WASHINGTON — President Obama’s sixth speech on the state of the union will spotlight many issues, but more than anything may illuminate the vast gap between his policy ambitions and the tools he has to achieve them.
The president made the ambition clear last month, when he referred to a “dangerous and growing inequality and lack of upward mobility” in the United States as the “the defining challenge of our time.” His overriding goal, he has said in speeches and interviews, is to reverse the trend in which incomes for most Americans have stagnated since the late 1970s while the share going to the wealthiest has soared.
In this latest State of the Union address, aides say, Obama plans to renew that theme, although he will frame his goal more in terms of expanded economic opportunities for the middle class than an effort to restrain the incomes of the wealthy.
That framing matters because persuading the public to focus on the issue makes up Obama’s first challenge. So far, Americans have displayed considerable ambivalence about income inequality, polls by several major organizations have shown.
On the one hand, large majorities of Americans — 60% in a recent Pew Research Center survey – say they believe the “economic system in this country unfairly favors the wealthy.” A slightly larger majority agreed that the gap between the rich and everyone else had grown significantly in recent years.
On the other hand, only a minority, 45%, believe that “reducing income inequality between the rich and poor” is an “absolute priority” that Congress and the president need to address this year, according to a Wall St. Journal/NBC poll released Tuesday. Americans are more likely to respond positively to questions about reducing poverty and, particularly, to improving jobs and wages for the middle class than to the more abstract concept of “reducing income inequality.”
With the economy showing signs of improvement, and with dwindling public concern about budget deficits, Obama is betting that voters are willing to think about broader, longer-term priorities. And while State of the Union speeches don’t have much ability to shift public opinion across the board, they can rally a president’s own party on issues he highlights. That could be crucial in an election year in which the Democratic control of the Senate probably will hinge on a few tightly contested races.
But the very fact that wage stagnation and income inequality have worsened for nearly four decades — through the presidencies of four Republican and three Democratic presidents — shows the difficulty of the task Obama has taken on. To accomplish it, he has limited options.
One of the expected highlights of his speech — the announcement of an executive order to raise the minimum wage for companies doing business with the government — illustrates the point. The order exemplifies the sort of executive action that Obama plans to emphasize this year as a way to move his agenda forward despite dug-in Republican opposition in Congress.
The order would raise wages over the next several years for an undetermined number of low-wage workers, probably several hundred thousand, including janitors in federal buildings and servers in their cafeterias. But the move necessarily will leave untouched the pay of millions of other low-wage workers whose jobs are not tied to federal contracts. Raising the minimum wage for that larger group would require Congress to act.
Some Democrats hope election year political pressure will cause Republican leaders to go along with a minimum wage bill, although both Speaker John A. Boehner of Ohio and Senate minority leader Mitch McConnell of Kentucky denounced the idea Tuesday. Even if Congress were to pass a bill, however, the increase to $10.10 per hour that the administration has backed would directly affect about 6% of the nation’s hourly wage earners who currently make less. Economists sympathetic with the administration support that increase, but concede that it would not, by itself, turn around the trend toward greater inequality.
The same goes for other issues that Obama plans to emphasize — and which Republicans are likely to continue to oppose — including extension of unemployment benefits for those who have been out of a job for more than 26 weeks, expansion of pre-kindergarten education and more money for repairing roads and bridges.
“There’s certainly no silver bullet that by itself will bring the levels of inequality back to where they were decades ago,” said Jared Bernstein, a former Obama administration economic advisor now at the Center for Budget and Policy Priorities in Washington.
“It’s challenging with a cooperative Congress,” Bernstein said. “With a gridlocked one,” a president can mostly “nibble at the margins.”
The fundamental problem is that for all the attention given to the economic records of presidents, they have very limited ability to shape how the economy acts, particularly in the short term. Programs like expanded pre-school might deliver the economic benefits that Obama and his allies hope. But if they do, the payoff would come years down the road when today’s kindergarten students get jobs.
The one policy outcome that would do the most to advance Obama’s goal of raising incomes for American workers is the one that has proved most elusive throughout his tenure: robust economic growth. That was the lesson of the late 1990s, when tight labor markets gave employees more bargaining power with their bosses and led to a brief spate of rising incomes for a majority of working Americans.
Former President Bill Clinton won strong approval ratings in his final years in large part because of those rising incomes. But while Clinton’s policies may have played a role in that economic growth, luck played the larger share. Much the same was true for Ronald Reagan. Both presidents experienced short, sharp recessions early on and enjoyed the upswing of the business cycle later.
The same could yet prove true for Obama if the economy continues to improve. But if it does not, he at least appears to have grown more philosophical about the limits he faces.
“One of the things that I’ve learned to appreciate more as president is you are essentially a relay swimmer in a river full of rapids, and that river is history,” he told New Yorker editor David Remnick in a recent interview. “You don’t start with a clean slate, and the things you start may not come to full fruition on your timetable. But you can move things forward.”
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