(Bloomberg View) — In his powerful and inspirational State of the Union address, President Barack Obama devoted time to economic proposals that have no chance of being approved by the Republican-controlled Congress.
Yet he didn’t squander the opportunity offered by this widely watched speech. The president was able to discuss an issue that is of considerable interest to the American people, and to frame the national economic debate before the 2016 elections. And if he is lucky, he may well end up achieving a few other goals, too.
In highlighting the significant accomplishments of the economy in 2014 — which he called “a breakthrough year for America” — Obama correctly noted that “the shadow of the crisis has passed.” Americans, he said, “have risen from recession freer to write our own future than any other nation on Earth.” Yet too great a share of the associated gains has accrued to only a small portion of the population: the very wealthy.
So the president was correct to stress that it is time to “turn the page” and “commit ourselves to an economy that generates rising income and chances for everyone who makes the effort.”
Now that America has recovered from the worst of a global financial crisis that almost tipped the global economy into a multiyear depression, Obama is urging Congress to help him execute a pivot: away from growth that is frustratingly sluggish and narrow, and toward long-term prosperity that is a lot more inclusive.
To that end, the president called upon Congress to “make child care more available, and more affordable;” “to lower the cost of community college — to zero;” and to advance an “infrastructure plan.” To fund these proposals, he proposed tax increases on the wealthiest Americans, including by closing tax loopholes that disproportionately benefit them, as well as measures to raise more revenue from large corporations.
Obama is responding to growing concern about the significant worsening of what I have called the inequality trifecta– of income, wealth and opportunity. This phenomenon has adverse consequences that extend well beyond its social, moral and ethical dimensions. By undermining both consumption and improvements in labor productivity, worsening inequality also creates headwinds to a lasting and broad-based economic expansion.