Obama turns attention to income inequality

WASHINGTON — President Obama on Wednesday declared an end to the war on budget deficits and pledged instead to fight the “deficit of opportunity” for the poor and middle class.

In a lengthy speech on his economic priorities, Obama said the federal deficit was under control and no longer presented a serious threat to the economy.

“When it comes to our budget, we should not be stuck in a stale debate from two years ago or three years ago,” Obama said at a nonprofit social services center in a poor neighborhood in the capital. “A relentlessly growing deficit of opportunity is a bigger threat to our future than our rapidly shrinking fiscal deficit.”

After months of moving away from rhetoric on the need to tame the deficit, Obama completed the maneuver in an address to members of his liberal base, many of whom had been troubled by his willingness to talk with Republican deficit hawks about deep budget cuts and entitlement reform.


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But on Wednesday, Obama chose to emphasize the gap between rich and poor, making a passionate — and at times personal — argument for investing in education and infrastructure, raising the minimum wage and strengthening the social safety net.

Obama has repeatedly told Republican leaders that he would discuss entitlement and tax code reform in the context of a broad budget deal that would reduce federal deficits.

A senior administration official said Obama was not backing away from that offer. But there are few indications that House Speaker John A. Boehner (R-Ohio) will consider resuming those negotiations more than a year later.

Rather, Obama’s shift signals that the president intends to present a different argument to Congress and the American people as the next rounds of fiscal and budget talks play out. If Republicans want to argue with his priorities, said the advisor — who asked not to be identified in order to discuss White House strategy — the onus will be on them to explain how they would address income inequality and the inability of workers to make economic gains.

Republican leaders quickly took issue with the president’s approach. Boehner suggested that Obama’s policies had created the very problems he described. “The American dream is certainly more in doubt than in decades,” he said, “but after more than five years in office, the president has no one to blame but himself.”

In his fullest discourse on income equality, Obama relied heavily on economic theory. A high concentration of wealth at the top is less likely to result in the broad-based consumer spending that drives the economy, he said.

He cited studies that suggest growth is more fragile and recessions are more frequent in countries with greater inequality. That doesn’t bode well for the United States, he said, “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.”

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A fixation on cutting spending gets in the way of fixing problems that affect real people, according to the White House.

“We’ve seen how government action time and again can make an enormous difference in increasing opportunity and bolstering ladders into the middle class,” Obama said in the speech, hosted by the Center for American Progress, a liberal think tank. “Investments in education, laws establishing collective bargaining and a minimum wage — these all contributed to rising standards of living for massive numbers of Americans.”

Obama also added personal testimony to his argument. “I’m only here because this country educated my grandfather on the GI Bill,” he said. When his father left and his mother hit hard times raising two children while going to school, he said, “this country helped make sure we didn’t go hungry.”

And when Michelle Obama’s working-class parents wanted to send her to college, he said, “this country helped us afford it until we could pay it back.”

“What drives me as a grandson, a son, a father, as an American,” he said, “is to make sure that every striving, hardworking, optimistic kid in America has the same incredible chance that this country gave me.”

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The president spoke before a receptive audience. This summer, the host think tank called for a “reset” of the budget debate, saying it was based on outdated facts from before deficit reduction measures started to work.

“We need to relentlessly push a pro-growth agenda,” said Joshua Dorner, advocacy director for the action arm of the Center for American Progress, on Wednesday. “The time for austerity, if there ever was such a time, is over.”