Economic inequality an issue for US 2012 campaign

WASHINGTON — Fighting to win over unhappy American voters, President Barack Obama and his Republican challengers are seizing on one of the most potent issues this election season: the struggling middle class and the widening gap between rich and poor.

Highlighted by the Occupy movement and fanned by record profits on Wall Street at a time of stubborn unemployment, economic inequality is now taking center stage in the 2012 presidential campaign, emphasized by Obama and offering opportunities and risks for him and his GOP opponents as both sides battle for the allegiance of the angst-ridden electorate.

President Barack Obama speaks during the news briefing at the White House. If President Barack Obama, the House and the Senate all want to extend a Social Security payroll tax cut and jobless benefits through next year, why are they fighting so bitterly over doing it? Obama, House Democrats and lopsided majorities of both parties in the Senate want to immediately renew the tax cut and jobless benefits for the next two months, and find a way later to extend them through 2012. House Republicans want to do it for a full year right away.

For Obama, who calls boosting middle-class opportunity "the defining issue of our time," the question is whether he can bring voters along — while parrying GOP accusations of class warfare — even though he's failed to solve the country's economic woes during his first term in office.

For Republicans, Obama's potential vulnerability gives them an opening, but they also must battle perceptions that their policies favor the wealthy at a time when voters support Obama's call to raise taxes on the very rich. Former Massachusetts Gov. Mitt Romney has already made clear he'll resist Obama's attempts to capitalize on the issue, adopting the language of Occupy Wall Street in an interview with the Washington Post this month where he called the president "a member of the 1 percent."

For both sides, the question is how to find political advantage in light of a weak economy with unemployment above 8 percent. Since Obama is expected to run for re-election with higher unemployment than any recent president even if the economy continues to show signs of improvement, he must aim to set the terms of the debate in a way that helps him and hurts the GOP — while Republicans will be working just as hard to deny him any advantage.

The president won a year-end victory Friday with the passage of a two-month extension of a payroll tax cut that had bipartisan support in the Senate.

The measure will keep in place a 2 percentage point cut in the Social Security payroll tax — worth about $20 a week for a typical worker making $50,000 (euro38,293) a year — and prevent almost 2 million unemployed people from losing jobless benefits averaging $300 a week.

House Republicans had unsuccessfully attempted to push for further negotiations toward a yearlong extension, which allowed Obama to argue for the two-month extension of the tax cuts and prevention of a pending tax increase. The two sides resume discussions on the payroll tax cut early next year.

Obama's campaign pressed its economic argument Friday in an op-ed by Vice President Joe Biden in The Des Moines Register where Biden, taking direct aim at Romney, wrote that the former Massachusetts governor "would actually double down on the policies that caused the greatest economic calamity since the Great Depression and accelerated a decades-long assault on the middle class."

Romney, campaigning in New Hampshire, quickly countered that it's Obama who is hurting the country and expressed astonishment that Biden would have the "chutzpah ... the delusion" to write such a piece. "This president and his policies have made it harder on the American people and on the middle class," Romney said.

It was a preview of an argument certain to carry through the 2012 race, as the Obama campaign, viewing Romney as the likely GOP nominee even before any votes have been cast, works vigorously to define him early on, and Romney does everything he can to resist.

And the dispute taps into a striking reality. After-tax income grew by 275 percent between 1979 and 2007 for the top 1 percent of the population, the nonpartisan Congressional Budget Office found in a report this fall. But for the 20 percent of the population making the least money, income growth over the same period was only 18 percent.

Obama "is viewed as more likely to help the middle class than is the GOP, so he can capitalize on this by playing on concerns about inequality and contrasting his positions and the GOP's on issues like tax cuts for the wealthy," John Sides, political science professor at George Washington University, said by email. "However," Sides added, "it's an open question whether that strategy would enable him to overcome a weak economy and win."

Aides say Obama has long been concerned with economic inequality given his background in community organizing. But he brought the issue into much sharper focus in a speech in Osawatomie, Kan., earlier this month, where he reprised a populist message delivered in the same town by Theodore Roosevelt decades ago, and decried a growing inequality between chief executives and their workers.

"This kind of inequality — a level that we haven't seen since the Great Depression — hurts us all," Obama said at the time.

"This kind of gaping inequality gives lie to the promise that's at the very heart of America: that this is a place where you can make it if you try."

The issue has become a rallying cry of the Occupy Wall Street movement that's swept the country, with activists proclaiming "We are the 99 percent" — as opposed to the "1 percent" at the top. And Obama advisers have identified this sense of inequality as the strongest current running through politics, one that they will be focusing on through Election Day.

But some polling suggests a note of caution for Obama in pressing the inequality argument. Gallup found this month that a majority of Americans don't view the country as divided into haves and have-nots. The polling also found that more people thought it was important for the government to focus on growing and expanding the economy, (82 percent) and increasing equality of opportunity (70 percent) than on reducing the income and wealth gap between the rich and poor (46 percent).

"The middle class certainly believes that it's in trouble and rightly so, because it is," said Bill Galston, a former Clinton administration domestic policy adviser now at the Brookings Institution. "But they are yet to be convinced that going after the rich will go to the heart of the problems that now afflict them."

That may suggest an opening for some GOP attacks against Obama. Romney charged in a speech in New Hampshire this month that Obama is pursuing an "entitlement society," versus the "opportunity society" that the former Massachusetts governor said he wants to offer the country. Newt Gingrich, Romney and other Republicans also regularly accuse Obama of "class warfare."

Obama senior adviser David Axelrod called such criticism the "Republican cartoon" of Obama's argument.

"In some ways the race will be different depending on who the nominee is but in some ways the same because they largely subscribe to the same economic theory" of cutting taxes for the wealthy and paring back regulations, said Axelrod. He added that Obama's speech in Osawatomie, Kansas, "was a very, very good statement of his values and vision and will help frame much of what comes in the next year."