Republicans talk about inequality. But how serious are they?

January 20, 2015

Senate Majority Leader Harry Reid, House Speaker John Boehner, Senate Republican Leader Mitch McConnell stand at a ceremony to posthumously present the Congressional Gold Medal to Raoul Wallenberg in Washington

President Barack Obama is laying down his marker Tuesday with his State of the Union Address. He told a closed-door meeting of Senate Democrats last week, “I’m not going to spend the next two years on defense. I’m going to play offense.”

The president is offering a plan to tackle the biggest and toughest problem facing the country right now: wage stagnation. This has been the central paradox of the economic recovery. Economic growth has picked up. But U.S. workers haven’t seen virtually any real wage growth for 14 years. The gains have all been concentrated at the top. The rich keep getting richer. If American workers do feel a little better off, it’s because gasoline prices have been falling.

One problem is that U.S. workers have become less competitive in the global economy — mainly because they lag in education. Other countries have been making gains in education that outpace those in the United States. In the new knowledge economy, Americans without a college degree are falling behind. When many U.S. companies go looking for well-trained employees, they have to either export jobs or import workers.

U.S. Speaker of the House John Boehner watches as U.S. President Barack Obama hosts a bipartisan meeting of Congressional leaders in the Cabinet Room of the White House in Washington

House Speaker John Boehner watches as President Barack Obama hosts a bipartisan meeting of congressional leaders in the Cabinet Room of the White House in Washington, January 13, 2015. REUTERS/Larry Downing

Republicans have long held the view that economic growth is sufficient. If you keep the economy growing, people can take care of themselves. But that’s not happening any more because the benefits of growth are no longer “trickling down.” The Democrats’ view is that growth is necessary but not sufficient. The government has to provide a safety net for those who continue to struggle, even in a growing economy. Safety-net spending, however, has been sharply curtailed.

Republicans are now being forced to acknowledge that the inequality problem is real. The safety net must be strengthened. Prospective Republican candidates for president are talking about things like poverty and inequality.

Jeb Bush told a conservative gathering in 2013, “Here’s reality: If you’re fortunate enough to count yourself among the privileged, much of the rest of the nation is drowning.’’

Former GOP presidential nominee Mitt Romney told the Republican National Committee last week, “Under President Obama, the rich have gotten richer, income inequality has gotten worse and there are more people in poverty than ever before.” Mitt Romney! “Mr. 1 Percent!” The guy who said in 2012, “I’m not concerned about the very poor. We have a safety net there.”

The way things are going, if one of them gets the Republican nomination, he may pick Senator Elizabeth Warren (D-Mass.) as his running mate.

By talking about wage stagnation and inequality, Republicans are playing on the Democrats’ turf. But if you look closely at Obama’s plan, it’s not exactly the Great Society Part II.

Obama is not proposing any big new government spending programs. His plan works almost entirely through the tax system. It includes a lot of new tax benefits for middle-income wage-earners: a new tax credit for two-income families, larger child-care tax credits, greater access to tax-sheltered retirement plans, more tax breaks for education. All those policies are aimed at improving the living standards of wage-earners. Republicans may embrace many of them because Republicans never saw a tax break they didn’t like.

What they won’t like are the tax hikes Obama is proposing on the wealthiest Americans: higher taxes on capital gains and inherited wealth. In a clever bit of public relations, the Obama administration says it wants to end “the trust fund loophole.”

The president is also proposing higher fees on the largest and most highly leveraged banks. The very same banks that brought on the 2008 financial crisis.

Are congressional Republicans ready to defend tax breaks for the wealthy? Yes, they are. They will claim that raising taxes on wealth will hamper economic growth. They will argue that the only way to pay for tax breaks for the middle class is to cut government spending. But government spending has already been cut, and the federal budget deficit has been declining. It’s now 3 percent of the nation’s economy, down from 10 percent in 2009.

Then there’s the president’s proposal to boost education: two years of free tuition for community college students. Congress would have to approve $60 billion to pay for those tuition breaks. It won’t. Which may suit the Democrats’ political agenda for 2016 just fine.

Sunday’s Washington Post headlined the president’s plan: “Budget Proposal to Target Wealthy.” On the same day, the New York Times went with a different headline: “Obama Will Seek to Reduce Taxes on Middle Class.” Both are correct.

Taxes are the Republicans’ turf. By focusing almost entirely on changes in the tax code, Obama is acknowledging that he must now share power with a Republican Congress. So we have Republicans talking about the Democrats’ favorite subject: inequality. And Democrats talking about the Republicans’ favorite subject: taxes.

See? Bipartisanship already.


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

Both sides talk about income inequality but neither is serious about it. All either side is doing is pandering to get votes. The Democrats love to blast Republicans for being wealthy but the Democrats are wealthy themselves. Few politicians know what it’s like to earn a living and support a family.

Posted by chaemeleo | Report as abusive

The Republicans are very serious about income inequality, it is their primary policy issue. They wish to maintain income inequality, preferably increase it, as they represent those who benefit from it.

Posted by AC4AQ | Report as abusive

Republican idea of inequality is how the 1% is picked on. How they barely have enough, after all the taxes and indictments…. to keep the Aspen house.

Poor 1%. Poor Mitt Romney.

Posted by AlkalineState | Report as abusive

Income inequality is a fabricated concern invented as a class warfare wedge issue and used to prey upon the widespread economic illiteracy in modern America. Economics is not a zero sum game, and the rich are not rich at the expense of the poor.

Posted by EndlessIke | Report as abusive

You know who the REAL victims are? White males.

Just kidding. White males, given that they comprise the bulk of our politicians, child molesters and school shooters, are actually…. the bulk of the problem. They can change or they can stay the same.

Posted by AlkalineState | Report as abusive

Income inequality has always been present and will always be present. Income inequality today is probably far more equitable than it was in prior times, when the King owned everything including his serfs. It doesn’t hurt me that someone is a millionaire. I don’t want the government correcting something that is not a problem. Any reader out there who thinks the government is going to take money from the Soro’s and Koch’s of the world is dreaming. The government is going to take money away from the upper middle class, Those who make more than $250,000 er 150,000 er 75000. It will spare the truly rich use the money to buy votes in the next election.

Posted by zotdoc | Report as abusive

“Economics is not a zero sum game, and the rich are not rich at the expense of the poor.”

Right, and resources are infinite and wealth can be just “created” and hugs hugs hugs.

Posted by AlkalineState | Report as abusive

Both sides talk about income inequality but neither is serious about it. All either side is doing is pandering to get votes. Income inequality is a fabricated concern invented as a class warfare wedge issue and used to prey upon the widespread economic illiteracy in modern America.

Posted by jessicaquynh | Report as abusive

jessicaquynh assures: “Income inequality is a fabricated concern…”

Incorrect. America was actually founded on class warfare. There was a royal class, and there was everybody else. The founding of America was a rejection of royalty and unaccountability. When Mitt Romney and Dick Cheney and GW Bush are able to duck vietnam because they are too busy being spoiled brats…. but then start a war that costs taxpayers 2 trillion dollars and 4,000 young American lives…. well, America sees a royal unaccountable class rearing its ugly head.

When that happens, heads roll.

Posted by AlkalineState | Report as abusive

“Income inequality is a fabricated concern invented as a class warfare wedge issue and used to prey upon the widespread economic illiteracy in modern America.”

Two posters post the exact same sentence, a sentence first denying the multitude of research tracking the steadily increasing inequality and then, insulting those who believe it. A really masterful piece of misinformation disseminated by some right-wing blog no doubt.

Posted by distancematters | Report as abusive

Republicans offer no serious detailed plans to reduce income inequality and to help the poor. Just a lot of hot air and blaming regulations that reduce pollution and protect the environment.

Posted by Leftcoastrocky | Report as abusive

Bush said that cutting taxes on the rich would boost the economy. Instead, the rich just pocketed that money (did not re-invest it here), put it overseas and the recession happened. Worst recession in 70 years happened under Bush. Republican solution to that? Do it again. This is what happens when people listen to AM radio talk shows instead of go to college. They start believing republicans.

Posted by AlkalineState | Report as abusive

No matter what the problem, the Republicans can be expected to bring out the same set of proposals. We will see the same tax breaks and legal loopholes for wealthy and large corporations that are supposed to trickle down but never do.

I don’t know that the Democrats will be able to solve the problem either, but at least they won’t cause another Great Recession.

Realistically, the age of great middle class jobs for tens of millions of workers with just a watered down high school degree doing jobs that only take a week or two of on the job training is just plain over.

Posted by QuietThinker | Report as abusive

There is clearly a bunch to realize about this. I feel you made various good points in features also.

Posted by free international people search | Report as abusive

I was studying some of your articles on this internet site and I think this web site is very instructive! Keep on posting .

Posted by The Top Car Accident Attorneys in Maryland | Report as abusive

Looking forward to reading more. Great article post.Really thank you! Awesome.

Posted by See Key West From The Air! | Report as abusive

Thanks-a-mundo for the blog. Cool.

Posted by cerrajeros valladolid 24 horas | Report as abusive

You made some good points there. I did a search on the subject matter and found most persons will approve with your website.

Posted by auto parts online | Report as abusive

There may be noticeably a bundle to find out about this. I assume you made sure good points in options also.

Posted by IT Professional Services | Report as abusive

Someone essentially help to make seriously posts I would state. This is the very first time I frequented your web page and thus far? I surprised with the research you made to create this particular publish extraordinary. Excellent job!

Posted by Excel expert | Report as abusive

Thanks again for the article.Much thanks again. Want more.

Posted by free calculator | Report as abusive

this subject and didn at know who to ask.

Posted by Website Design and Development | Report as abusive

If some one needs to be updated with most up-to-date technologies after that he must be visit

Posted by Online Stores | Report as abusive

Simply wanna say that this is very useful, Thanks for taking your time to write this.

Posted by Lasik Toronto | Report as abusive

There is noticeably a bundle to identify about this. I suppose you made various nice points in features also.

Posted by women gym vests | Report as abusive

Thanks for the blog article.Much thanks again. Awesome.

Posted by payday loans online | Report as abusive

Im obliged for the blog article.Much thanks again. Want more.

Posted by Yevo International | Report as abusive

Please forgive my English.excellent put up, very informative. I wonder why the other specialists of this sector do not realize this. You must continue your writing. I am confident, you have a great readers a base already!

Posted by disappearing screen doors | Report as abusive

very couple of websites that happen to be in depth beneath, from our point of view are undoubtedly nicely worth checking out

Posted by travel to nigeria | Report as abusive

It is best to participate in a contest for among the finest blogs on the web. I all suggest this website!

Posted by Ш¬Ш±Ш§Ш­ЫЊ ШЁЫЊЩ†ЫЊ | Report as abusive