Obama’s Solution For Saving the Middle Class-Egalitarianism

Look at the statistics. In the last few decades, the average income of the top 2.5 million tax payers has gone up by more than 250%, to $1.2 million per year. For the top 25,000, the average income is now $27 million per year. And while the incomes of most Americans did rise by 45-50% over that same period, over the last decade, the incomes of those same Americans have actually fallen by about six percent.

More fundamentally, this kind of gaping inequality gives lie to the promise at the very heart of America: that this is the place where you can make it if you try. We tell people that in this country, even if you’re born with nothing, hard work can get you into the middle class; and that your children will have the chance to do even better than you. That’s why immigrants from around the world flocked to our shores.

But if the trend of rising inequality over the last few decades continues, it’s estimated that a child born today will only have a 1 in 3 chance of making it to the middle class. Fortunately, that’s not a future we have to accept. There’s another view about how we build a strong middle class in this country – a view that’s truer to our history; a vision that’s been embraced by people of both parties for more than two hundred years.

It’s a view that says in America, we are greater together – when everyone engages in fair play, than if we act only on our self-interests. That way everyone gets a fair shot, everyone does their fair share. So what does that mean for restoring middle-class security in today’s economy?

It starts by making sure that everyone in America gets a fair shot at success. The truth is we’ll never be able to compete with other countries when it comes to whose best at letting their businesses pay the lowest wages or pollute as much as they want.

The race we want to win – the race we can win – is a race to the top; the race for good jobs that pay well and offer middle-class security. Businesses will create those jobs in countries with the highest-skilled, highest-educated workers; the most advanced transportation and communication; the strongest commitment to research and technology.

It starts by making education a national mission – government and businesses; parents and citizens. In this economy, a higher education is the surest route to the middle class.

We shouldn’t be expecting less of our schools – we should be demanding more. We shouldn’t be making it harder to afford college – we should be a country where everyone has the financial support necessary to go.

In today’s innovation economy, we also need a world-class commitment to science, research, and the next generation of high-tech manufacturing. Our factories and their workers shouldn’t be idle. We should be giving people the chance to get new skills and training at community colleges, so they can learn to make wind turbines and semiconductors and high-powered batteries.

While businesses, not government, will always be the primary generator of good jobs with incomes that lift people into the middle class and keep them there, as a nation, we have always come together, through investments by our government, to help create the conditions where both workers and businesses can succeed.

Of course, those productive investments cost money. And so we must pay for these investments by asking everyone to do their fair share. If we want a strong middle class, then our tax code must reflect our values. We have to make choices.

In the long term, we have to rethink our tax system more fundamentally. We have to ask ourselves: Do we want the Government to make the investments we need in things like education, and research, and high-tech manufacturing? Or do we want to keep in place the tax breaks for the wealthiest Americans in our country? We can’t afford to do both.

Today, the wealthiest Americans are paying the lowest taxes in over half a century. This isn’t like in the early 50s, when the top tax rate was over 90%, or even the late 1970s, when it was about 70%. Under President Clinton, the top rate was only about 39%. Today, thanks to loopholes and shelters, a quarter of all millionaires now pay lower tax rates than millions of middle-class households. Some billionaires have a tax rate as low as 1%. One percent!

The fact is this crisis has left a deficit of trust between Main Street and Wall Street. And major banks that were rescued by the taxpayers have an obligation to go the extra mile in helping to close that deficit. At minimum, they should remedy past mortgage abuses that led to the financial crisis and collapse of home values. They should be obligated to keep homeowners in their home, even those whose home is underwater. They should provide more time for unemployed homeowners, who are in default, to look for work without having to worry about immediately losing their house. The big banks should give them the chance to rewrite their mortgage contracts and benefit from historically low interest rates. And they should recognize that precisely because these steps are in the interest of middle-class families and the broader economy, they will also be in the banks’ own long-term financial interest.

The Government should be investing in things like education that give everybody a chance to succeed. And the tax code should raise tax rates on incomes of the wealthy making sure everybody pays their fair share and observes laws that make sure everybody follows the rules. This will transform our economy.