Obama has faced major difficulties at the start of his second term, with his approval rating slipping below 50 percent this month, according to a new Washington Post-ABC News poll. Revelations of surveillance programs at the National Security Agency, allegations of political bias at the Internal Revenue Service and broad unrest in the Middle East have largely overshadowed economic issues.
The president argued Wednesday that the government must play a role in promoting manufacturing, making college affordable, training future workers and ensuring a strong safety net to protect the middle class from calamity as the economy shifts.
His economic agenda has been challenged this year, leaving the type of goals he laid out Wednesday more aspirational than achievable. Payroll taxes increased for all working Americans at the start of the year, and he misjudged whether Republicans would allow the sequestration cuts.
And while the unemployment rate has come down from 9.8 percent to 7.6 percent over his term, there remain worrisome signs about the health of the job market, including data showing that the percentage of the U.S. population that is working has declined since his tenure began.
Obama’s message Wednesday was designed to better connect his economic prescriptions with the day-to-day concerns of the middle class, which he argues is threatened by the world’s changing economic landscape and by Republican policies. He labeled those policies “social Darwinism” in his commencement address at Knox College eight years ago, a message he echoed in spirit Wednesday.
“In many ways, the trends that I spoke of here in 2005 — of a winner-take-all economy where a few do better and better while everybody else just treads water — have been made worse by the recession,” he said. “This growing inequality isn’t just morally wrong; it’s bad economics.”
Obama said that when middle-class families have less to spend, businesses have fewer customers, and when the rich have most of the wealth, it can lead to dangerous financial bubbles.
“That’s why reversing these trends must be Washington’s highest priority. It’s certainly my highest priority,” he said. “Unfortunately, over the past couple of years in particular, Washington hasn’t just ignored the problem; too often, it’s made things worse.”
Economists say the top 1 percent of American earners have continued to benefit most from the uneven recovery, mostly because the stock market has soared past its pre-recession levels. Median income, meanwhile, has been flat at around $50,000.
Obama raised taxes on the rich at the beginning of the year, which will have a modest effect on reducing after-tax inequality.
“It’s not enough to cite positive macro trends without considering whether they’re reaching the broad swath of households whose economic prospects have been disconnected from growth for many years,” Jared Bernstein, a senior economic adviser in the Obama administration during its first term, wrote this week. “We may shift into higher gears, but if we’re zipping along through gated neighborhoods in a Ferrari with no passengers from the bottom 99 percent, we’ll still be in trouble.”
Blaming partisan ‘gridlock’
In Illinois, Obama placed much of the blame for the widening gap in wealth and the halting recovery squarely on what he described as “a sizable group of Republican lawmakers.”
“Over the last six months, this gridlock has gotten worse,” he said. “With an endless parade of distractions, political posturing and phony scandals, Washington has taken its eye off the ball. And I am here to say this needs to stop. Short-term thinking and stale debates are not what this moment requires.”
Senate Minority Leader Mitch McConnell (R-Ky.) dismissed Obama’s remarks and his economic philosophy, saying the president “can’t seem to let go of ivory tower economic theories, even after 41
2 years of an economy treading water.”
Republicans, McConnell said, “understand the necessity of empowering private enterprise if we’re ever going to drive a sustained recovery for middle-class families.”
Later on Wednesday, Obama appeared at the University of Central Missouri in Warrensburg, highlighting the school’s mix of academics and job-training programs. He will hit the road again Thursday for an economy-focused appearance at the port in Jacksonville, Fla.
Goldfarb reported from Washington.