Obama portrays a nation at risk in bid to reset national agenda

Obama gave a great speech today, focused on reversing rising income inequality, which he called "the defining challenge of our time." It's been a dispiriting autumn, and as Obama's returned to the bully pulpit in recent days I've thought that maybe I'm past getting keyed up as he cranks up the rhetoric.  But he didn't do that. He offered new thinking and reframed our political discourse. He expanded and refocused the narrative he's been developing throughout his political career.

The outlines of that narrative were familiar. Throughout its history, the United States has thrived because it's periodically widened the circles of opportunity, extended the means to pursue happiness to previously excluded groups, made new investments in shared prosperity. Around 1980, though, the country took a wrong turn, and the American dream is fraying.  As president, he will channel popularly willed recommitment to shared prosperity.

This time around, though, there were several differences. The stylized, compressed precis of U.S. history that's an Obama speech staple was focused more sharply on economic turning points.  The wrong turn of the last 30-plus years was ascribed in large part to global economic forces, in a sense depoliticized. The faith that political action will right the ship was tempered by a warning that rising inequality, unchecked, could take us to a point of no return.

Finally, an economic argument that sustainable prosperity depends on reversing the widening wealth gap was more fleshed out than ever before. I have never read a presidential speech that cited as many economic studies.  Those studies and a battery of stats were deployed to make several key points: that inequality is at an historic high point; that the U.S. lags other wealthy countries in economic mobility; that those born in poverty in the U.S. today are likely to remain locked in; that poverty is not just a "minority" problem but touches more than half of Americans at some point in their lives; and that rising inequality is a drag on growth.

I want to start at the end, at a point where Obama drove his purpose home. Political scientists tell us that presidential speeches can't change popular opinion on particular issues. They can sometimes marshal existing public support for a given measure -- but with today's GOP in opposition, even that is extremely rare, as the failure of legislation closing the gun show loophole for mandatory background checks in gun sales demonstrated.  What presidents can sometimes do, however, is set an agenda -- force politicians of both parties to take up a particular problem or address a stated priority. And that, for the long haul, is what Obama bid to do:

So let me end by addressing the elephant in the room here, which is the seeming inability to get anything done in Washington these days. I realize we are not going to resolve all of our political debates over the best ways to reduce inequality and increase upward mobility this year or next year or in the next five years.

But it is important that we have a serious debate about these issues, for the longer that current trends are allowed to continue, the more it will feed the cynicism and fear that many Americans are feeling right now that they’ll never be able to repay the debt they took on to go to college, they’ll never be able to save enough to retire, they’ll never see their own children land a good job that supports a family.

And that’s why, even as I will keep on offering my own ideas for expanding opportunity, I’ll also keep challenging and welcoming those who oppose my ideas to offer their own. If Republicans have concrete plans that will actually reduce inequality, build the middle class, provide moral ladders of opportunity to the poor, let’s hear them. I want to know what they are. If you don’t think we should raise the minimum wage, let’s hear your idea to increase people’s earnings. If you don’t think every child should have access to preschool, tell us what you’d do differently to give them a better shot.

If you still don’t like “Obamacare” -- and I know you don’t -- (laughter) -- even though it’s built on market-based ideas of choice and competition and the private sector, then you should explain how exactly you’d cut costs and cover more people and make insurance more secure. You owe it to the American people to tell us what you are for, not just what you’re against. (Applause.) That way, we can have a vigorous and meaningful debate. That’s what the American people deserve. That’s what the times demand. It’s not enough anymore to just say we should get our government out of the way and let the unfettered market take care of it, for our experience tells is that’s just not true.

The message here is that you can't gainsay the goal, and you can't escape trying to shape government action that will address it. It's a message that policy-oriented conservatives like Ross Douthat, Reihan Salam, Ramesh Ponnuru and David Frum have been fruitlessly urging on the GOP for years. They should embrace this challenge. It's a challenge that should resonate over decades, as Eisenhower's warning about the military-industrial complex resonated.

To return to the beginning, as I mentioned earlier, Obama usually takes his listeners on a quick march through U.S. history, presenting it as a series of challenges met, widening the circles of opportunity. Here's a sampling from his election night speech in 2008:

Ann Nixon Cooper is 106 years old.

She was born just a generation past slavery; a time when there were no cars on the road or planes in the sky; when someone like her couldn't vote for two reasons - because she was a woman and because of the color of her skin.

And tonight, I think about all that she's seen throughout her century in America - the heartache and the hope; the struggle and the progress; the times we were told that we can't, and the people who pressed on with that American creed: Yes we can.

At a time when women's voices were silenced and their hopes dismissed, she lived to see them stand up and speak out and reach for the ballot. Yes we can.

When there was despair in the dust bowl and depression across the land, she saw a nation conquer fear itself with a New Deal, new jobs and a new sense of common purpose. Yes we can.

When the bombs fell on our harbor and tyranny threatened the world, she was there to witness a generation rise to greatness and a democracy was saved. Yes we can.

She was there for the buses in Montgomery, the hoses in Birmingham, a bridge in Selma, and a preacher from Atlanta who told a people that "We Shall Overcome." Yes we can.

A man touched down on the moon, a wall came down in Berlin, a world was connected by our own science and imagination. And this year, in this election, she touched her finger to a screen, and cast her vote, because after 106 years in America, through the best of times and the darkest of hours, she knows how America can change. Yes we can.

Today, the points of progress were all economic:

Now, the premise that we’re all created equal is the opening line in the American story. And while we don’t promise equal outcomes, we’ve strived to deliver equal opportunity -- the idea that success doesn’t depend on being born into wealth or privilege, it depends on effort and merit. And with every chapter we’ve added to that story, we’ve worked hard to put those words into practice.

It was Abraham Lincoln, a self-described poor-man’s son who started a system of land-grant colleges all over this country so that any poor-man’s son could go learn something new. When farms gave way to factories, a rich-man’s son named Teddy Roosevelt fought for an eight-hour work day, protections for workers and busted monopolies that kept prices high and wages low.

When millions lived in poverty, FDR fought for Social Security and insurance for the unemployment and a minimum wage. When millions died without health insurance, LBJ fought for Medicare and Medicaid. Together we forged a new deal, declared a war on poverty and a great society, we built a ladder of opportunity to climb and stretched out a safety net beneath so that if we fell, it wouldn’t be too far and we could bounce back.

And as a result, America built the largest middle class the world has ever known. And for the three decades after World War II, it was the engine of our prosperity.

The history of America is here a history of public investments and essential regulation, an infrastructure of protections and supports.

The turn astray, in Obama's campaign speeches in 2007-2008 and 2012, came at some point in the Reagan or Bush presidencies. Here, for example, is Obama's version of economic policy gone wrong delivered at Cooper Union in March 2008:

Ironically, it was in reaction to the high taxes and some of the outmoded structures of the New Deal that both individuals and institutions in the '80s and '90s began pushing for changes to this regulatory structure. But instead of sensible reform that rewarded success and freed the creative forces of the market, too often we've excused and even embraced an ethic of greed, corner cutting, insider dealing, things that have always threatened the long-term stability of our economic system. Too often we've lost that common stake in each other's prosperity. Now, let me be clear. The American economy does not stand still and neither should the rules that govern it. The evolution of industries often warrants regulatory reform to foster competition, lower prices or replace outdated oversight structures. Old institutions cannot adequately oversee new practices. Old rules may not fit the roads where our economy is leading. So there were good arguments for changing the rules of the road in the 1990s.

Our economy was undergoing a fundamental shift, carried along by the swift currents of technological change and globalization. For the sake of our common prosperity, we needed to adapt to keep markets competitive and fair. Unfortunately, instead of establishing a 21st century regulatory framework, we simply dismantled the old one, aided by a legal but corrupt bargain in which campaign money all too often shaped policy and watered down oversight. In doing so we encouraged a winner take all, anything goes environment that helped foster devastating dislocations in our economy. Deregulation of the telecommunications sector, for example, fostered competition, but also contributed to massive over-investment. 

Today, Obama cast "the great divergence," as Timothy Noah calls the galloping inequality of the last few decades, as originally a product of economic forces (starting during a Democratic administration), exacerbated later by poor policy choices:

But starting in the late ‘70s, this social compact began to unravel. Technology made it easier for companies to do more with less, eliminating certain job occupations.

A more competitive world led companies ship jobs anyway. And as good manufacturing jobs automated or headed offshore, workers lost their leverage; jobs paid less and offered fewer benefits.

As values of community broke down and competitive pressure increased, businesses lobbied Washington to weaken unions and the value of the minimum wage. As the trickle-down ideology became more prominent, taxes were slashes for the wealthiest while investments in things that make us all richer, like schools and infrastructure, were allowed to wither.

And for a certain period of time we could ignore this weakening economic foundation, in part because more families were relying on two earners, as women entered the workforce. We took on more debt financed by juiced-up housing market. But when the music stopped and the crisis hit, millions of families were stripped of whatever cushion they had left.

And the result is an economy that’s become profoundly unequal and families that are more insecure. Just to give you a few statistics: Since 1979, when I graduated from high school, our productivity is up by more than 90 percent, but the income of the typical family has increased by less than 8 percent. Since 1979 our economy has more than doubled in size, but most of the growth has flowed to a fortunate few. The top 10 percent no longer takes in one-third of our income; it now takes half. Whereas in the past, the average CEO made about 20 to 30 times the income of the average worker, today’s CEO now makes 273 times more.

And meanwhile, a family in the top 1 percent has a net worth 288 times higher than the typical family, which is a record for this country.

National politicians, especially presidents, have to be optimists, and Obama has always professed a firm faith that the U.S. will meet current challenges as it has met former ones, that we are on the cusp of one of the course corrections that democracy enables.  Today he did somewhat perfunctorily express that faith toward the end.  But at greater length, he portrayed a nation at risk, describing a series of vicious circles (my italics):

The problem is that alongside increased inequality, we’ve seen diminished levels of upward mobility in recent years. A child born in the top 20 percent has about a 2-in-3 chance of staying at or near the top. A child born into the bottom 20 percent has a less than 1-in-20 shot at making it to the top. He’s 10 times likelier to stay where he is. In fact, statistics show not only that our levels of income inequality rank near countries like Jamaica and Argentina, but that it is harder today for a child born here in America to improve her station in life than it is for children in most of our wealthy allies, countries like Canada or Germany or France. They have greater mobility than we do, not less.

You know, the idea that so many children are born into poverty in the wealthiest nation on Earth is heartbreaking enough. But the idea that a child may never be able to escape that poverty because she lacks a decent education or health care or a community that views her future as their own -- that should offend all of us. And it should compel us to action. We are a better country than this.

So let me repeat: The combined trends of increased inequality and decreasing mobility pose a fundamental threat to the American dream, our way of life and what we stand for around the globe. And it is not simply a moral claim that I’m making here. There are practical consequences to rising inequality and reduced mobility.

For one thing, these trends are bad for our economy.

One study finds that growth is more fragile and recessions are more frequent in countries with greater inequality.

And that makes sense. You know, when families have less to spend that means businesses have fewer customers and households rack up greater mortgage and credit card debt. Meanwhile, concentrated wealth at the top is less likely to result in the kind of broadly-based consumer spending that drives our economy and, together with lax regulation, may contribute to risky, speculative bubbles.

And rising inequality and declining mobility are also bad for our families and social cohesion, not just because we tend to trust our institutions less but studies show we actually tend to trust each other less when there’s greater inequality. And greater inequality is associated with less mobility between generations. That means it’s not just temporary. The effects last. It creates a vicious cycle.

For example, by the time she turns three-years old, a child born into a low-income home hears 30 million fewer words than a child from a well-off family, which means by the time she starts school, she’s already behind. And that deficit can compound itself over time.

And finally, rising inequality and declining mobility are bad for our democracy. Ordinary folks can’t write massive campaign checks or hire high-priced lobbyists and lawyers to secure policies that tilt the playing field in their favor at everyone else’s expense. And so people get the bad taste that the system’s rigged. And that increases cynicism and polarization and it decreases the political participation that is a requisite part of our system of self-government.

That's strong stuff. Laying out the problem is as important as proposing solutions, which Obama also did at some length.  But what will last will be the framing.

Update, 12/6: As is sometimes my wont in these speech parsings, I gave Obama's actual policy proposals  somewhat short shrift here. Paul Krugman didn't --and also sharply defined the agenda shift:

And there was this: “When it comes to our budget, we should not be stuck in a stale debate from two years ago or three years ago.  A relentlessly growing deficit of opportunity is a bigger threat to our future than our rapidly shrinking fiscal deficit.” Finally! Our political class has spent years obsessed with a fake problem — worrying about debt and deficits that never posed any threat to the nation’s future — while showing no interest in unemployment and stagnating wages. Mr. Obama, I’m sorry to say, bought into that diversion. Now, however, he’s moving on.

"Deficit of opportunity" was arguably the key phrase in the speech.