These changes may only modestly affect inequality in the United States, but any reduction is notable. Among 35 of the world's most developed countries, according to the Organization for Economic Cooperation and Development, only a handful of national tax systems do less than the U.S. code to reduce income inequality.
Still, only so much can be accomplished through taxes and government subsidies, and Obama is well aware of that. To truly bend the slope of rising inequality over the next generation, he also has focused on education. Despite budget pressures, he made a goal of having every student receive at least one year of college.
Every president talks about education, but Obama's rhetoric reflects an acute awareness of recent research. The data show that rising inequality is largely the result of a changing economy that handsomely rewards people with better skills or credentials — a college education — and leaves people with a basic education at a disadvantage.
The White House is sensitive to the notion that the president could be called a “redistributionist” — an idea that fuels the animosity of Obama's conservative opponents but also stirs uncomfortable feelings among many Americans who generally approve of greater fairness but object to programs that look like mere government handouts. “The idea was to promote opportunity and mobility and not equality of outcomes,” Jared Bernstein, a former White House economic adviser, told me in a conversation about Obama's approach. “Where inequality came into the mix is the recognition that we've gotten to the point that inequality is blocking opportunity.”
Faced with a divided Congress that imposes significant limits on what he hopes to accomplish, it may seem, in 20 years, that Obama only tinkered at the margins. Several of the nation's leading experts on inequality say that although he has pushed in the right direction, he may have to push much harder if he wants to make a significant mark. As University of Arizona sociologist Lane Kenworthy has written, that may mean universal child-care and preschool programs, designed to start children on an early path to the skills they will need to succeed while freeing parents to earn more. At the other end of the educational spectrum, Obama would need to go further to reduce the escalating cost of college. Either measure would require substantially more tax revenue, which would presumably be collected from the wealthy.
“Obama's proposals are not strong enough, per se, to undo the very large inequality increase the U.S. has experienced since the 1970s, particularly when it comes to the incomes at the very top,” Emmanuel Saez, an economics professor at the University of California at Berkeley and one of the world's top experts on the subject, told me. “To really make a dent, you would need to consider more radical policies.”
Saez noted, for example, that Obama's policies do not match those of Franklin D. Roosevelt during the New Deal. By the end of the 1930s, the wealthiest 1 percent of earners were paying more than double the taxes they did at the beginning of the decade, said Elliot Brownlee, a history professor at the University of California at Santa Barbara. By contrast, according to the Tax Policy Center, Obama's wish list of tax policy changes would require the top earners to pay 15 percent more.