After the financial crisis and the Occupy era, “inequality” became a mainstream political issue. And the Obama administration made some quantifiable progress. Now? Prepare for the reverse.
Given the fact that economic inequality here has been on the rise since the Reagan era and the fact that the American dream of upward mobility is demonstrably dying, Obama’s efforts to combat the issue should be classified as “modest.” Still, those efforts and an accompanying posture of support for closing the wealth gap do exist.
Yesterday, the White House Council of Economic Advisers released its annual economic report, showcasing the administration’s economic achievements over the past eight years. The chapter titled “Progress Reducing Inequality” notes that if our level of inequality was the same as it was 40 years ago, the average American household would be earning $9,000 more per year. (If the average American household earned $9,000 more per year, Donald Trump would not be president, I wager.)
This report is a political document, but it contains inarguable facts: Obamacare has given health insurance to 20 million new people; his tax policies have taken 9% out of the incomes of the top 0.1%, and slightly raised the after-tax incomes of the poorest fifth of Americans; and the minimum wage increases that Obama advocates would help also, if he could ever get them through Congress. Still, the modest nature of our current administration’s accomplishments in stemming the ever-increasing flow of wealth to the richest Americans is well summed up by this: “From the business cycle peak in 1979 to the business cycle peak in 2007, the after-tax income share of the top 1 percent more than doubled. Changes in tax policy and the coverage provisions of the ACA have rolled back one-third of the decline in the share of after-tax income accruing to the bottom quintile of households over this period and one-tenth of the increase in the share accruing to the top 1 percent of households.”
Obama, in other words, has pushed the enormous boulder a few feet up the hill. What can we expect from our president-elect on this front? We can expect the exact opposite. We can confidently expect the Trump administration and its Republican Congressional allies to cut taxes on corporations; to slash taxes on the highest earners; and to roll back the financial regulations that improved the overall safety of our financial system, in part by restraining Wall Street’s ability to speculate. All of Donald Trump’s primary economic policies will have the effect of increasing, not decreasing, inequality. These policies will make the rich richer. They will give the government less tax revenue that could be distributed to the poor and middle class. And they will justify it with the old promise of “unleashing economic growth,” which most respected economists believe is a canard. Trump, a billionaire who reportedly plans to hold on to his business while he is in office, has assembled the wealthiest cabinet in American history. The administration’s tax cuts could personally enrich the Trump family and his cabinet by hundreds of millions of dollars or more, assuming they do not provoke another financial crisis before he leaves office. Larry Kudlow, the CNBC talking head who is reportedly the leading contender to head Trump’s Council of Economic Advisers, is a longtime advocate of tax cuts on high earners, corporations, and capital gains, all policies that will benefit the rich and not the poor or middle class. Kudlow has even advocated a 15% flat tax, a policy that would amount to gift-wrapping tens of millions of dollars and handing it to Donald Trump’s cabinet members each year. It is safe to say that in the annual economic report that Kudlow publishes four years from now, the chapter on reducing inequality will be much different, if it even exists.
I state all of this simply to encourage us all to look at Trump’s policies through a specific lens. It was the grotesque rise in inequality that made Americans angry enough to elect a man like Donald Trump, and in exchange they will get a set of policies that will make that inequality much, much worse. It is akin in many ways to the fight against climate change: what we need is a radical departure from the norm; what we are getting is a determined plan to do more of what created the problem in the first place.
Everyone who professed to care about inequality while Obama was president should not stop caring about it simply because the occupant of the Oval Office has gotten more outrageous. The government is getting out of the business of promoting economic equality. Not to be a broken record, but the only viable path for regular people to stem the tide of inequality now is to unionize and promote organized labor—the last tool that the middle class has to build its own safety net, when the government decides that it is not interested in doing so.
For the next four years, it’s either that, Molotov cocktails, or grim acceptance.