President Obama recently declared that income inequality is "the defining challenge of our time," one that "drives everything I do in this office." In fact, he mentioned it 26 times in one speech (to the Center for American Progress, a liberal think tank, last month), telling the audience that it motivates his decisions on everything from formulating our federal budget to reforming our health care, housing and financial systems. You can bet income inequality will be the theme of his State of the Union address later this month, as well as most of his speeches for the next three years.
Obama correctly points out that stagnant incomes for the middle class have hurt the ability of many Americans to move to better jobs. What he doesn't usually mention is that the combined trends of increased income inequality and decreasing economic mobility have worsened during the five years he's been in office. According to the Census Bureau, this is the first time since 1965 that the poverty rate has remained above 15 percent for three straight years; since 2009, median household income in America has fallen 4.4 percent to $58,000 per year; median household income for black Americans has dropped nearly 11 percent to just $33,519. After five years of "recovery" under the Obama administration, a shocking 46.5 million Americans still live in poverty.
There is a reason more people live in poverty now than when President Obama took office, and that reason is the economic policies he is pursuing. The explosion of federal regulations, the lack of corporate tax reform, the uncertainty as to which federal laws will be enforced and which will not, and the disastrous rollout of health care reform have all taken their toll on consumer and business confidence. The best way out of poverty is a job, and unemployment has remained stubbornly high since Obama took office.
For the remainder of his term, Obama is calling for more regulation, more spending, more collective bargaining for unions and a higher minimum wage. He continues to defend his health reform plan in speeches. And he's announced "promise zones" to spur small business growth in the poorest neighborhoods.
And, in a stunning admission of the failure of his administration's job creation policies, he has called for yet another extension of unemployment benefits, which are financed by payroll taxes on employers and employees. When states run out of money to pay the benefits, they borrow from the federal government. If the debt is not repaid, then the feds impose automatic state payroll tax hikes on employers and workers. Fifteen states still owe the feds nearly $20 billion, down from 34 states owing $30 billion. Higher payroll taxes are not good for job growth and hit the working poor the hardest.
Earlier this month, the president urged Congress to vote for extending benefits because doing so "creates jobs and voting against it does not." He accused Republicans who oppose the idea of "abandoning our fellow Americans" and being "just plain cruel."
House Speaker John Boehner responded by saying that the benefits need to be paid for by spending cuts and that they should include job creation measures as well. If the president really wanted the House to pass the extension, he would have included a way to pay for it; instead, he's using the issue to paint Republicans as hard-hearted, cheap and cruel, a caricature they don't need.
Thanks to health care reform, the president has a credibility problem with voters. People want solutions, and they're not getting them from Obama. There's an opening here for Republicans to make a larger, positive argument, beyond insisting that benefits be offset by cuts.
The Republican case should go something like this: We all agree that government assistance can be effective in keeping families afloat when people are between jobs. Times are still tough, and most Americans want government to offer a hand up, not a handout. Emergency benefits can do just that.