The best you could say about U.S. President Barack Obama’s State of the Union address last year was that it initiated an impressive string of failures. Immigration reform. Gun control. A higher minimum wage. Tax reform. Protecting Americans’ privacy. Failed. Failed. Failed. Failed. And failed.
When your only success is stopping a 16-day partial government shutdown, you know your light didn’t shine in 2013.
So what do you do?
Well, if you are Obama, you up the ante and call for a “year of action” that will mobilize the country to give every person a “fair shot” at economic success. This is what he has promised to do in Tuesday’s State of the Union address. Expect a sort of full-throttle invocation of the American dream.
It goes without saying that the challenge is herculean. But Americans have no idea how big. They are about to learn.
U.S. unemployment continues to drop but largely because many people have officially stopped looking. Yet that’s not the real issue.
More important is the growing wealth and wage disparity that is slowly beginning to dominate so much of American political and economic debate in both parties. Hard work no longer assures the American dream. For the vast majority of Americans, the treadmill is actually pushing them back no matter how many jobs they hold down. Their sweat enriches only the top 10 per cent.
This is why the issue has raised grave concerns about – believe it or not – a coming class war if the problem is not solved.
Polls show that while Americans – both Republicans and Democrats – believe the wealth gap reflects a fundamental unfairness that should be corrected, they don’t resent the wealthy. But this might be the case only because they don’t fully appreciate just how huge the gap is and how perilous their situation has become.
In one awareness study, a Harvard professor found that Americans believe that the top 10 to 20 per cent earn about 100 times more than the poorest Americans and about 10 times more than the middle class. (See http://neweconomy.net/content/wealth-inequality-america for an astonishing video depicting U.S. wealth distribution.)
That’s not even close to reality. The real figures show that the gap between the top 10 per cent and the middle class is well over 1,000 per cent. And if you are in the top one per cent of wealthy Americans the gap is another 1,000 per cent bigger. The middle class is barely above the poor and the poor are barely visible. As one study found, the average employee “needs to work more than a month to earn what the CEO earns in one hour.”
The key fact here is not so much that one per cent of America has 40 per cent of the nation’s wealth, but that the bottom 80 per cent has only seven per cent. Equally telling is that the top one per cent own 50 per cent of stocks, bonds and mutual funds while the bottom 50 per cent of Americans own only half a per cent of those investments.
Despite America’s enormous wealth, the U.S. middle class languishes well down the ranks at 27th among OECD (Organization for Economic Cooperation and Development) countries in average median wealth, coming in at $38,786 in 2012. (Canada is 12th at $81,610.)
In other words, the middle class has no money to invest and is essentially hanging onto the American dream by the thread of cheap Asian goods and low interest rates.
(The U.S. is not alone. A recent Oxfam report revealed that 85 of the richest people have more wealth than the poorest 3.5 billion.)
Since he was first elected in 2008, Obama’s State of the Union speeches have consistently promised to strengthen the middle class and facilitate upward mobility. This means assuring that poor and middle-class children have good nutrition and access to quality education at all levels. He has made little headway on either front.
Last year he promised to increase the federal minimum wage, which has languished at about 60 per cent of the poverty level since 1985. The Republicans refused. They also refused this month to heed Obama’s call to continue a $25 billion unemployment insurance program for 1.4 million people plus their dependents.
Listening to White House background briefings this month, it’s clear Obama has no delusions about making concrete progress on wealth distribution. But that’s not the end of the story.
Most of his power on domestic issues lies in his oratory. His call for national action will inevitably turn up the volume on the growing wealth gap. The true picture of the off-the-charts wealth in the hands of a narrowing club of rich people will trickle down.
He hopes the payoff will come in November at the mid-term elections.