Inequality, opportunity, bifurcation, and Obama's SOTU

The full transcript of the President's State of the Union Address can be read here.

There really isn't much to add or comment on regarding the SOTU that hasn't been said or doesn't come off as boring conventional wisdom. Yes, I second many of the domestic initiatives Obama outlined under the theme 'opportunity,' which I'm fine with as a rhetorical stand-in for 'inequality.' The two words are not synonymous. But in the context of what is possible, it is hard for me to get worked up about 'opportunity,' even as I admit it is often used as a way to sound like you care about inequality while dismissing any actually redistributive policies. That said, opportunity has the advantage of being unmistakably positive. The US could reduce its inequality, while helping no one. The US could increase the opportunities for the disadvantaged while damaging no one. And I'm not afraid of "class warfare" as I write that.

As long as we are discussing which words to use, why not, as Mike Konczal suggests, bring back "full employment"? I'd be happy to start there.

Because, as John Aziz and Krugman discuss, not only is the economy bifurcating (i.e. the middle class is hollowing out), the US public's sense of the economy and themselves increasingly reflects this bifurcation. This graph from Pew Research is making the rounds:

-Pew Research-

In sum:

"[T]he proportion of Americans who identify themselves as middle class has dropped sharply in recent years. Today, about as many Americans identify themselves as lower or lower-middle class (40%) as say they are in the middle class (44%)

Here's Krugman on the possible implications:

The whole politics of poverty since the 70s has rested on the popular belief that the poor are Those People, not like us hard-working real Americans. This belief has been out of touch with reality for decades — but only now does reality seem to be breaking in. But what it means now is that conservatives claiming that character defects are the source of poverty, and that poverty programs are bad because they make life too easy, are now talking to an audience with large numbers of Not Those People who realize that they are among those who sometimes need help from the safety net."

Krugman basically wonders if policies to address the economic problems of the disadvantaged will become more tenable as more people come to see themselves as part of the truly disadvantaged. We shall see.

Anyway, I warmed up for Obama's SOTU by reading David Remnick's quite long New Yorker essay in which he interviews the President while following along on a "three-day fund-raising trip to Seattle, San Francisco, and Los Angeles." Here are a few excerpts of particular interest.

• First, on the all-important Iran deal, Obama didn't exactly express optimism the deal will ultimately come to fruition:

"The night before, Iran had agreed to freeze its nuclear program for six months. A final pact, if one could be arrived at, would end the prospect of a military strike on Iran’s nuclear facilities and the hell that could follow: terror attacks, proxy battles, regional war—take your pick. An agreement could even help normalize relations between the United States and Iran for the first time since the Islamic Revolution, in 1979. Obama put the odds of a final accord at less than even ..." [bold mine]

• Indeed: "less than even." Here, in Remnick's words, is why on Iran optimism takes a back seat to realism:

"The Saudis, the Israelis, and the Republican leadership made their opposition known.... Even a putative ally like New York Senator Chuck Schumer could go on 'Meet the Press' and, fearing no retribution from the White House, hint that he might help bollix up the deal."

• On Syria:

“I am haunted by what’s happened,” he said. “[But] I am not haunted by my decision not to engage in another Middle Eastern war. It is very difficult to imagine a scenario in which our involvement in Syria would have led to a better outcome, short of us being willing to undertake an effort in size and scope similar to what we did in Iraq."

• In a recent speech, Obama again referred to economic inequality as "the defining challenge of our time." This is notable given that he also thinks his second term can be defined by progress rather than maintenance — going on "offense" rather than playing mere "defense":

“The conventional wisdom is that a President’s second term is a matter of minimizing the damage and playing defense rather than playing offense,” Obama said in one of our conversations on the trip and at the White House. “But, as I’ve reminded my team, the day after I was inaugurated for a second term, we’re in charge of the largest organization on earth, and our capacity to do some good, both domestically and around the world, is unsurpassed, even if nobody is paying attention.”

• Remnick points out, "Obama lost among white voters in 2012 by a margin greater than any victor in American history."

• On the flipside, Remnick reports "Obama’s advisers are convinced that if the Republicans don’t find a way to attract non-white voters, particularly Hispanics and Asians, they may lose the White House for two or three more election cycles"

• Finally, back to inequality and the broader issue of economic stagnation. Perhaps the most interesting thing the Remnick essay reveals is how Obama will assess his own final three years. In foreign policy, Obama has wound down two wars (Iraq & Afghanistan) and dramatically undercut the likelihood of a third war (Iran). Setting that aside, the biggest issue facing US political economy is whether it is again willing to invest in its own domestic society, whether through deficit spending or through higher tax revenues. So far, the answer is a resounding no. But the decay of the US domestic economy is very real, and will only grow more recognizable over time. This then is the statement to remember, I think, while reflecting about Obama's SOTU, and more importantly, watching him and US political economy over the next three years:

"I can tell you that I will measure myself at the end of my Presidency in large part by whether I began the process of rebuilding the middle class and the ladders into the middle class, and reversing the trend toward economic bifurcation in this society."

We shall see if the bifurcation mentioned by Aziz and Krugman, and empirically documented in the Pew data, will be addressed by this President, facing as he does a remarkably hostile opposition party that is not yet growing any less hostile.