Politics & Policy

President Obama’s Inequality Speech, Revised

President Obama delivers his speech on income inequality on December 4.
What the president should have said, in his own words.

F. Scott Fitzgerald said that “the test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function.” Of course, that might also be an indication of utter confusion, or, coming from a politician, simple mendacity. So it is with President Obama and his recent address on “inequality,” which was rife with contradictions. We “don’t promise equal outcomes, [but] have strived to deliver equal opportunity,” he said — before attacking the rich and decrying sky-high salaries for CEOs. We must “relentlessly push a growth agenda,” he argued — before laying out a policy agenda inimical to growth.

Still, his speech is packed with many wise insights and sound ideas. In the service of seeking common ground — and a set of policy proposals that might actually help the poorest Americans — I present here a revised version of his speech, by keeping the good parts and leaving the bad. Every word here is President Obama’s.

Over the last two months, Washington has been dominated by some pretty contentious debates — I think that’s fair to say. And between a reckless shutdown by congressional Republicans in an effort to repeal the Affordable Care Act, and admittedly poor execution on my administration’s part in implementing the latest stage of the new law, nobody has acquitted themselves very well these past few months. So it’s not surprising that the American people’s frustrations with Washington are at an all-time high.

But we know that people’s frustrations run deeper than these most recent political battles. Their frustration is rooted in their own daily battles — to make ends meet, to pay for college, buy a home, save for retirement. It’s rooted in the nagging sense that no matter how hard they work, the deck is stacked against them. And it’s rooted in the fear that their kids won’t be better off than they were. They may not follow the constant back-and-forth in Washington or all the policy details, but they experience in a very personal way the relentless, decades-long trend that I want to spend some time talking about today. And that is a lack of upward mobility that has jeopardized middle-class America’s basic bargain — that if you work hard, you have a chance to get ahead.

#ad#I believe this is the defining challenge of our time: Making sure our economy works for every working American.

Now, the premise that we’re all created equal is the opening line in the American story. And while we don’t promise equal outcomes, we have strived to deliver equal opportunity — the idea that success doesn’t depend on being born into wealth or privilege, it depends on effort and merit. And with every chapter we’ve added to that story, we’ve worked hard to put those words into practice.

America built the largest middle class the world has ever known. And for the three decades after World War II, it was the engine of our prosperity.

Now, we can’t look at the past through rose-colored glasses. The economy didn’t always work for everyone. Racial discrimination locked millions . . . out of opportunity. Women were too often confined to a handful of often poorly paid professions. And it was only through painstaking struggle that more women, and minorities, and Americans with disabilities began to win the right to more fairly and fully participate in the economy.

Nevertheless, during the post–World War II years, the economic ground felt stable and secure for most Americans, and the future looked brighter than the past. And for some, that meant following in your old man’s footsteps at the local plant, and you knew that a blue-collar job would let you buy a home, and a car, maybe a vacation once in a while, health care, a reliable pension. For others, it meant going to college — in some cases, maybe the first in your family to go to college. And it meant graduating without taking on loads of debt, and being able to count on advancement through a vibrant job market. And because of upward mobility, the guy on the factory floor could picture his kid running the company some day.

But starting in the late ’70s, this social compact began to unravel. Technology made it easier for companies to do more with less, eliminating certain job occupations. A more competitive world lets companies ship jobs anywhere. And as good manufacturing jobs automated or headed offshore, workers lost their leverage.

This trend is not unique to America’s market economy. Some of you may have seen just last week, the Pope himself spoke about this at eloquent length. “How can it be,” he wrote, “that it is not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points?”

Understand we’ve never begrudged success in America. We aspire to it. We admire folks who start new businesses, create jobs, and invent the products that enrich our lives. And we expect them to be rewarded handsomely for it. In fact, America is a place where even if you’re born with nothing, with a little hard work you can improve your own situation over time and build something better to leave your kids. As Lincoln once said, “While we do not propose any war upon capital, we do wish to allow the humblest man an equal chance to get rich with everybody else.”

The problem is that we’ve seen diminished levels of upward mobility in recent years. It is harder today for a child born here in America to improve her station in life than it is for children in most of our wealthy allies — countries like Canada or Germany or France. They have greater mobility than we do, not less.

The idea that so many children are born into poverty in the wealthiest nation on Earth is heartbreaking enough. But the idea that a child may never be able to escape that poverty because she lacks a decent education or health care, or a community that views her future as their own — that should offend all of us and it should compel us to action. We are a better country than this.

#page#So this is an issue that we have to tackle head-on. And if, in fact, the majority of Americans agree that our number-one priority is to restore opportunity and broad-based growth for all Americans, the question is: Why has Washington consistently failed to act? And I think a big reason is the myths that have developed around the issue of inequality.

First, there is the myth that this is a problem restricted to a small share of predominantly minority poor — that this isn’t a broad-based problem, this is a black problem or a Hispanic problem or a Native American problem. Now, it’s true that the painful legacy of discrimination means that African Americans, Latinos, Native Americans are far more likely to suffer from a lack of opportunity — higher unemployment, higher poverty rates.

But here’s an important point. The decades-long shifts in the economy have hurt all groups: poor and middle class; inner-city and rural folks; men and women; and Americans of all races. And as a consequence, some of the social patterns that contribute to declining mobility that were once attributed to the urban poor — that’s a particular problem for the inner city: single-parent households or drug abuse — it turns out now we’re seeing that pop up everywhere.

#ad#A new study shows that disparities in education, mental health, obesity, absent fathers, isolation from church, isolation from community groups — these gaps are now as much about growing up rich or poor as they are about anything else. The gap in test scores between poor kids and wealthy kids is now nearly twice what it is between white kids and black kids. Kids with working-class parents are ten times likelier than kids with middle- or upper-class parents to go through a time when their parents have no income. So the fact is this: The opportunity gap in America is now as much about class as it is about race, and that gap is growing.

So if we’re going to try to improve upward mobility for all people, we’ve got to move beyond the false notion that this is an issue exclusively of minority concern. And we have to reject a politics that suggests any effort to address it in a meaningful way somehow pits the interests of a deserving middle class against those of an undeserving poor.

We need to set aside the belief that government cannot do anything about reducing inequality. It’s true that government cannot prevent all the downsides of the technological change and global competition that are out there right now, and some of those forces are also some of the things that are helping us grow. And it’s also true that some programs in the past, like welfare before it was reformed, were sometimes poorly designed, created disincentives to work.

But we’ve also seen how government action can make an enormous difference in increasing opportunity and bolstering ladders into the middle class. When previous generations declared that every citizen of this country deserved a basic measure of security — a floor through which they could not fall — we helped millions of Americans live in dignity, and gave millions more the confidence to aspire to something better, by taking a risk on a great idea.

Without Social Security, nearly half of seniors would be living in poverty — half. Today, fewer than one in ten do. Before Medicare, only half of all seniors had some form of health insurance. Today, virtually all do. And because we’ve strengthened that safety net, and expanded pro-work and pro-family tax credits like the Earned Income Tax Credit, a recent study found that the poverty rate has fallen by 40 percent since the 1960s. And these endeavors didn’t just make us a better country; they reaffirmed that we are a great country.

So we can make a difference on this. In fact, that’s our generation’s task — to rebuild America’s economic and civic foundation to continue the expansion of opportunity for this generation and the next generation. And like Neera [Tanden], I take this personally. I’m only here because this country educated my grandfather on the GI Bill. When my father left and my mom hit hard times trying to raise my sister and me while she was going to school, this country helped make sure we didn’t go hungry. When Michelle, the daughter of a shift worker at a water plant and a secretary, wanted to go to college, just like me, this country helped us afford it until we could pay it back.

So what drives me as a grandson, a son, a father — as an American — is to make sure that every striving, hardworking, optimistic kid in America has the same incredible chance that this country gave me. It has been the driving force [behind] everything we’ve done these past five years. And over the course of the next year, and for the rest of my presidency, that’s where you should expect my administration to focus all our efforts.

Let me offer a few key principles, just a roadmap that I believe should guide us in both our legislative agenda and our administrative efforts.

To begin with, we have to continue to relentlessly push a growth agenda. It may be true that in today’s economy, growth alone does not guarantee higher wages and incomes. We’ve seen that. But what’s also true is we can’t tackle inequality if the economic pie is shrinking or stagnant. The fact is, if you’re a progressive and you want to help the middle class and the working poor, you’ve still got to be concerned about competitiveness and productivity and business confidence that spurs private-sector investment.

We’ve got to grow the economy even faster. And we’ve got to keep working to make America a magnet for good, middle-class jobs to replace the ones that we’ve lost in recent decades — jobs in manufacturing and energy and infrastructure and technology.

#page#

And that means simplifying our corporate tax code in a way that closes wasteful loopholes and ends incentives to ship jobs overseas. And by broadening the base, we can actually lower rates to encourage more companies to hire here, and use some of the money we save to create good jobs rebuilding our roads and our bridges and our airports, and all the infrastructure our businesses need. It means streamlining regulations that are outdated or unnecessary or too costly.

So that’s step one towards restoring mobility: making sure our economy is growing faster. Step two is making sure we empower more Americans with the skills and education they need to compete in a highly competitive global economy.

#ad#We know that education is the most important predictor of income today, so we launched a Race to the Top in our schools. We’re supporting states that have raised standards for teaching and learning. We’re pushing for redesigned high schools that graduate more kids with the technical training and apprenticeships, and in-demand, high-tech skills, that can lead directly to a good job and a middle-class life.

We know it’s harder to find a job today without some higher education, so we’ve helped more students go to college with grants and loans that go farther than before. And today, more students are graduating from college than ever before.

But while higher education may be the surest path to the middle class, it’s not the only one. So we should offer our people the best technical education in the world. That’s why we’ve worked to connect local businesses with community colleges, so that workers young and old can [learn] the new skills that earn them more money.

We should be willing to look at fresh ideas to revamp unemployment and disability programs, to encourage faster and higher rates of re-employment. We shouldn’t weaken fundamental protections built over generations, because given the constant churn in today’s economy and the disabilities that many of our friends and neighbors live with, they’re needed more than ever. We should strengthen them and adapt them to new circumstances so they work even better.

Look, I’ve never believed that government can solve every problem or should — and neither do you. We know that ultimately our strength is grounded in our people — individuals out there, striving, working, making things happen. It depends on community, a rich and generous sense of community — that’s at the core of what happens at THEARC [a Washington community center] here every day. You understand that expanding opportunity requires parents taking responsibility for their kids, kids taking responsibility to work hard. It requires religious leaders who mobilize their congregations to rebuild neighborhoods block by block, requires civic organizations that can help train the unemployed, link them with businesses for the jobs of the future. We know that’s our strength — our people, our communities, our businesses.

If we refocus our energies on building an economy that grows for everybody, and gives every child in this country a fair chance at success, then I remain confident that the future still looks brighter than the past, and that the best days for this country we love are still ahead.

Thank you, everybody. God bless you. God bless America.

— Michael J. Petrilli is executive vice president at the Thomas B. Fordham Institute and research fellow at the Hoover Institution.

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