President Barack Obama delivers the State of the Union address to a joint session of Congress in the House chamber. (Win McNamee / Getty Images)
The repackaged populism President Barack Obama presented in his State of the Union address Tuesday night will not substitute for sound economic policies that help the private sector create more jobs. Nor are they likely to do much to accomplish the presidentís stated goal of reducing income inequality.
Obama has been pursuing versions of these proposals for the past five years, and the result is a wage gap that is wider than when he took office. The top 1 percent of earners in America now receive 25 percent of all pretax income, while the share of the bottom 90 percent is below 50 percent for the first time.
The gap is widening despite the presidentís various wealth transfer schemes. Certainly, the issue of inequality is real. But it is better attacked by improving the incomes of those at the bottom than by tearing down those at the top.
The driver of the income gap is the failure of the economy to produce jobs. Even as the recovery gains real traction, as evidenced by stronger home prices and corporate profits, job creation is stagnant. In December, the economy added a piddling 74,000 jobs, its worst performance in three years.
But instead of offering ideas for unshackling private sector job creation, the president focused on proposals that could actually add to unemployment and entangle the government more tightly in the private marketplace.
Business groups, including the Michigan Chamber of Commerce, warn that Obamaís keystone initiative, raising the federal minimum wage above $10 an hour, would kill jobs for the most vulnerable ó teens and minorities.
While proponents dispute that claim, a period of negligible job growth seems a poor time to test the theory. And yet Obama, continuing his legally questionable practice of bypassing Congress, signed an executive order before the speech raising the minimum wage on federal contracts to $10.10 an hour. The measure will increase costs for local and state governments that accept federal dollars to support their programs.
Obama attempted to tie inequality to a choking off of economic mobility in America. That claim simply isnít true, according to a spate of recent studies, including one released recently by economics professors at Harvard University and the University of California, Berkeley, that finds climbing the ladder of success no more difficult today than in the past.
The report ties mobility to education and intact families, rather than conditions of birth.
Obama is right to focus on the skills gap. It was encouraging to see that instead of simply throwing more money at job training efforts, he is asking Vice President Joe Biden to review, and hopefully revamp, the existing programs, which a 2011 report from the General Accounting Office found cost $18 billion and are largely ineffective.
Also, give the president credit for pushing immigration reform as an economic development tool. The nation needs more high-skilled workers; if it doesnít allow them to come here, the jobs will go to where the workers are.
But on the whole, the president failed to address the real obstacles to job creation, including the uncompetitive corporate income tax, Obamacareís hiring disincentives, and energy policies that have destroyed good-paying jobs in the coal mines of Appalachia and on the oil rigs of the Gulf, among other places.
He also is doing nothing to reduce the regulatory burden. Federal rules now total 170,000 pages and place a particularly onerous compliance hardship on small businesses.
The presidentís inequality agenda seems more directly aimed at giving Democrats something to talk about this election year other than Obamacare.
Earlier in the week, he warned he has ďa pen and a phoneĒ and would implement his proposals without congressional approval if he has to.
That would be indefensible even for a president who enjoys broad support. But 63 percent of Americans say they do not have confidence in Obama to make the right decisions for the country, according to a Washington Post-ABC News poll.
A president with such low backing cannot justify ignoring both the Constitution and Congress to ram through policies that could do more harm than good.