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Pity Barack Obama. Everything in his experience prepared him to be the U.S. president who would take on the big challenge of the 21st century: rising income inequality and the hollowing out of the middle class.

His peripatetic youth taught him about the price of plutocracy. In a 1995 interview with a Chicago newspaper, he recalled: "My travels made me sensitive to the plight of those without power and the issues of class and inequalities as it relates to wealth and power." As an adult, he didn't take the obvious and lucrative path for an editor of the Harvard Law Review – a high-flying Wall Street career. Instead, he returned to Chicago and focused on the issues of the underclass he had first addressed there as a community organizer.

His swift political ascent soon propelled him back into the world of the plutocrats, but even as he was pocketing their donations, he worried about coming to share their world view. In The Audacity of Hope, Mr. Obama wrote that the financiers and lawyers who backed his 2004 run for the Senate were "smart, interesting people" who weren't looking for a quid pro quo for backing him. Even so, he worried that hanging out with the super-rich would skew his perspective. He was concerned about losing sight of the "frequent hardship of the other 99 per cent of the population – that is, the people that I'd entered public life to serve."

So when Mr. Obama got to the most powerful political office in the world, he arrived fully equipped to take on the issue that leading U.S. economists – many of whom he consulted – were identifying as the big new economic fact of our time.

But he didn't start his presidency by addressing income inequality head on; the small matter of a global financial crisis had to be taken care of first. Yet even in the face of the gravest economic meltdown since the Great Depression, he pressed on with one of his key initiatives to level the U.S. playing field: health care reform.

That drive, which cost so much political capital and yielded such a complex result, is evidence of his commitment to the 99 per cent. Health care had been the big missing piece in the social safety net, a gap that became more dangerous as incomes and job security deteriorated for the middle class.

In 2012, Mr. Obama campaigned for re-election on his willingness to name inequality as the problem, and won on his promise to fix it: "What drags down our entire economy," he said last spring, "is when there is an ultra-wide chasm between the ultra-wealthy and everyone else."

With this week's budget plan, he made good on that pledge. In the apt summary of Derek Thompson of The Atlantic, the haiku version of Mr. Obama's proposal is "tax the rich, spare the poor, remember the young." He wants to raise taxes at the top, including closing loopholes that have enriched the plutocrats; help the poor, with measures such as increasing the minimum wage; and increase opportunity with early childhood education.

Put this together with health care reform, the current American aversion to taxes and the country's sorry fiscal state, and it amounts to a rather muscular attack on income inequality.

That's where the pity comes in. Mr. Obama is addressing the issue he cares about most with a lot of energy, but the problem is still getting worse.

Wall Street has surged to pre-crisis highs, even as median incomes stagnate. At the very, very top, incomes are higher, and wealth is greater, than ever before. But for the 99 per cent, unemployment remains crippling and, perhaps even more worryingly, the jobs that are coming back aren't as good as the jobs they are replacing.

Annie Lowrey of The New York Times pointed out that the National Employment Law Project did a study last year that found lower-wage occupations were 21 per cent of recession losses, but 58 per cent of recovery growth. Meanwhile, mid-wage jobs were 60 per cent of recession losses, but only 22 per cent of recovery growth.

The problem is not, as the left sometimes complains, that Mr. Obama doesn't care, or that he isn't trying hard enough. It is that the issue he has long been focused on has become more deeply entrenched and harder to fix over the past 30 years. A diagnosis isn't enough; doing something about it requires transformational leadership and a transformational agenda. Liberals need their own Margaret Thatcher, and they haven't found her yet.