Scoring the obama administration's record on inequality
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.
Posted by: krazen1211 | December 27, 2010 3:33 PM | Report abuse
Posted by: Chris48 | December 27, 2010 4:36 PM | Report abuse
Posted by: staticvars | December 27, 2010 4:47 PM | Report abuse
Posted by: visionbrkr | December 27, 2010 5:24 PM | Report abuse
Posted by: JJenkins2 | December 27, 2010 6:13 PM | Report abuse
Posted by: michaelterra | December 27, 2010 6:22 PM | Report abuse
Posted by: quisqueyo1 | December 27, 2010 6:52 PM | Report abuse
Posted by: pmcgann | December 27, 2010 8:24 PM | Report abuse
Posted by: N369RM | December 27, 2010 10:25 PM | Report abuse
Posted by: kathrynmuniz | December 28, 2010 3:24 AM | Report abuse
Posted by: jabbog48152 | December 28, 2010 8:52 AM | Report abuse
Posted by: IQ168 | December 28, 2010 9:03 AM | Report abuse
Posted by: sdgashasdg | December 28, 2010 11:08 AM | Report abuse
Posted by: lanbr1 | December 28, 2010 11:13 AM | Report abuse
Posted by: gannon_dick | December 28, 2010 11:27 AM | Report abuse