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Posted at 3:00 PM ET, 12/27/2010

Scoring the obama administration's record on inequality

By Ezra Klein

So is Jacob Weisberg right to say that "if Obama has declared war on inequality, inequality seems to be winning"? Here's the scorecard, I think:

The stimulus (and subsequent extensions of its components, like unemployment insurance): Major downward redistribution. The Making Work Pay tax credit was highly progressive, and the same goes for unemployment benefits, food stamps, the expansion of the Earned Income Tax Credit and the Child Tax Credit, the spending on Medicaid and Pell grants, etc. I imagine most of the jobs created by the infrastructure projects also benefited workers in the bottom half of the income scale. The $70 billion spent on the AMT patch was, however, quite regressive. Overall, I'd say the stimulus pushed against inequality.

Health-care reform: I'll turn the mic over to David Leonhardt, who devoted a column to this topic. Short version: "The bill that President Obama signed on Tuesday is the federal government’s biggest attack on economic inequality since inequality began rising more than three decades ago." And unlike the stimulus, the health bill is, in theory, ongoing -- it's not a two-year interruption of long-term trends, but a change to the trends themselves.

Financial regulation: I could argue this one either way. It didn't do nearly enough, in my view, to cut pay or profits in the financial sector, both of which are major drivers of inequality. On the other hand, it did do a fair amount on both points (there are a raft of new regulations affecting compensation committees, for instance, though I don't know anyone who expects them to radically change compensation practices), it set up the new Consumer Protection Bureau to keep ordinary Americans from getting continually ripped off, and if it manages to stop some financial crises in the future, that'll be a huge help to the working class. Where you come down on this basically depends on whether you think they could've -- or should've -- gotten something significantly better through Congress.

The tax deal: Locked in the absurdly regressive Bush tax cuts, though it paired them with a new payroll tax cuts and the extension of unemployment benefits and various other tax extenders. Overall, a big win for inequality -- though also a big win on stimulus. But since this deal only lasts until 2012, the real question comes when Congress needs to craft a more permanent status quo for the tax code: If the tax cuts for the rich get extended, this becomes a huge accelerator of post-tax income inequality.

Things that didn't get done: The Employee Free Choice Act, or really any change in labor rules that would upset the current anti-union status quo.

The big mover here is the health-care reform bill, if only because it's presumably permanent. The financial-regulation bill isn't likely to do that much to restrain the financial sector's profits or pay, and though the stimulus and its various extensions were good, and the extension of the Bush tax cuts were bad, neither will have a long-term effect on distribution of income in this country. Revitalizing labor unions would've been a big deal, but it's hard to blame the administration for it: There were never anywhere close to 60 votes for EFCA, no matter how many times various senators told the unions otherwise when they wanted the labor's help in the past. On the other hand, you can blame the administration for doing so little to publicly support labor or make an issue out of their decline. If they'd done more, perhaps some sort of compromise could've slipped through.

Where I think Weisberg overstates his case is to say Obama has declared war on inequality. He's mentioned it a few times, but the fight has been against joblessness, recession, and frozen credit markets. The better question is whether Obama decides to focus on inequality going forward -- whether long-term distribution becomes a major part of the test the White House applies both publicly and privately to legislation. Both the expiration of the tax deal in 2012 and any deficit-reduction packages that Congress decides to move will give the White House plenty of opportunity to either move inequality to the center of the public conversation, or to ignore it.

By Ezra Klein  | December 27, 2010; 3:00 PM ET
Categories:  Inequality  
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Comments

What on earth is a war on inequality?

Posted by: krazen1211 | December 27, 2010 3:33 PM | Report abuse

Given the past 31 years, the houses of Congress needed to do a lot more to reduce inequality, and the White House should have done more to push them in that direction. That said, I think Congress and the White House should get a little credit too for the Lilly Ledbetter Fair Pay Act. It's a start on one big area of inequality.

Posted by: Chris48 | December 27, 2010 4:36 PM | Report abuse

I am thinking about declaring war on the war on inequality. Demand equal rights, yea! Demand equal results, nay!

How is anything pro-union against inequality? Unions are unfair to younger workers. Unions get monopoly protection for providing labor to companies. Unions cause things to cost more, causing jobs to leave the country. Unions mean companies hire fewer people, because each one is getting paid above the market rate. Unions were great when they were campaigning for OSHA and other safety ideas, now they are just club trying to grab the most money for the members. Ick!

Did you see the high risk pool article? "New Hampshire's plan has only about 80 members, but they already have spent nearly double the $650,000..." Is health care an unfair redistribution scheme? Many treatments cost more money than most people make in a lifetime, and more are being invented. Yet, I see people in that article complaining about the cost. There is a tradeoff in there somewhere, where the most expensive stuff isn't available for $358/month or whatever. That's a great price for getting more than $10k in benefits annually!

Posted by: staticvars | December 27, 2010 4:47 PM | Report abuse

obviously Mr. Weisberg isn't factoring in the $450 billion ANNUALLY in subsidies for healthcare that will take redistribution of wealth to an entirely new level.

The better question is what is the COST to the war on inequality and aren't we better off attacking the cost end of the equation than the other side?

Posted by: visionbrkr | December 27, 2010 5:24 PM | Report abuse

I think one of the largest items in Obama's arsenal of policies to address inequality is his (as yet completely unaccomplished but much talked about) education agenda. It is aimed almost exclusively at the very bottom of the economic and social spectrum (the bottom 5% of schools and therefore the neediest students). He has called it key to the country's future, and so far he's been pretty unafraid of offending the vested interests in pursuing it. I'm not even sure it's right, but his aim seems to be to do whatever it takes to save these kids, even if it means some pretty unpopular stuff with the base. I think we'll be hearing more about it this year.

Posted by: JJenkins2 | December 27, 2010 6:13 PM | Report abuse

Inequality is a symptom more than a cause. A focus on reducing inequality as a policy objective will end up back-firing for a number of reasons. It would be far more informative to score the Obama Administration on efforts to restructure the economy in a way in which the wealth would be distributed more for work and less for speculative investment. Inequality has grown because of outsized rewards are conferred upon those who speculate on, among other things, asset prices. To try to address inequality without facing the primary cause is like re-arranging deckchairs on the Titanic.

Posted by: michaelterra | December 27, 2010 6:22 PM | Report abuse

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Posted by: quisqueyo1 | December 27, 2010 6:52 PM | Report abuse

The first thing you need to know about declaring war on "inequality" is that you will never win. And that is not Barack Obama. He'd much rather win grandly at ping pong here and mightily at tiddly winks there than slog into the Big Fight.

Roosevelt declared war on inequality. His world-shaking wins were just skirmishes in that war. For Obama, getting the deal cut on taxes IS the war.

He seems to me to be the kind of player who goes for stats.

Posted by: pmcgann | December 27, 2010 8:24 PM | Report abuse

Obama TOTALLY blew EFCA. The Unions spent almost 500 MILLION dollars to elect Democrats to Congress and Obama in order to pass EFCA. Had it passed, union membership would have doubled in 4 years, contributions to Democrats would have doubled in the 2012 election and the Democrats with Union money would have achieved power that they had not seen since the 1940's.

Instead, through sheer incompetence, Pelosi played chicken with Reid and refused to pass EFCA until Reid acted in the Senate. Obama just sat on the sidelines trying to pass Obamacare.

The Union got NOTHING but the shaft. How can the Unions go back to their members and say "We blew 500 MILLION dollars on these clowns?"

No wonder the Unions are upset! I am surprised they turned out the vote for Reid who did NOTHING for them but take their money! Fool me once, shame on you. Fool me twice, shame on me. Or as P.T. Barnum said, “there is a sucker born every minute.“

No matter how you describe it, the Unions got taken to the cleaners. The only swindle that was greater was Bernie Madoff.

Obama made every dirty deal in the book to pass Obamacare. Name me ONE deal he cut to pass EFCA!!!

We might want to classify the Union leader’s under Einstein's definition as insane, since the Union leader’s keep doing the same thing over and over again expecting a different result!

The Unions will probably not have another chance to ever pass EFCA again. Call them suckers, insane or just plain foolish; the bottom line is they keep expecting the Democrats to do something other than just take their money.

Did I mention the Union leaders may be insane?

Posted by: N369RM | December 27, 2010 10:25 PM | Report abuse


In fact, under new health care reform your health insurance company will no longer be allowed to cancel your policy if you get sick, we should be doing this already! search online "Wise Health Insurance" it is a good place to find insurance if you have illness like me.

Posted by: kathrynmuniz | December 28, 2010 3:24 AM | Report abuse

A commenter said, "...I think Congress and the White House should get a little credit too for the Lilly Ledbetter Fair Pay Act."

Perhaps a little credit is too much.

Nothing has worked to close the gender wage gap — not the 1963 Equal Pay for Equal Work Act, not Title VII of the 1964 Civil Rights Act, not the 1978 Pregnancy Discrimination Act, not the 1991 amendments to Title VII, not affirmative action, not diversity, not the Ledbetter Fair Pay Act.... Nor would the Paycheck Fairness Act have worked. None of the legislation pushed by pay-equity advocates works because the advocates continue to overlook the implications of this:

Despite the 40-year-old demand for women's equal pay, millions of wives still choose to have no pay at all. In fact, according to Dr. Scott Haltzman, author of "The Secrets of Happily Married Women," stay-at-home wives, including the childless who represent an estimated 10 percent, constitute a growing niche. "In the past few years,” he says in a CNN August 2008 report at http://tinyurl.com/6reowj, “many women who are well educated and trained for career tracks have decided instead to stay at home.” (“Census Bureau data show that 5.6 million mothers stayed home with their children in 2005, about 1.2 million more than did so a decade earlier....” at http://tinyurl.com/qqkaka. This may or may not reflect a higher percentage of women staying at home than in the previous decade. But if the percentage is higher, perhaps it's because feminists and the media have told women relentlessly for years that female workers are paid less than men in the same jobs, and so why bother working if they're going to be penalized and humiliated for being a woman.)

As full-time mothers or homemakers, stay-at-home wives earn zero. How can they afford to do this while in many cases living in luxury? Because they're supported by their husband.

If millions of wives can accept no wages and live as well as their husbands, millions of other wives can accept low wages, refuse overtime and promotions, take more unpaid days off, avoid uncomfortable wage-bargaining (http://tinyurl.com/23qycq) — all of which lower women's average pay. They can do this because they are supported by a husband who must earn more than if he'd remained single — which is how MEN help create the wage gap. (If the roles were reversed so that men raised the children and women raised the income, men would average lower pay than women.)

See “A Male Matters Response to the Ledbetter Fair Pay Act” at http://tinyurl.com/pvbrcu

Posted by: jabbog48152 | December 28, 2010 8:52 AM | Report abuse

Equality (and 'inequality') are myths. Cream rises to the top, a barrel of oil has jet fuel at the top and asphalt at the bottom, a septic tank has liquid on the top and solid on the bottom, you can't keep a good man down, you can't make a silk purse from a sows ear ... . This administrastion is pursuing the impossible ... and will fail.

Posted by: IQ168 | December 28, 2010 9:03 AM | Report abuse

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Posted by: sdgashasdg | December 28, 2010 11:08 AM | Report abuse

I just got a dollar the old fashion way, I expended a part of my life earning it.
Quick - tell me who "qualifies" for half of it.
I certainly don't want them to have to wait for their "share".

Posted by: lanbr1 | December 28, 2010 11:13 AM | Report abuse

Elsewhere in the WaPo ...

"Wall Street gets most of what it wants"

The President has been hard at work delivering the rest of what Wall St. wants. Don't be so hard on him ...

Posted by: gannon_dick | December 28, 2010 11:27 AM | Report abuse

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