Then he talked a little about tax reform.
Of course, cleaning up and simplifying a complicated tax code is important. But it is not, by any stretch of the imagination, a cure for widening inequality and declining economic mobility. This is the problem with the president’s approach to America’s big economic problems: His rhetoric seems way ahead of his policy proposals.
There are several reasons for that, including the complexity of the challenges at hand, the polarized political climate and the difficulty of crafting comprehensive solutions (let alone poll-tested ones). But the simplest explanation is that Obama’s economic team is built to tackle a totally different set of issues than the ones the president loves to talk about. It is built largely to address the problems of the federal budget deficit.
The political reality in Washington is that everyone is focusing on deficit reduction. The economic reality is that deficits are, at worst, a medium-run problem — at a time when America is struggling with some very immediate economic woes.
The past dozen years produced anemic job creation, even if you don’t count the massive job losses of the Great Recession. It has become harder for workers to climb into the middle class. Within the middle class, the average worker is making less money in real terms than he or she did at the turn of the millennium, even as incomes have soared among the wealthiest.
“The most important economic policy challenge going forward,” said Jeffrey Liebman, a Harvard University economist who worked in both the Clinton and Obama administrations, “is to create prosperity that is broadly shared.”
How has Obama girded himself for that challenge? By surrounding himself with the descendants of an economic dynasty that, depending on how charitably you view it, either missed those big problems as they were emerging or pursued policies that exacerbated them.
Most of Obama’s top economic advisers, during his first term and entering his second, came of age in the service of President Bill Clinton. The current crop includes Jack Lew, a former budget chief and the current Treasury secretary nominee, and Gene Sperling, the head of the National Economic Council.
In the Clinton administration, this group came under the influence of Robert Rubin, a longtime investment banker who ran Clinton’s first National Economic Council and later served as Treasury secretary. Rubin espoused an economic philosophy that would dominate Democratic policy circles through the Great Recession: one that favored opening global markets, deregulating Wall Street and limiting federal budget deficits.