time to tell the story.
After World War II, America built the first broad middle class where we all grew together. It did this step by step, measure by measure. The GI Bill educated a generation of veterans to create the most skilled workforce in the world. Government funding helped convert wartime industries to civilian production. Tax rates on the wealthy – 90 percent through the early years – helped provide the funds to build a modern public infrastructure, from the interstate highway system under Eisenhower to affordable college. Thirty percent of the workforce was organized; union contracts set the frame for rising pay levels across the economy. Finance was regulated, limiting speculation and helping to make homes affordable. Full employment was more the rule than the exception. The rewards of growth were widely shared and income inequality declined.
The new inequality and the sinking middle class were also created, step-by-step and policy-by-policy. Wall Street freed itself from regulation, and the economy is now wracked by its speculative booms and busts. Corporations launched a war on unions. Our tax and trade policies – defined by multinational banks and corporations – racked up unsustainable deficits, while rewarding companies for moving good jobs and hiding profits abroad. The minimum wage didn’t keep up with productivity or inflation. Taxes were cut on the top, and corporate tax avoidance flourished. Public investment in areas vital to our economy – from infrastructure to public education – didn’t keep up. Profits and productivity rose, but wages lagged, and benefits like decent pensions and adequate health care were cut. Full employment became the exception, not the rule. And now in our big money politics, entrenched interests and the privileged few rig the rules to their own benefit.
An explanation – needless to say, Obama could do this far more eloquently – could then turn his agenda from a disparate list of policies to an integrated strategy to rebuild an economy that works for working people.
Inequality and Full Employment
The first step is to ramp up growth and jobs to drive to a full employment economy. Full employment – jobs available for those willing and able to work – is the most powerful antidote to inequality. Full employment forces employers to compete for workers, rather than workers compete for jobs. It pushes wages up across the board, helping to generate the demand that creates more jobs and more growth.
This economy is growing, but not nearly fast enough. To ramp up growth requires Congress to act now on investments vital to our future that will put people to work, including long overdue modernization of our infrastructure and providing the basics in education, from universal preschool to affordable college. It also requires a manufacturing strategy so that we make things in America once more. That would include a commitment to capture the lead in the green industrial revolution that is creating the growth markets of the next decades, and policies that balance our trade while taking on the mercantilist nations like China or Germany.
Here the president can announce that he won’t wait for Congress to act; he can announce new initiatives on energy efficiency and renewable energy that will open markets and help generate jobs while addressing catastrophic climate change. He could announce that the U.S. will act against nations that manipulate their currencies while running up consistent trade surpluses with the U.S.
A second step is to ensure that workers gain a fair share of the profits and productivity that they are helping to produce. Raise the minimum wage and index it to inflation. Empower workers to organize at the workplace and crack down hard on violations of worker rights. Pass paycheck fairness so women gain equal pay for the same work. Pass comprehensive immigration reform to bring millions out of the shadows where they are easily exploited. Provide basic security for working families: Continue the progress made towards universal affordable health care, guarantee paid family leave and minimal paid vacations, as every other industrial country does. Protect and expand Social Security to insure workers can retire with dignity. Curb perverse executive compensation policies that give CEOs multimillion-dollar incentives to plunder their own companies.
Here the president should announce that he will issue a good jobs initiative for government procurement, insuring that taxpayers’ dollars give preference to high-road employers who pay their employees a living wage and respect labor laws. And he should once more shame the Congress for failing to extend jobless benefits to working people struggling to find a job.
A third step is to guarantee to every child the full opportunity to learn. That means a true focus on the first five years of life for poor children, with infant nutrition and universal preschool critical investments in their potential. And we should not force young people to assume unsustainable debts to gain the college education or advanced training that we agree is vital to the nation’s future as well as their own.
And Obama would be wise to launch a new initiative to revive our democracy and limit the power of big money in Washington. He could give a call out to the Moral Monday movement in North Carolina, where people are mobilizing to protect their right to vote. He might consider convening governors to lay out a model for democratic reform – from universal voter registration to disclosure of contributions and lobbying, to various forms of public matching of small contributions.
No speech can encompass the full reform agenda. The real test for the president will be whether he can help Americans understand why we are in the fix we are in – and then show them that there is a way out. Voters are skeptical of promises. They want help, but are dubious about whether Washington has a clue. They rightly think that the rules are rigged. To break through the skepticism, the president has to be not only compelling, but also credible. And that requires making it clear whose side he is on, who he is prepared to fight for and who he is prepared to take on.