Alan Krueger, chairman of the President’s Council of Economic Advisors, spoke at the Center for American Progress on the rise and consequences of income inequality in the United States. His remedy, unsurprisingly, boils down to continued government spending and higher taxes on the wealthiest Americans. Still, conservatives should not overlook the issue he is discussing.
The CBO reported that the average real after-tax household income for the top 1 percent of the population grew by 275 percent from 1979 to 2007. During that same period of time, average real after-tax household incomes for the lowest 20 percent of the population grew only 18 percent. Income growth has been uneven. Point taken #OWS. Though some conservatives would choose to rebut even the premise of income inequality, for now, let’s just go along with it.
A slightly more contentious issue is how incomes became so unequal. In his lecture, Krueger discussed a number of speculative causes and admitted that an exact cause is still being studied. Krueger cited skill-based technical changes in labor, increased globalization, and a decline in union membership as causes economists generally think may have contributed to the rise in inequality. However, can you blame anyone for any of those? These causes are very generally part of an evolving global system and a changing labor market. Perhaps the United States did not adjust as well as it could have. The point seems moot, or, at the very least, not the most pressing.
The real issue has become intergenerational mobility, the equality of opportunity, the ability of each American to set out into the real world, on the same playing field, and get rich or die tryin’. Does every American regardless of background have the same opportunity to be successful in this country?
Well yes, everyone has an opportunity. But also, yes, maybe it is easier for some people. The unemployment rate for African Americans is twice as high as that of White Americans, 15.8 percent compared to 7.5 percent. A disparity that high should not simply be attributed to individual behavior. Doing so ignores the realities of the U.S.’s economic situation and how hard it can be to find a job.
Conservatives must show how they will help make the U.S. economy become more efficient, more productive, and healthier. Conservatives can restore confidence in the equality of opportunity by showing how their plans on tax, health care, and education reform will grow the U.S. economy for all income brackets, and improve the quality of everyone’s life.
The divided nature of our politics has prevented significant reform on these issues and on rising government debt by this Congress, and yet everyone involved wants economic growth and prosperity in the end. Krueger’s solution was to wait on the constitutionally questionable Affordable Care Act to start saving us health care dollars, to pass the American Jobs Act and payroll tax cut extension, and to make those making more than $250,000 pay more.
Can conservatives sell THEIR pro-growth agenda? As evidenced by the Republican primaries, can they agree on one? While the President is talking about “insourcing” and Krueger touts a deficit-burgeoning agenda, Republicans need to remind the electorate how their agenda will create jobs and increase the equality of opportunity in a more efficient and fiscally responsible manner. The cyclical nature of the economy is on President Obama’s side and Republicans are bungling this debate.