President Obama: economic inequality is "the defining issue of our time"

I see my blogging superpowers are already getting results.

Yesterday I launched this new blog on economic inequality. And today, President Obama gave a major speech on . . . economic inequality.

My take? There was a whole lot of good stuff there. But Pope Francis, whom the President quoted in his speech, would likely have been troubled by the serious sins of omission.

The heart of the speech was here:

The top 10 percent no longer takes in one-third of our income -- it now takes half. Whereas in the past, the average CEO made about 20 to 30 times the income of the average worker, today’s CEO now makes 273 times more. And meanwhile, a family in the top 1 percent has a net worth 288 times higher than the typical family, which is a record for this country

So the basic bargain at the heart of our economy has frayed.  In fact, this trend towards growing inequality is not unique to America’s market economy.  Across the developed world, inequality has increased.  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?”

Obama also spoke about a related problem: declining economic mobility:

“growth alone does not guarantee higher wages and incomes” - See more at: http://www.epi.org/blog/president-obama-hits-notes/#sthash.DG1tbUB6.dpuf

The problem is that alongside increased inequality, we’ve seen diminished levels of upward mobility in recent years.  A child born in the top 20 percent has about a 2-in-3 chance of staying at or near the top.  A child born into the bottom 20 percent has a less than 1-in-20 shot at making it to the top.  He’s 10 times likelier to stay where he is.  In fact, statistics show not only that our levels of income inequality rank near countries like Jamaica and Argentina, but that 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.

There are several things that were striking. First, as economist Tim Smeeding noted, it's very unusual for a president to address this subject. “This is a major speech on a topic that American presidents normally stay away from,” he said. Second, President Obama stressed the political, and not just the technological, causes that have driven rising inequality:

businesses lobbied Washington to weaken unions and the value of the minimum wage.  As a trickle-down ideology became more prominent, taxes were slashed for the wealthiest, while investments in things that make us all richer, like schools and infrastructure, were allowed to wither.

Third, he emphasized government-centered solutions. He called for policy fixes like raising the minimum wage and universal pre-K. I especially liked his emphasis on "empowering workers":

It’s time to ensure our collective bargaining laws function as they’re supposed to -- (applause) -- so unions have a level playing field to organize for a better deal for workers and better wages for the middle class.  It’s time to pass the Paycheck Fairness Act so that women will have more tools to fight pay discrimination.  (Applause.)  It’s time to pass the Employment Non-Discrimination Act so workers can’t be fired for who they are or who they love.

I didn't love everything about the speech. There were some problematic sections, like the shout-out for the teachers' union-hostile education program, Race to the Top. There were also some major sins of omission -- what about expanding Social Security, for instance? Or doing something for the more than 11 million Americans who remain unemployed? Or instituting a far more progressive income tax? Most notably, the President breathed not a word about cracking down on the financial sector and the banks. And without action on that issue, there is little hope of making significant headway on the inequality problem.

Even so, the speech received high marks from some progressives who had been critical of the President. For example, Economic Policy Institute's Larry Mishel said Obama "hit the right notes" and praised his emphasis on policy responses. He also emphasized Obama's point that “growth alone does not guarantee higher wages and incomes”-- an important distinction, because for decades, policymakers have mindlessly fetishized economic growth, without any apparent concern about the nature of the distribution of that growth. Mishel had been unhappy with a somewhat similar speech Obama gave in July, because it didn't focus on solutions.

It's encouraging that the President made such a substantive speech about this topic --yet one more sign, like the ones I enumerated yesterday, that economic inequality is becoming a vital national concern. My main question is, how serious is President Obama about enacting this agenda? Even under a relatively optimistic scenario, it's hard to imagine many Republicans getting behind the items on the President's wish list. Today, Barack Obama gave a pretty speech. But we may have to wait until the next time we have a Democratic president and Democratic Congress to see any of his words become deeds.