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The Response on Obama and Redistribution that Reveals Too Much

Trying to deflect from Mitt Romney’s comments on those dastardly parasites who make up 47% of America, conservatives have trotted out an “exclusive” secret tape from 1998 with then State Senator Barack Obama making utterly banal mainstream Democratic comments about redistribution:

And my suggestion, I guess, would be that the trick—and this is one of the few areas where I think there are technical issues that have to be dealt with as opposed to just political issues—I think the trick is figuring out how do we structure government systems that pool resources and hence facilitate some redistribution. Because I actually believe in redistribution, at least at a certain level, to make sure everybody’s got a shot.

Rhetorically speaking, Obama, like practically every other Democrat, has made this point consistently since 1998 and going far back from that. Obama campaigned on it in 2008. It shows up in Obama campaign commercials in 2012 (which should tell you something about the policy successes on this front in the first term, actually). He favors slightly increased taxation on the rich and “a certain level” of social programs that inevitably help the poor and disenfranchised, to equalize their opportunities to succeed.

Pat Garofalo, trying to bolster Obama’s side of this story a bit more, commits the sin of telling the truth about the impact of Administration policies.

…if Obama is truly out to redistribute the wealth, he’s not doing a bang-up job of it, as more wealth has moved to the top of the income scale and the country has gotten more unequal.

The Census Bureau reported last week that income inequality increased in 2011. The Gini coefficient, which measures inequality, has only risen (signalling growing inequality) while Obama has been in office, as this chart from St. Louis Federal Reserve data shows:

According to the Census Bureau, the top one-fifth of households made 50 percent of the income in 2008. In 2010, that rose to 50.2 percent. In 2011, it rose further to 51.1 percent. The top 5 percent of households saw a similar increase, going from making 21.5 percent of the income in 2008 to 22.3 percent of the income in 2011. In 2010, a whopping 93 percent of the country’s income gains went to the richest 1 percent.

This is all perfectly true. It also serves as an indictment of the current Administration, to the extent that I think they would rather not see this in print as a “defense” of their record. In the four years of this Presidency, the rich have captured almost all of the income gains. The stratification between rich and poor, which started around 1979 and continued on an unbroken line since then, only got worse over the last four years. The Obama Administration has done next to nothing, on the pre-tax or post-tax side, to arrest this increase in income inequality.

Maybe by 2014, when the Affordable Care Act gets fully implemented, and the transfer payments to the poor and middle class to purchase health insurance begin, and Medicaid gets expanded to a broader group of people, this will reverse course a bit. At the moment, all we see are falling median wages, a more entrenched American aristocracy, and a hollowed-out middle class. Mitt Romney would do nothing to alleviate this either, but we have to recognize the bipartisan problem at work here.

This has relevance well beyond just the distastefulness of a neofeudal class system. Research from the International Monetary Fund shows that inequality is part of a series of causes of financial crises. Chris Hayes wrote in his book about how cascading inequality produces a set of elites more prone to spectacular institutional failure. This is among the central problems of our time, and we don’t have any policy apparatus willing to attack it. 3.6% increases in the top-end marginal tax rate doesn’t really cut it.

The truth is that Democrats were scared off the redistribution debate decades ago, and now only meekly interface with it over things like “equality of opportunity,” as if education can entirely cover for institutional poverty and create social mobility that doesn’t actually exist in America. Now they hail the hard work that got their group of meritocrats to the top of the ladder, but they ignore the fact that hard work is proven, in the data, to not be enough to reverse the sad and dangerous trajectories on which this country has been for some time. No, Obama is not a good redistributor. That’s a problem.

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David Dayen

David Dayen