Obama is the first president in the modern era to focus so much on economic inequality. Democratic predecessors concentrated more on poverty, such as Lyndon Johnson's “Great Society” and Bill Clinton's tax credit for the working poor. But Johnson also lowered taxes on the wealthy, and Clinton, having increased taxes early in his term, cut capital gains taxes in his second term, benefiting richer Americans who had substantial income from investments.
When Obama discusses this subject — as he often has over the years — he sometimes begins his narrative in the period right after World War II. In late 2011, he delivered a seminal speech on income inequality in Osawatomie, Kan., where Teddy Roosevelt had proclaimed his progressive agenda a century earlier.
Obama expressed nostalgia for the post-war America of his grandparents' generation, when incomes were rising remarkably fast, especially at the bottom of the economic ladder, when people could get decent-paying jobs as file clerks or factory workers. “They believed in an America where hard work paid off, and responsibility was rewarded, and anyone could make it if they tried — no matter who you were, no matter where you came from, no matter how you started out,” he said. “These values gave rise to the largest middle class and the strongest economy that the world has ever known.”
That common prosperity was coming to an end about the time Obama arrived in Chicago as a community organizer in the 1980s. He saw firsthand how workers were displaced from good jobs in the once-vibrant Chicago steel mills.
Working in that hotbed of black politics, he might have been tempted to focus exclusively on racial inequalities, the crusade of an earlier generation. But class was rising to the forefront of his thinking. In “Dreams From My Father,” Obama recounts a conversation he had in the late 1980s with his now-estranged pastor, the Rev. Jeremiah Wright. Obama was telling him that the church could do more to reach out to working-class blacks. Wright was disagreeing.
“It's not about income, Barack,” the pastor responded. “Cops don't check my bank account when they pull me over.”
Reflecting later on his conversation, Obama wrote in his book, he wasn't convinced. “Wasn't there a reality to the class divisions?” he wondered.
About two decades later, as Obama began his presidential campaign, he met with a group of economic advisers to craft his policy. Lawrence Katz, a Harvard economist, arrived for a meeting with a stack of slides on inequality to show the candidate.
One slide, “Growing Together vs. Growing Apart,” documented how the income of top earners had once climbed at about the same pace as every other category, but had sharply diverged in the previous 30 years. Another showed that the value of a college degree, always lucrative, had soared as a financial advantage. A third showed the startling drop in the demand for workers — in auto factories and clerical positions — who were being replaced by computers and machines.
Altogether, the slides conveyed the thesis that Katz and another economist, Claudia Goldin, had recently documented— that increasingly sophisticated technology required more educated workers, who subsequently could capture more of the nation's income. Over the following months, in interviews with reporters, and in his campaign policies, Obama would take aim at precisely those challenges.
Arriving at the White House amid a threat of a second Great Depression, Obama's first major piece of legislation was an $800 billion stimulus bill to boost the sinking economy. Although it was not sold or viewed as an attack on income inequality, it was precisely that.
The legislation cut taxes in a way that most benefited the middle and lower class, increased safety-net payments for poor Americans, and launched construction projects that helped create jobs for working-class Americans. Obama funded the stimulus package through more federal borrowing, a bill that's now coming due — and one he's hoping to pay with new tax revenue provided by the wealthy. “We want our children to live in an America that isn't . . . weakened by inequality,” he declared in his victory speech on the night of his reelection.
Eight days later, as he stood in the East Room of the White House for his first post-election news conference, he took a question about his mandate. His answer sounded like the usual rhetoric ahead of a big legislative battle. But it reflected his unifying philosophy.
“I've got a mandate to help middle-class families and families that are working hard to try to get into the middle class,” Obama said. “That's my mandate.”
Zachary A. Goldfarb is The Washington Post's White House economics reporter.