Wednesday, January 29, 2014

Inequality Was A Core Theme Of Obama's State Of The Union Address

BO and Paco's upcoming encuentro will likely focus intequality


Inequality was one of the core themes of the State of the Union. "President Barack Obama pledged to address deepening inequality in the US, with a volley of directives covering everything from higher wages for low-paid federal workers to new government-backed retirement accounts...The minimum wage move dovetails with the primary theme of the speech and Mr Obama's second term - his campaign to reduce growing inequality in the US, although the speech focused more on creating "opportunity" than on the gap between the rich and poor. After four years of economic growth "corporate profits and stock prices have rarely been higher, and those at the top have never done better. But average wages have barely budged. Inequality has deepened. Upward mobility has stalled."" Richard McGregor in The Financial Times.

Obama won't talk about the biggest thing he's done to fix inequality: Raise taxes. ""Changing tax rates is likely to have small effects on supply of labor and capital and on output," the Congressional Research Service reported earlier this month. Wealth managers dealing with high net worth individuals say that's because, by and large, people making enough money to land in those top two tax brackets are affluent enough that taxes don't materially affect their quality of life." Lydia DePillis in The Washington Post.

Obama also proposed widening eligibility for the EITC. "The way EITC works now is that it offers a substantial economic boost to a population largely composed of working single moms and some married couples with kids, but very little for people who don't have kids at home. As this report from the Center on Budget and Policy Priorities details, changing that to make EITC benefits more broadly available would do a lot to boost incomes in a way that encourages and rewards work and employment. They also think it might boost marriage rates, by boosting the incomes of male low-wage workers and making marriage and family formation more feasible." Matthew Yglesias in Slate.

Meanwhile, Americans feel they are slipping out of the middle class. "If you actually take a close look at the numbers, it turns out that of the people who identified as middle class in 2008, nearly a third of them now identify as lower middle or lower class...Class self-identification is deeply tied up with culture, not just income, and this decline means that a lot of people--about one in six Americans--now think of themselves as not just suffering an income drop, but suffering an income drop they consider permanent. Permanent enough that they now live in a different neighborhood, associate with different friends, and apparently consider themselves part of a different culture than they did just six years ago." Kevin Drum in Mother Jones.

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