The sorrow and the pity of Obama’s budget

By Chrystia Freeland
April 11, 2013

Pity Barack Obama. Everything in his life experience prepared him to be the president who would take on the big challenge of the 21st century: rising income inequality and the hollowing out of the middle class.

His peripatetic youth taught him about the price of plutocracy. In an interview unearthed by Zachary A. Goldfarb of the Washington Post, in 1995 Barack Obama, plugging his autobiography, “Dreams From My Father,” recalled that experience for the Hyde Park Citizen, his neighborhood edition of a newspaper that bills itself as the “Premiere African American Weekly” in Chicago.

“My travels made me sensitive to the plight of those without power and the issues of class and inequalities as it relates to wealth and power,” he said.

“Anytime you have been overseas in these so-called Third World countries, one thing you see is a vast disparity of wealth of those who are part of the power structure and those outside of it.”

As an adult, he didn’t take the obvious and lucrative path for an editor of the Harvard Law Review: a high-flying Wall Street career. Instead, Obama returned to Chicago and continued to focus on the issues of the underclass he had first addressed there as a community organizer.

Obama’s swift political ascent soon propelled him back into the world of the plutocrats, but even as he was pocketing their donations, he worried about coming to share their worldview.

In “The Audacity of Hope,” his second book, Obama writes that the financiers and lawyers who backed his 2004 run for the Senate were “smart, interesting people” who weren’t looking for a quid pro quo for backing him.

Even so, Obama feared that hanging out too much with the super-rich would skew his perspective. He was concerned, he wrote, about losing sight of the “frequent hardship of the other 99 percent of the population — that is, the people that I’d entered public life to serve.”

It is worth noting that Obama was writing about the 99 percent in 2006 — well before the Occupy Wall Street movement introduced that term into our collective discussion and before Obama’s presidential campaign introduced him into the national debate.

All of which meant that when Obama got to the most powerful political office in the world, he arrived intellectually and psychically equipped to take on the issue that America’s leading economists — and, being a wonk, Obama consulted many of them — were, at that moment, identifying as the big new economic fact of our time.

As things turned out, Obama didn’t start his presidency by addressing income inequality head-on: The small matter of a global financial crisis had to be taken care of first. But even in the face of the gravest economic meltdown since the Great Depression, Obama pressed on with one of his key initiatives to level America’s playing field: healthcare reform.

That drive, which cost so much political capital and yielded such a complex, emotionally unsatisfying result, is critical evidence of Obama’s commitment to the 99 percent: Healthcare had been the big missing piece in America’s social safety net, a gap that became more dangerous as incomes and job security deteriorated for the middle class.

To understand the significance of Obama’s healthcare drive, it is worth remembering that there was another huge item still left on the liberal to-do list that a different president might have focused on: climate change. Among the president’s affluent backers, the green agenda trumped everything else, but for Americans experiencing “frequent hardship” the financial devastation of medical bills was the more urgent problem, hence Obama’s choice.

In 2012, Obama campaigned on his willingness to name inequality as the problem, and won on his promise to fix it: “What drags down our entire economy,” he said last spring, “is when there is an ultrawide chasm between the ultrawealthy and everyone else.”

With this week’s budget plan, Obama made good on that pledge. In the apt summary of Derek Thompson of The Atlantic, the haiku version of the president’s proposal is “tax the rich, spare the poor, remember the young.”

He wants to raise taxes at the top, including closing some of the loopholes that have enriched the plutocrats; help the poor, with measures like increasing the minimum wage; and increase opportunity for the young, with early childhood education.

Put these measures together with healthcare reform, recall the current American aversion to taxes and the country’s sorry fiscal state, and this amounts to a rather muscular attack on income inequality.

That’s where the pity comes in. Within the constraints of American politics and the American economy, Obama is addressing the issue he cares about most with a lot of energy. The tragedy is that the problem is still getting worse.

Wall Street has surged to pre-crisis highs, even as median incomes stagnate. At the very, very top, incomes are higher, and wealth is greater, than ever before. But for the 99 percent, unemployment remains crippling, and perhaps even more worryingly, the jobs that are coming back aren’t as good as the jobs they are replacing.

As Annie Lowrey of the New York Times has pointed out, the National Employment Law Project did a study last year that showed lower-wage occupations were 21 percent of recession losses, but 58 percent of recovery growth. Meanwhile, mid-wage jobs were 60 percent of recession losses – but only 22 percent of recovery growth.

The problem is not, as the left sometimes complains, that Obama doesn’t care or that he isn’t trying hard enough. It is that the issue he has long been focused on has become more deeply entrenched and harder to fix over the past three decades. A diagnosis isn’t enough; doing something about it requires transformational leadership and a transformational agenda. Liberals need their own Margaret Thatcher, and they haven’t found her yet.

27 comments

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/

Great article. Thank you Ms. Freeland, but you forgot to include Obama is up against the most intractable group of Republicans/Tea Party in the House of Representatives, which has made his job next to impossible.

Posted by JL4 | Report as abusive

I’m sorry, but there seems to be a very severe disconnect in the huge difference between the two Obamas you are describing.

Mr. Obama seems to exhibit a personality that operates something like a Chinese Wall.

“A Chinese wall is an information barrier implemented within a firm to separate and isolate persons who make investment decisions from persons who are privy to undisclosed material information which may influence those decisions.”

—————–

You state “Pity Barack Obama. Everything in his life experience prepared him to be the president who would take on the big challenge of the 21st century: rising income inequality and the hollowing out of the middle class.

Put these measures together with healthcare reform, recall the current American aversion to taxes and the country’s sorry fiscal state, and this amounts to a rather muscular attack on income inequality.

That’s where the pity comes in. Within the constraints of American politics and the American economy, Obama is addressing the issue he cares about most with a lot of energy. The tragedy is that the problem is still getting worse.

———————-

In my opinion, Mr. Obama is uniquely unqualified to be president.

He obviously lacks the necessary experience and/or skill set to bring together a divided nation when we need it now more than we have since the Great Depression.

What he actually accomplishes (e.g. healthcare) is openly divisive, and considering the urgent economic problems of this country, extremely badly timed.

Pity the American people, because we are stuck with a president who is clearly not equal to the job, for more reasons than I can possibly state in this venue.

I fear we will not survive his tenure in office.

Posted by PseudoTurtle | Report as abusive

Obama seems like a really nice guy, with such a sincere concern for the well-being of all Americans. Everyone in America would like to see a stronger middle class and lower unemployment; the debate centers on how to achieve that. Paradoxically, the “1%” of the nation also have quite an influence over hiring, so taxing them more isn’t going to make them more keen to hire workers.

Posted by richieg | Report as abusive

To be fair, Obama is up against the Federal Reserve who seem determined to redistribute wealth in the other direction -from the poor to the rich. Reducing interest rates has allowed hedge funds to snap up foreclosed properties for a song, while keeping commodity prices high penalizing those who spend a large part of their income on food and gas. Raising the price of assets has made those with discretionary funds to invest very wealthy indeed, but it has impoverished those who need to save for a pension. Artificially low yields will mean a miserable future for many retirees in years (and decades) to come.

Posted by dexterbland | Report as abusive

The sad fact that the left refuses to accept is that prosperity comes at a cost. It is true that forty years ago, one could graduate from high school and move right into a manufacturing job that paid a “middle class wage.” But as globalization has moved forward and raised living standards around the world, middle class Americans have not kept up.

New labor markets have created competition for middle class jobs, and the fact is other countries can do a lot of things more efficiently than we can because they can pay their workers less. This is the beauty of the market (you don’t hear the “middle class” complaining about the lower prices they are paying, do you?).

The equality problem in the US stems from the fact that a large contingent of our population is not adapting to these new circumstances. Unemployment is at 7.6%+ yet there is serious concern about a shortage of skilled manufacturing workers in this country. Why aren’t people studying science, engineering and math or seeking out trade programs to prepare them for these well-paying jobs? From my perspective, it appears that it is easier to back a movement that blames the productive for the woes of the “middle class” rather than taking the challenging steps that are necessary to change one’s circumstance for the better.

At the end of the day, the only way to sustain the middle class is to improve productivity and provide the skills needed to fill the jobs that are available. Unfortunately, it is no longer as easy as graduating high school and stepping on to the manufacturing floor. The new economy demands more of American workers. If that is what the liberal Margaret Thatcher would say, then I couldn’t agree more.

Posted by utatch | Report as abusive

Liberals don’t need their own Margaret Thatcher. They need a Merlin.

Posted by OneOfTheSheep | Report as abusive

The left and the right are killing this country. Both support policies that favor a minority at the expense of the middle class.

Since 1986 our GDP was tripled while our National debt has gone up 16 times its 1985 amount. GDP…3x , National debt 16x.

College tuition has gone up 4x the rate of inflation since 1985.

Healthcare costs 2x the rate of inflation since 1985.

We need a strong middle class to provide demand. The left and the right are destroying the middle class at record speeds.

Posted by Gen | Report as abusive

Despite the recent stock market surge, the US and much of the “developed world” are in a protracted economic decline. If it isn’t obvious already, the most glaring disparity in wealth is between those in the employ of the government and everyone else. This will certainly get much worse and soon. Those at the top of the heap in the private sector make an easy target, but the real money is in curtailing the government gravy train.

Posted by gordo53 | Report as abusive

Thank you, Ms. Freeland, for expressing your insightful perspective.

Posted by bcrawf | Report as abusive

Chrystia, while this is an insightful article, you fail to understand that Margaret Thatcher would not be able to do nearly as much here as she did in the UK. We do not have a majoritarian system of government. The sad reality is that the President cannot carry out most of his agenda because the majority of the American people do not really support it. If they did, the Democrats would control the house. It is Congress that sets the national legislative agenda. The President merely executes laws passed by previous Congresses. While those lines have been blurred, opponents can hide behind the Constitution to block an agenda that he supports.

Lady Thatcher’s skills have been overrated. Everyone seems to forget that she could only pass her legislative agenda because she was a member of the legislature, her party was in the majority and that in the British system of government, there is no need to build consensus with the minority party.

Posted by asrinath3 | Report as abusive

I’m sorry, just not getting it. Was this article meant as a joke? Barry walked into office with a chip on his shoulder and exactly zero qualifications for the job of President. The widening income gap is no more unique than that found in any country. The middle class is suffering because there are fewer and fewer middle class jobs in this country. A product of liberal agenda, i.e. unions, the environmental movement, raising minimum wages, increasing dependancy on welfare programs and increasing taxes on anyone perceived to be successful, just as examples. The result is that it is cheaper to produce a wrist watch in Thailand using ores mind from Peru and shipped to the U.S. than have it be made right here in America. Obama is nothing more than another tool for that liberal agenda and has openly expressed as much.

Posted by wonderinghow | Report as abusive

establish a national identication card that can not be duplicated or falsefied it can be done as dod firms and other high tech companies are already using this type of system.
make every entrant or person living here as an illegal prove the they have a sponser willing to accept full finaanical liability for their care and upkeep such as canada has.
canada settles its immigrants where it needs them in physical location to benefit canada . the usa should do the same .
fine the companies that hire them . make it not a civil offense but a criminal one to employ them. pull all their state and federal contracts issued. for the executives and principles involved in the heavy profitable use of illegals pull those executives passports.
make their children attending schools prove lawfulness of their presence.
make them use special documents not the same ones that full citizens use until they are granted usa citizenship. that most especially accords to social security and medicare and other aid and benefit programs.
no studend aid grants or loans or special programs until they are citizens . not to be given priority status because they are minority persons still non citizens.
insure that they are really who they say they are to insure that their criminal history is true and accurate not like the cuban and central ameircan exodus when castro said “now we will send you some of our bums criminals” they flooded the country with criminal under the pretext that they where freedom fighters with massive history of criminal enterprise envolvement.
make visas necessary for entry from pureto rico . this is really a favorite route of entrance for mexicans entering the usa . the current checks are not good enough,.
they should not be allowed on welfare or the receive food stamps until they are citizens . their sponsers should be full resonsible for their total upkeep.
charitable organizations should not be allowed to offer santuary to illegals. such as the cathoiic workers , the salvation army and the mens missions systems allowance centers . all that apply must register with documents that can be police verified.
the temporary labor services are great imployers of illegals tighten up on the requirements for valid identifcation documents that can be verifited . it found out that employment is given through these firms then punish them as the major agri producers who employ so many illegals also should be punished.
do not allow them to join unions until they are full citizens. this is a scam for membership on part of the unions part and a loolhole for illegals to escape prosecution.
fast foods seem to be one of the major employers of illegals.the same checks and punishments that apply to other industries should apply to them as well . many of these fast food chains are owned by the russian secrets services the allowance of illegals in their employ play well for them .
allow the police to stop , question and detain on suspicion of illegality . language , cultural difference etc etc should suffice.
latins , chinese , southeast asians all have major usa ghettos in the usa subject to illegal inspection and interst.
once apprehened don’t immediate repatriate them to their native country. insist that their country of origin full reimbuse the usa for all serives provided . take it out of usa international aid and projects that those nationa are engaged with the usa in . they come here to work they say and not live off welfare or the commission of crimes . well then let them work of their sentences in places like the chico prison farm system or other prison agricultural programs allow them to pay for their stay and visit to the usa.
tract all remmitance payouts via foreign workers to outside countries . who are using brokers that are specialist is sending remmitances to third world countries . track and monitor their transactions and accounts . wire fraud are federal offenses.
stop offering political refugee status to former criminals who apply.

Posted by rjkarder | Report as abusive

Talk about drinking the Obama Kool-aid. You’re drowning and don’t even know it.

This guy was NEVER intellectually prepared for the office he holds. Any one who thinks they can change Washington is delusional. He was prepared to be elected, never to lead. He’s an armchair point guard who cannot shoot, drive the lane, or work the press on defense.

Secondly, he embraces the lifestyle he regularly condemns. He fully embraces the wealth, power and influence that he regularly chastises, and the privileges it delivers.

A review of his work “record” in the private sector is indicative of a guy who does not like to work. (Only to be reinforced by his track record in the White House.) He went into the taxpayer-funded side of the economy because he prefers not to be accountable to himself or anyone else (voting “present”) Thus, he regularly condemns others for his apparent shortfalls.

Lastly, he has no understanding, let alone an appreciation, for the private sector and what it takes to be successful. Therefore, as indicated in his budget, he believes that there is an infinite amount of taxes that can be generated from those that work. In spite of his rhetoric, he has abandoned the middle class, embraced the importation of poverty via illegal immigration (thus exacerbating the income gap), and continues to see government as a solution versus the inefficient use of limited resources it consumes.

Posted by COindependent | Report as abusive

What Ms. Freeland doesn’t take into account is that healthcare is consumption, and indeed is at the heart of the jobs issue: the total real compensation for U.S. workers (income+benefits) is making Americans too expensive to hire. In a genuine capitalist system no head of government can do more than trim the edges of class inequality. The best social welfare program is still a job.

Posted by Bagehot | Report as abusive

If you include pensions, insurance and taxpayer provided health care, the disparity narrows somewhat. Still, the fact is that even the most class conscious president to get elected since Lincoln is only going to get so far. The only people waging class war in the U.S. are the wealthy. They’re winning. Always have.

Posted by Bagehot | Report as abusive

Ms. Freeland: If one was seeking a job on the White House staff, this is exactly the type of article I would recommend they compose.

It aligns perfectly with:

The Perpetual Campaign
The Vilification of the Wealthy (while embracing that same lifestyle on the taxpayers dime)
The Abdication of any Responsibility for Anything
The Zero-Sum Economic mantra

Need I go on? In the words of Jay Carney: “When can you start”

Posted by COindependent | Report as abusive

China! Besides winding down two wars and fixing “the small matter of a global financial crisis”, Obama “just” need to figure out how to save capitalism from itself now…
I am happy that this country got sober enough to elect Obama twice. So, in my view, there’s still hope.

Posted by UauS | Report as abusive

Our country is more divided than ever before, even during the abortion battles, the civil liberties era – any time I can remember in my 76 years.

That division comes from the top, with many of us angered at the broken promises. It comes from the top, with the catering and pandering to certain groups at the expense of our citizens and legal immigrants. It comes from the top, with members of the cabinet refusing to prosecute wrong-doers.

Now we see that the broken promises, the catering and pandering, the “too rich to jail” decisions are going to hurt the most vulnerable – those this president promised to protect. SS cuts, Medicare cuts, Obamacare problems that are increasing, 1/4 of our children facing hunger and the hunger and poverty rates rising, unemployment and under-employment – these are real problems and will hurt (are hurting) our country and its people.

Posted by AZreb | Report as abusive

I suggest the real crisis in the financial sector is the banking and money markets which are not getting smaller after the crash – in EU it’s the central financial structure bringing down sovereign states.

As long as banks are *too big to fail*…and there is no Chinese wall between commercial and shadow-banking (ie. Hedge Funds & Investment Banks) the inequality of wealth will exacerbate and politicians/leaders will not have the wherewithal to deal with the power of plutocracy.

The Pascha (Obama) is a passing political phenomena and won’t really mitigate growing chasm in American society.

Posted by hariknaidu | Report as abusive

Thank you Ms. Freeland once again well-written, thoughtful article. However, I really believe until we have real campaign finance reform in this country, not only will the chasm keep widening at an ever quickening pace, but more and more legislation will be passed in favor of the corporatocracy with the effect of continually chipping away at middle class.

The simple fact that a congressman spends well over 75% (this is very conservative, most estimates are much higher) of his or her time fundraising speaks volumes about what kind of a job they are actually doing as opposed to what citizens think they are doing. It’s no wonder legislation is written by and for the benefit of corporate America. In the end, it doesn’t really matter how fervently Obama fights for the 99%. There are 535 people in this country who even if they share Obama’s view, are beholden to the deep pockets that threaten their existence; if they were to vote their conscience, big money can quickly find another candidate who will do their bidding. The gun reform issue is a perfect example of how big money has skewed a debate in which the vast majority of Americans are actually in agreement.

I think Obama is most likely saddened by a lack of courage by so many who have the power to make positive change to just do it.

Posted by giftgirl | Report as abusive

“It is worth noting that Obama was writing about the 99 percent in 2006 — well before the Occupy Wall Street movement introduced that term into our collective discussion and before Obama’s presidential campaign introduced him into the national debate.”

Why is that worth noting? It means Obama supporters were behind the OWS movement and used that line as their buzz word.

I’ve never been sure how anyone came up with 1% anyway. I recall that Fernand Braudel used the figure 5% that he claimed was about the size of the elite class of any historic society. And a few books I can’t recall the names of anymore, back as far as the 60s, used to talk about the top 10%. If the middle class is shrinking so, apparently, is the top?

That the number of the elite is drifted so far in the past decades seems largely driven by PR and fashion. This country tries on social theories the way some women charge their outfits. And it gets bored with them just as quickly.

Who knows, we could be talking about the top 1/10 of one percent in a few years, when things get really tight. That should be just lovely. That would mean hardly anyone will be mega wealthy and they would be easier to cage and tax. Or they will simply run away to the Cayman Islands or Dubai and the country will figure out a constitutional way to confiscate the assets of the emigres or emigre.

When the ship is sinking – the personality or competence of the captain isn’t really all that important. If the problem is structural, there is nothing the windbags at the top are going to be able to do but collect their salaries, their perks and anything else they can grab before the tub sinks, and they take the available lifeboats. That has seemed to be the fundamental approach to politics and life in the country for the past 40 years.

None of our legislative leaders, even dear leader Obama, are really the type to go down with the ship. I don’t think they make self-sacrificing leadership anymore. I think all of them are fully prepared to write off the wreckage and look for other boats to milk until they sink too.

Obama got the worst of all possible worlds with the health care reform legislation. Couple rising costs with inflation like a tidal wave (the pressure is building to astounding proportions and may be the only way this country can live with it’s massive deficits and debts) and we’ll all be swimming with the fishes and we’ll be back to the issue with a vengeance for decades to come. That is if the country doesn’t destroy itself Syrian style in a blood bath of foreign mercenaries we will be very hard pressed to identify or control. It’s obvious in the gun debates, that many are arming themselves for just such an event or because they are afraid it will happen. “Great powers” have been torn apart before by severe inequality. The rising powers will use this country as a field for exercise in global concern, profit, and a let for domestic aggression and frustration.

The country is built of ticky-tacky and would be reduced in the blink of an eye. So is its population.

Posted by paintcan | Report as abusive

2utatch
Question: Was professional education in US hit as heavely as in former USSR?
As i see currently here that lot of demand for skilled workforce exists without system in place to train it. Basically busyness owners seek skilled and experienced workers at same time skimping on funding common professional education or on providing competitive wages and _clear_ growth _prospects_ to young people with basic skills.

As for people bein’ less interested in engineering/science than other things – look at TV cable schedule. There’s only one true blue collar here, his name is Homer Simpson…

Posted by chyron | Report as abusive

The level of disconnect in this piece is stunning. I thought I was reading a piece dripping with over the top sarcasm until it became clear she really believes this stuff. The extreme left is just as delusional as the Glen Beck right.

If Obama isn’t a 1 percenter I can’t say who would be.

Posted by Chapelhill | Report as abusive

And the purpose of this article is ? Getting the Republicans off the hook , of course,I am sorry Freeland, but you really are second rate.

Posted by Biscayne | Report as abusive

Unqualified for the job.

Posted by FrankRifleman | Report as abusive

Even though there are many who can so easily ignore the tremendous harm that was done to more than a hundred million ordinary Americans, someone needs to speak the truth. Thanks, Chrystia.

Millions of jobs that formerly paid a modest, but decent wage have vanished to remote corners of the globe. Justice has vanished into the deep pockets of those who have close friends in Congress and the SEC.

Those who are still well-compensated for their labors have nothing but disdain for fellow Americans who are desperate for the opportunity to earn a living.

This country is a mere spectre of what it once was.

Posted by breezinthru | Report as abusive

America’s economic downturn is due to other nations siphoning off our best ideas for seeding and growing their own sorry economies. This technology transfer has occurred unabated for decades and we’ve lost not only the technical edge to compete globally, but now the financial backing is also crumbling. Obama wants to share the wealth which will only drain the ‘reserve tank’ and prolong the agony. We need our politicians to be trained professionally in careers which promote innovation and collaborative skills like creative thinking, idea sharing, teamwork, objective test of ideas, cost consciousness, efficiency, rapid test and timely completion of projects. Instead, our politicians are trained in careers which don’t value creative thinking and encourage divisiveness and differentiation. This leads them to adopt others’ ideas as their own, take competitive and opposite positions, apply subjective testing based on opinion (polls), distort statistical data to achieve a goal, focus on ‘winning’ instead of compromising to attain a better result, wearing down opponents rather than completion of effort. The only thing we can say with certainty is that we will document our fall from greatness very well because good record keeping is an important skill for attorneys.

Posted by atoe | Report as abusive