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A Bruised President

12:00 AM, Feb 1, 2014 • By IRWIN M. STELZER
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President Obama surely deserves to relax this weekend and enjoy the Super Bowl after an arduous week in which he prepared and delivered his fifth State of the Union message, one the White House admits set forth a rather limited agenda, and then took to the hustings for stops in four states on the campaign trail that has become his natural home. The president might have been spared the chore had Woodrow Wilson, in 1913, not overturned Thomas Jefferson’s 1801 decision to deliver only a written message, a move explicitly designed to avoid mimicking the pomp of Britain’s King’s Speech. Thanks to the Wilson and the forward march of communications technology we now are treated to the spectacle of congressmen vying for seats on the aisle so that they might touch the flesh of the president as he enters the chamber.  

Obama did have to make a last-minute change in his message when a new study revealed that one of his major themes, that economic mobility is “declining” in the United States, is not true. The president knows that inequalities of income and wealth have never troubled Americans quite as much as electorates in other countries because of the belief that anyone can rise above his or her birth-station by dint of hard work, with the current occupants of the White House prime examples of that upward mobility. So he hoped to attack inequality of opportunity. When the president was into the nth draft of his speech, Raj Chetty and Emmanuel Saez, professors at Harvard and the University of California, respectively, reported that their study of tens of millions of tax records proved that economic mobility has not, as the president was saying, “declined.” Instead, it has remained essentially unchanged for the past twenty years, reducing support for the idea that a crisis demanding government action is upon us. It would, of course, be good if mobility had increased, but stability beats decline by a long shot.      

Still, the president seems to have hit upon a related theme that resonates with many, and perhaps a majority of Americans: rising income inequality unrelated to job performance. Jamie Dimon, CEO of JPMogan Chase, after presiding over management miscues that resulted in fines of some $20 billion and still counting, is deemed by the bank’s board (which he chairs) to be worthy of a reward of a 74 percent pay rise while real wages of middle class workers remain virtually unchanged for decades. Anecdotes such as this trump demonstrations that rising income inequality is ameliorated by the progressive tax system and transfer payments, that it has its roots in the malign effect of globalization on unskilled workers, and that it is a consequence of the Federal Reserve Board’s decision to fight the recession by driving up the value of assets such as shares and houses, a decision that in the long run might benefit middle class workers, but then again might not.

This voter unease has focused the minds of the politicians who hope to remain in or join the House of Representatives and the senate after the November elections. Some want to “give America a raise” by increasing the federal minimum wage from $7.25 per hour to $10.10, as Obama urged them to do during his State of the Union message. “It’s easy to remember 10.10. It will help families. It will give businesses customers with more money to spend,” said the president. It would do that, concede the president’s critics, but only be reducing the pay of many workers from $7.25 per hour to zero, as they are laid off, for example, by fast-food franchises that further automate the food preparation process. At this writing it seems unlikely that congress will go along with the increase in the minimum wage, adding to the embarrassment caused for the president by Senate majority leader Harry Reid, who has just said “no” to Obama’s request for the fast-track authority he needs if he is to conclude trade deals with Pacific rim and European trading partners. 

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