State of the Union 2014: Obama says "inequality has deepened"

Though evidence abounds that the U.S. economy is rebounding, many Americans don’t feel better off because wage growth throughout the recovery that followed the 2008 financial crisis has barely kept up with inflation. President Obama vowed to address that problem tonight in his State of the Union address.

It won’t be easy. Although the White House advocates raising the federal minimum wage, for instance, Republicans in Congress have argued that a pay hike will kill jobs. Obama also wants to overhaul the nation's tax code, which he described in his speech as being “riddle with wasteful, complicated loopholes.” 

  Yet while there is bipartisan support for tax reform, partisan disagreement on what qualifies as a loophole could make progress on this front impossible. Democrats and Republicans also remain divided on immigration, energy, education and many other key issues.

In view of the ongoing political conflict that has blocked a more forceful legislative response to the sluggish recovery, Obama chose Tuesday night to speak in broad strokes about the challenges facing Americans.

“Inequality has deepened,” he told a joint session of Congress in his fifth State of the Union speech.  “The cold, hard fact is that even in the midst of recovery, too many Americans are working more than ever just to get by – let alone get ahead.  And too many still aren’t working at all.”

Though he extended an olive branch to Congress, a visibly frustrated Obama vowed to take action unilaterally, a position that has angered many congressional Republicans. He is signing an executive order to require that federal contractors pay their workers a wage of at least $10.10 an hour and urged Corporate America to boost employee compensation.

“Say yes,” he said. “Give America a raise.”

Obama noted that, adjusting for inflation, the minimum wage is “20 percent less than when Ronald Reagan stood here.” In the year since Obama called on Congress to raise the minimum wage, five states have raised theirs, while more than two dozen other states are considering a hike. 

Not surprisingly, Obama also gave a spirited defense of the Affordable Care Act, his signature legislative achievement that came under fire after the botched roll-out of the government’s website.

Meanwhile, Obama chastised the GOP over what he called “a rancorous debate over the size of the federal government." While such a debate is useful, Obama said that October's government shutdown and the fight over the debt ceiling needlessly put the “full faith and credit” of the U.S government in jeopardy.

Despite the strong rhetoric, the speech was relatively light on specific policy prescriptions for reducing inequality and stimulating economic growth. Among Obama's few concrete proposals was for what described as a new savings bond aimed at helping Americans save for retirement. The program, called My RA, "encourages folks to build a nest egg" and "guarantees a decent return with no risk of losing what you put in," he said, promising immediately to direct the U.S. Treasury Department to develop the program.

Offer every American access to an automatic IRA on the job, so they can save at work just like everyone in this chamber can," Obama added.

  • Jonathan Berr

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