Op-Ed, 626 words

The State of Our Union’s Inequality

Obama should follow in FDR's footsteps and do something about the "overprivileged" as well as improving conditions for the poorest among us.

Sarah Anderson

There’s no doubt that President Barack Obama will make inequality a major theme of his State of the Union address, just as Franklin Delano Roosevelt did in 1935.

“We have not weeded out the overprivileged and we have not effectively lifted up the underprivileged,” FDR lamented. “Both of these manifestations of injustice have retarded happiness.”

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Like Roosevelt, Obama gets that the inequality problem has a top and a bottom. In a speech last December, he railed against the exploding gap between CEO and worker pay and the concentration of our nation’s wealth in the hands of a few.

When it comes to proposed actions, though, Obama is expected to focus exclusively on lifting up the bottom.

Don’t get me wrong. I’ll be cheering if Obama uses the State of the Union address to make a big pitch for raising the minimum wage. It’s shameful that in the richest country in the world there are so many people who work hard every day and still live in poverty.

But unless Obama also tackles the top end of the problem, he won’t do much to turn around the trend toward extreme inequality.

In his 1935 speech, FDR was careful to explain what he meant by “overprivileged.” He had no problem with some people earning more than others.

What he did have a problem with was “the acquisition of wealth which, through excessive profits, creates undue private power over private affairs and, to our misfortune, over public affairs as well.”

In other words, it ticked him off when those at the top rigged the rules in their favor.

It’s not hard to find examples of such “overprivilege” today. Most glaring, perhaps, are the Wall Street titans who made excessive profits from reckless financial activities that crashed the economy. While millions lost their jobs and homes, the titans used their undue power to walk away largely unscathed.

The 2010 Dodd-Frank financial reform legislation was supposed to prevent Wall Street pay packages that reward excessive risk-taking. More than three years since the law was enacted, however, these modest reforms have not been implemented.

Then there are the overprivileged who hire hotshot lawyers to help them avoid their fair share of taxes. Mitt Romney’s Cayman Islands accounts were a prime example of the kind of tax dodging that costs the rest of us an estimated $100 billion per year. Unfortunately, the Obama administration has backed off tough tax haven proposals.

These are just two areas where the president could be doing a lot more to weed out the overprivileged. Of course when he faces the current Congress, he’ll see fewer friendly faces than FDR did in 1935, when Democrats had strong majorities in both houses.

And yet Obama shouldn’t give up trying to build support across party lines on these issues. A new Gallup poll shows that 54 percent of Republicans are dissatisfied with current levels of U.S. income and wealth distribution. Small business owners, who are more likely to be Republicans than Democrats, overwhelmingly oppose loopholes that allow big businesses to use offshore accounts to avoid paying their taxes.

Even most tea partiers aren’t big fans of the Wall Street gamblers who expect to be bailed out when their bets go bad.

At the same time, Obama should use the bully pulpit to plug state and local initiatives that could build momentum for national action. Like the minimum wage fights rippling across the country, local and regional drives for fair tax reform make tremendous sense at a time of Washington gridlock.

When I sit down to watch the State of the Union, I’ll be looking forward to strong words about lifting up the poor. Let’s hope Obama doesn’t overlook the equally serious injustice of the overprivileged.

Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies and is the author of the report Fast Food CEOs Rake in Taxpayer-Funded Pay. IPS-dc.org
Distributed via OtherWords (OtherWords.org)

  • condaggit

    What we need is a War on Ebonics……And Racial hate crimes to apply to all people even black people.

    Those 2 items will be the Hope and Change that will make America stronger.

    People all over the world value education so why cant we? Functional illiteracy is a failure of the public school system….

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  • Peter Fabish

    Thank you Sarah for your excellent research and well-presented ideas in this and other articles. It seems important that we not end up confronting this issue as a matter of “class warfare,” as the 1% has attempted to frame the issue. It is really an issue of how democratic we wish our American Democracy Experiment to be going forward. Given that our courts have equated campaign spending with speech, excessive concentration of wealth among few people is inherently anti-democratic. As we have seen, that phenomenon of wealth concentration, along with such poorly-reasonsed court decisions as Citizens United, has already resulted in an alarming corruption of our democratic political process. To the point where credit agencies don’t consider the U.S. capable of functioning as a rational enterprise (thus our credit downgrade). The ironic thing is, this trend benefits no one, not even the ultra-wealthy. Absent a healthy middle class, who will be around to buy their products should this trend continue? It is short-sighted for all concerned. As citizens devoted to democracy, we should all be paying attention and getting behind reasoned solutions. I am very grateful to IPS for being on the forefront of thought and research into these issues.

  • Johnny Dollar

    As long as we’re closing tax loopholes, don’t forget to eliminate the deductibility of donations to all 501(c)(3) corporations.