Voters Not Buying Obama’s Bogus Inequality Talk: Ramesh Ponnuru

President Barack Obama wants to spend the next year talking about economic inequality. Republicans shouldn’t take the bait.
In a speech last week in Kansas, the president presented rising economic inequality as the defining issue of our time. As is often true of political speeches, Obama didn’t make anything resembling a tight logical case. Instead he relied heavily on caricature (Republicans allegedly want everyone “to fend for themselves and play by their own rules”) and dubious assertion (supposedly there are billionaires who pay only 1 percent of their income in taxes).


But even for a political speech, Obama’s Kansas remarks were slippery. He never quite came out and said that rising inequality is the root cause of our economic troubles over the last few years. He never said explicitly that we should raise taxes on the wealthy to combat inequality. Or that the Great Depression was caused by too much reliance on free markets and too little government regulation. Or that the tax cuts and market liberalization begun under President Jimmy Carter and continued through the Reagan, Clinton and Bush years were mistakes that should be reversed.
Instead he strongly implied all of these things. Unless he was trying to convey these ideas, his speech made no sense: It was just an agglomeration of unrelated paragraphs.
So why not speak more clearly? Perhaps because these claims, made directly, are either obviously false or politically perilous.

False Claims

Start with the history. Economists generally believe that the Great Depression wasn’t a cosmic punishment for the excesses of the 1920s but the result of an inappropriately tight monetary policy by the Federal Reserve. Nobody has offered an even slightly plausible argument that connects the financial crash of 2008 to George W. Bush’s tax cuts of 2001 and 2003 -- let alone to Ronald Reagan’s tax cuts of 1981 and 1986.
Obama didn’t say that deregulation and tax cuts were worthwhile ideas that eventually got taken too far and caused problems. He said that the philosophy underlying these policies was mistaken and that they have led to a ruinous level of inequality.
Center-left critics of the president’s speech, like the Washington Post editorial board, underestimate Obama when they point out that the policies he recommends are inadequate to the scale of the inequality problem. His solutions are politically constrained. But his ambition, to reverse the last three and a half decades of economic and political history, can’t be faulted for timidity.
During his campaign for the Democratic nomination in 2008, Obama said that he would favor raising the capital-gains tax even if it raised no revenue: It was a matter of fairness.
That’s the impulse at work in his speech and in the 2012 campaign it effectively started. It’s one thing to favor higher taxes on the rich on the theory that the government needs money and they have it to spare. (That’s the case Obama has usually made, until now.) To suggest that their high incomes are in themselves a problem that the government needs to address -- which has to be the case if tax policy is to combat inequality - - is something harder to defend.
Republicans haven’t reached a consensus about how to respond to Obama’s new focus on inequality. Some of them are highlighting statistics that minimize or deny the increase in inequality. A few are saying that inequality is a good thing, the natural result of free markets. Representative Paul Ryan of Wisconsin, the House Budget Committee chairman, points out that various government spending programs and tax breaks reward affluent citizens and that reforming those policies is the right way to tackle inequality.

Voters Don’t Care

There’s no need for Republicans to be defensive about this subject. Although inequality has long been a major concern of liberals, most voters don’t seem to share it.
When the National Opinion Research Center asked people whether they believed the government has a responsibility “to reduce the differences in income between people with high incomes and those with low incomes,” in 2008, only 37 percent agreed. Forty-three percent disagreed, and 20 percent had no opinion. When pollsters ask people to name the top issue facing the country, almost nobody volunteers inequality, notes Karlyn Bowman, an opinion-research analyst at the American Enterprise Institute. “I’ve literally never seen it cross the 1 percent threshold,” she says.
But if voters don’t especially care about how much money the rich are making, they do care about how much they themselves are making. A return to robust economic growth and rising middle-income wages doesn’t require reversing a decades-long trend toward higher inequality. It requires improvements to our monetary, tax and health-care policies.
Instead of talking about inequality -- even to rebut Obama’s dubious claims -- Republicans should talk about what voters care about, while pointing out that the president would rather chase ideological will-o’-the-wisps.