Inequality fight: Let's start with Obama's policies

One of the few surprises in Barack Obama’s State of the Union speech this week was the relatively small amount of time given to “income inequality,” especially after the White House public-relations effort took pains to emphasize that as a major theme of the speech. Instead, we got the usual laundry list of proposals that Obama floats every year at this time, with a few passing references to inequality — and even those turned out to be utter nonsense. CNN noticed it shortly after the speech came to an end:

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President Obama’s State of the Union speech was billed as focusing on income inequality, an issue he’s promised to devote himself to addressing in 2014.

And, true, he topped it with some emphatic observations about the widening income and opportunity gap in America.

But it was short on rhetoric and heavy on wonk. He used the bulk of his speech to list a bevy of policies, many of which he has already started or proposed before.

In fact, as CNN also points out, Obama never once actually uttered the phrase “income inequality”; according to the NPR transcript of the speech as given, the word “equal” never got mentioned, either. The only appearance of the word “fair” was in relation to science fairs. What happened? Perhaps Obama and his team realized that being in Year 6 of a presidency makes a reform platform a wee bit difficult.

If Obama and his administration really wants to solve income inequality, Avik Roy argues today, they need to look at their own policies as the real problem:

The president likes to think of himself as an empiricist, a nonideological believer in what works. So why is it that his policy approach is the opposite of the one that has worked in Texas and elsewhere?

Obama noted in his address that “stock prices have rarely been higher,” benefiting wealthy investors, big banks and corporations. That is because the Federal Reserve, through a monetary policy committed to ultra-low interest rates, has recklessly and artificially inflated the value of equities, bonds and real estate. This has been great for the wealthy, but it has done nothing for the poor or the unemployed. The president strongly endorses the Fed’s approach, doubling down on it by appointing one of its leading exponents, Janet Yellen, as its new chairman.

The president wants to increase the minimum wage to $10.10 an hour. That is great for the children of wealthy parents in the suburbs who want to earn extra money in their spare time. But it is not good for those trying to work for small businesses in inner cities, where the difference between employing 12 people at $7 an hour and 10 people at $10 an hour is two lost jobs. …

The president has dramatically expanded the power of the Environmental Protection Agency to hassle businesses and drive up their costs. In his address Tuesday night, he sought to do more of the same. A certain amount of environmental regulation is appropriate. But money that businesses spend on satisfying needless bureaucratic demands is money they do not spend on hiring new workers.

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Avik then goes on to discuss ObamaCare as one of the worst policies for job creation and economic growth, so be sure to read more. In my column at The Fiscal Times, I argue that the White House is too busy trying to spin failure as success to see that staying the course is a losing argument, politically and economically:

Even in the first two difficult years of the Reagan presidency, unemployment spiked but people stayed in the workforce. The participation rate in Reagan’s first term started at 63.9 percent, dipped to 63.5 percent, and ended up at 64.5 percent by the 1984 election before the massive growth of the workforce in his second term. Obama, who ironically ran on “hope and change,” has produced more hopelessness in five years than Reagan or even George W. Bush managed to generate.

It’s this dogged refusal to acknowledge failure that produces Obama’s well-worn litany of short-term gimmicks as his economic policies. What exactly were his job-creation proposals? Well, his leading proposals to “expand opportunity for more American families” was the First Lady’s Let’s Move effort on childhood obesity, a committee to urge people to hire more veterans, and a conference to address “inequality in access to higher education.”

Obama offered a vague endorsement of tax reform to incentivize business investment and “insourcing” of jobs from overseas. Ironically, Obama made this pitch after the White House convinced retiring Senate Democrat Max Baucus to abandon his effort to find bipartisan tax reform to become the next Ambassador to China. The same day Obama paid lip service to that tax reform, Baucus told the Senate Foreign Relations Committee that he was “no real expert on China” when he couldn’t answer basic questions on acute diplomatic issues in the region.

Obama did mention energy as one opportunity, calling natural gas a “bridge fuel,” but insisting that he would block carbon emissions in the future. On top of that, Obama proposed spending more money on infrastructure –- the very same “shovel-ready jobs” policy that the stimulus funded. Its failure, in light of the lack of job creation and declining participation in the workforce, could hardly be more emphatic.

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Obama and his team still have no Plan B after Obamanomics. And the retreat from “income inequality” and the retreaded, “small bore” policy proposals belie the befuddled state of this administration.

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