“This is a make-or-break moment for the middle class, and for all those who are fighting to get into the middle class. Because what’s at stake is whether this will be a country where working people can earn enough to raise a family, build a modest savings, own a home, secure their retirement.” -- Remarks by the President on the Economy in Osawatomie, Kansas, December 6, 2011
The President has been focused on working to ensure an America that grows together, rather than one in which the gains go disproportionately to the wealthy. His policies have already made a real contribution to achieving this ideal—benefiting millions of people, principally middle-class Americans and those struggling to get into the middle class—and he continues to push tirelessly for policies, including the Buffett Rule, that will help us get closer.
The best available data on incomes refute the baseless claim recently made by some that income inequality is worse under President Obama than it was under President George W. Bush. More fundamentally, whereas the previous Administration’s policies were tilted towards the wealthiest Americans, President Obama has been focused on the middle class and those working to get into the middle class.
Inequality Was Worse Under President Bush than Under President Obama
According to the latest data from economist Emmanuel Saez, when the last economic expansion ended in 2007, the fraction of income going to the top 1 percent was the highest since 1928 and the fraction of income going to the top 0.1 percent was the highest ever recorded (the data go back to 1913). The share of income going to the very top remains high, but has come down and was lower in both 2009 and 2010 than in any year from 2005 through 2008.
It is difficult to evaluate changes in inequality over very short periods of time, especially when these coincide with a deep recession and dramatic fluctuations in equity prices. But there is no basis in the data for claiming that inequality under President Obama is greater than the historic levels reached under President Bush. Any suggestion to the contrary is based on a combination of ignoring the most obvious facts and treating the dramatic recovery of the stock market in 2009 and 2010 as if it tells a deeper structural story about the economy.
President Obama’s Policies Have Helped Promote Shared Growth and Opportunity—while His Agenda Pushes for Even Larger Gains
Regardless of what the data show about short-term fluctuations in inequality, what really matters is what you do about it. President Bush focused on tax cuts tilted towards the wealthiest Americans, policies to which the Republicans would like to return. In contrast, since his first day in office, President Obama has been focused on policies that promote shared growth and help the middle-class and those struggling to get into it. Below are just a few notable examples:
- Income for families. The President secured tax cuts for the middle-class; expanded the refundability of key tax credits for working families, making them available to more households; and pushed for temporary expansions in critical safety net programs, first in the Recovery Act and extended in subsequent legislation. Thanks to the President’s policies, 7 million Americans were lifted out of poverty in 2010 according to the Center on Budget and Policy Priorities, and middle-class families got a $1,000 tax cut both last year and this year.
- Education. The President has more than doubled the amount of funding available for Pell Grants, and the maximum award has increased from $4,730 in 2008 to $5,550 in the 2011-12 school year; and 3 million more students received Pell grants this year than in 2008. The President also created the American Opportunity Tax Credit to reduce college costs, which benefited 9.4 million students and their families in 2010. Furthermore, he championed bold and comprehensive student loan reform that will save taxpayers $68 billion over the next decade, and is helping student loan borrowers better manage their debt through flexible repayment options. Together, these efforts represent the largest investment in higher education since the G.I. Bill.
- Health reform. The new health care law will help provide security for American families, something that a New York Times column described as the “federal government’s biggest attack on economic inequality since inequality began rising more than three decades ago.”
- Fair pay for working women. The first piece of legislation President Obama signed into law was the Lilly Ledbetter Fair Pay Act, which empowers women to recover wages lost to discrimination by extending the time period in which an employee can file a claim. The President also continues to push for the Paycheck Fairness Act, commonsense legislation that gives women additional tools to fight pay discrimination. And in January of 2010, the President created the National Equal Pay Task Force, which brings together the Equal Employment Opportunity Commission (EEOC), the Department of Justice, the Department of Labor, and the Office of Personnel Management to identify and rectify challenges to gender pay disparities. The Task Force has worked diligently to promote full compliance with the pay discrimination laws, including recovery of substantial monetary relief for victims of pay discrimination, and to facilitate unprecedented inter-agency collaboration on enforcement matters, training, and education and outreach.
- The President’s Blueprint for an Economy Built to Last—from improving education to implementing the Buffett Rule.The President continues to push for growth that lifts up all Americans, through everything from investments in education and helping families refinance their mortgages, to the Buffett Rule to ensure that no millionaire pays less in taxes than the middle class.