Income Gap Becomes Politicians' Latest Battleground

Nov 3, 2011

There's been a shift in the economic discussion in American politics. For months, the debate was focused on government spending, regulations, debt and taxes. Now there's something new: income inequality.

And it's not just the Occupy Wall Street protesters who are worried about the growing gap between the richest 1 percent and the rest of America. The gap has been growing for 30 years, but in the midst of the recession, it appears to have reached a tipping point.

A senior White House official says there's a surging sense among voters that the playing field is tilted toward the wealthy and connected. That's the sentiment behind President Obama's new populist push for his jobs bill.

"Middle-class families shouldn't pay higher tax rates than millionaires and billionaires," the president has said. "Warren Buffett's secretary shouldn't pay a higher tax rate than Warren Buffett."

But where the president sees simple fairness, Republicans see class warfare. Last week, House Budget Committee Chairman Paul Ryan (R-Wis.) blasted Obama for his call to raise taxes on millionaires.

"The president is barnstorming swing states, pushing a divisive message that pits one group of Americans against another on the basis of class," Ryan said. "This just won't work in America."

A Populist Moment?

Ryan says the income gap isn't as important as the American ideal of equality of opportunity — people's ability to move up the economic ladder.

But social mobility is also slowing down. It's now lower in the United States than other developed countries. The number of Americans who can move up has shrunk as the income gap has gotten wider.

"This issue is one that drives Republicans crazy," says Democratic strategist Carter Eskew, who thinks this might be a rare populist moment in American politics, when Democrats instead of Republicans have the advantage.

"Republicans in the past have done a very good job of screaming 'class warfare,'" Eskew says. "We, I think, have an ambivalent feeling when people try to stoke those kinds of fears and divisions, and Republicans have been very good at playing to that. However, it may be that we have entered a phase where the gap has become so yawning, so wide, that those arguments are not going to be as effective."

GOP strategist Ed Rogers thinks Republicans need to offer their own solutions to the widening gap between the rich and everyone else, which he believes is a real problem.

"It's happening in the U.S. It's happening at an accelerating race," he says. "That said, the answer to income inequality isn't to confiscate [from] the few and spread out among the many. They tried that in Havana. They tried that in Moscow. It hasn't worked.

"The solution is to build a bigger pie where more people get a bigger slice."

A 'Polite' Message

Rogers wants the kind of economic growth where wealth is more evenly shared — but by the market, not by the government. But Democrats are confident the redistributionist label won't stick to them because Obama is delivering his populist message not with a pitchfork but with a teaspoon.

"The way that it's being framed is pretty polite," Eskew says. "President Obama is not talking about a massive redistribution of wealth. What he's talking about is shared sacrifice, which most Americans would support."

And they do. Polls show 75 percent of Americans back a millionaires' tax and equally big majorities see Republicans as defending the interests of big corporations.

Rogers says that could present a risk for his party.

"You can't be a candidate or a party that appears to be in business to protect the interests of the privileged few, and that's where Democrats want to push the Republicans," he says. "Republicans are pretty good at pushing back, but, nonetheless ... that would be an untenable political situation."

Republicans Changing Tone

One Republican who wants to avoid that trap is presidential candidate Mitt Romney. He initially called the Occupy Wall Street protests dangerous, but now he says he understands people's frustrations.

"I don't worry about the top 1 percent. I don't stay up nights worrying about 'Gee, we need to help them.' I don't think about that. I'm not worried about that. They're doing just fine by themselves," he has said. "I worry about the 99 percent in America."

Other Republicans are changing their tone as well. House Majority Leader Eric Cantor (R-Va.), who once called the Wall Street protesters a "growing mob" now says he wants to have a policy discussion about solutions to the income gap.

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