Inequality is ‘the defining issue of our time’

The speech on inequality that President Obama delivered just now will mostly pass unnoticed by the political world, with Republicans dismissing it as “class warfare” and an effort to distract from Obamacare, and pundits describing it more delicately as a ”pivot” away from the law.

But experts who see inequality as one of the most urgent moral, political and economic long term challenges facing the country will see it as one of the most important speeches of the Obama presidency – more ambitious than his similar 2011 speech in Kansas.

“This is a major speech on a topic that American presidents normally stay away from,” Tim Smeeding, an expert on inequality at the University of Wisconsin, tells me, adding that it compares in some ways to Franklin Delano Roosevelt’s addresses. “The fact that a sitting president faced with a crowded agenda had the courage to discuss this overarching problem is historic.”

A few key takeaways from the speech: Obama described the decline in economic mobility as a direct consequence of inequality — as opposed to arguing that lack of mobility is itself the problem — and as the product of trends that are decades in the making. He cast the need to ensure that ”opportunity is real” for our children as “the defining issue of our time.”

Obama also argued that current levels of inequality and lack of opportunity as out of sync with the country’s founding values, noting that “the premise that we’re all created equal is the opening line in the American story,” and that the way to preserve that promise is to ensure that “success doesn’t depend on being born into wealth or privilege, it depends on effort and merit.”

And, crucially, Obama described the overall problem as the result of the rich pulling away from the rest. He noted that the share of the country’s wealth is increasingly going to the top while tax cuts for the wealthiest have cut into investments that benefit the rest, emphasizing that this has made it harder for poor children to escape poverty. Meanwhile middle class incomes have stagnated thanks to technological advances and declining unions. Result: The “basic bargain at the heart of our economy has frayed.”

“The speech was not just about the top one percent, or about the middle class, or about the poor,” Smeeding says. “It was about the three of them together. It was about all three parts of the distribution — the whole thing.”

Economists such as Joseph Stiglitz have written that we face a crossroads. Either the country figures out how to address these problems with a sense of common purpose, or, as Stiglitz has put it, we risk going the way of “developing countries” that are marked by “two societies living side by side, but hardly knowing each other.” Obama didn’t go quite that far, but he did note that inequality poses a “fundamental threat” to “our way of life.”

Obama discussed the need to prioritize growth; for universal pre-K education; to raise the minimum wage; tax and trade policies that encourage companies to grow here; more investments in worker retraining; proposals to reduce the cost of going to college; and other ideas.

Of course, all of the usual caveats apply: This was just a speech; it must be matched by action and policy; we still don’t know whether Dems will agree to more austerity in coming budget talks; the Obama administration has been too cozy with Wall Street; Congressional Republicans won’t agree to any of Obama’s suggested prescriptions; etc.

But it was good to have this speech laid down as a marker. It will likely serve as another touchstone in an evolving argument among Democrats over the need for the party to embody a truly progressive economic agenda, one that will likely continue resonating through at least 2016 and beyond.

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