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Middle Class Series: Rebuilding Our Middle Class

President Obama Rightly Says It Is the Challenge of Our Times

SOURCE: AP/J. Scott Applewhite

President Barack Obama delivers the State of the Union address in the U.S. Capitol in Washington, Tuesday, January 24, 2012.

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See also: President Obama Links Middle-Class Prosperity and Innovation by Ed Paisley and Sean Pool; Manufacturing America’s Energy Future by Kate Gordon; Obama’s Clean Energy Plan for an America Built to Last by Daniel J. Weiss; Will Congress Block Infrastructure Spending? by Donna Cooper

President Barack Obama in his State of the Union address last night forcefully articulated an economic policy framework that correctly recognizes revitalizing America’s middle class is the challenge of our times—and the key to long-term U.S. economic prosperity.

The policy blueprint the president laid out builds on two threads that have come together in recent months as the twin components of this administration’s bridge to a better economy:

  • Continued and intense concentration on repairing the Great Recession’s damage to the middle class
  • Focusing long term on the threat that mounting income and wealth inequality pose to our growth prospects and global economic competitiveness

Taken together, these two strains have the potential to finally liberate our economic policymaking system from the counterproductive—but strangely persistent—thinking that the key to growth is strengthening the hands of monied “job creators” rather than boosting the actual job-creating power of a broad middle class.

Among the key initiatives proposed by President Obama yesterday were tax policies that encourage domestic manufacturing and discourage outsourcing of middle-class jobs, tough trade enforcement that gives American companies even footing in the global market, workforce initiatives that reward hard work and education, and a fairer tax code that ensures everyone contributes his fair share to deficit reduction.

Yesterday’s speech also marks an important elaboration of the president’s December 6 speech in Osawatomie, Kansas, in which he decried “the gaping inequality” that undermines what we might call the American Promise: If you work hard and play by the rules, you can participate in the American Dream.

While pundits have largely described recent White House statements about inequality and the middle class as a populist shift in political rhetoric, it should rightly be recognized as the expression of a sound intellectual theory that recognizes that a thriving middle class is not the byproduct of a prosperous economy—it is in fact the driver of prosperity.

The middle-class consumer creates the incentives to conceive, manufacture, and sell what our economy produces. That demand drives business opportunities and spurs investment. Entrepreneurship and invention also are rooted in the middle class, and the rise in middle-class worker productivity generates much of our nation’s wealth.

This theory was fleshed out earlier this month by Princeton economist Alan Krueger, chairman of the president’s Council of Economic Advisers, in a speech at the Center for American Progress. Krueger persuasively argued that our economy today would be stronger if not for the troubling rise in inequality in the United States in the last three decades.

The Obama administration’s full-throated support of economic policies focused on the middle class presents a welcome contrast to the failed “trickle down” approach favored by conservatives. Economists and policymakers in Washington and across the country should seize this moment to continue to hammer home the importance of strengthening the middle class, and making it easier for Americans of all backgrounds to join it.

That’s why the Center for American Progress has launched a yearlong series of events and publications on the importance of the middle class to our economy. Here’s hoping that in the next State of the Union address, the president of the United States can look back and thank Congress for recognizing that today’s top-heavy economy is neither good for our country or our economy.

Gadi Dechter is Managing Director for Economic Policy at the Center for American Progress. Michael Ettlinger is Vice President for Economic Policy at the Center.

For more on this year’s State of the Union, see:

 

To speak with our experts on this topic, please contact:

Print: Allison Preiss (economy, education, poverty)
202.478.6331 or apreiss@americanprogress.org

Print: Tom Caiazza (foreign policy, health care, energy and environment, LGBT issues, gun-violence prevention)
202.481.7141 or tcaiazza@americanprogress.org

Print: Chelsea Kiene (women's issues, Legal Progress, Half in Ten Education Fund)
202.478.5328 or ckiene@americanprogress.org

Spanish-language and ethnic media: Tanya Arditi (immigration, race and ethnicity)
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TV: Rachel Rosen
202.483.2675 or rrosen@americanprogress.org

Radio: Chelsea Kiene
202.478.5328 or ckiene@americanprogress.org

 

This is part of a special series: Middle Class Series

For more from this series, click here