Breaking up the nation’s biggest banks or erecting steep tariffs on imports may sound appealing, but the economy cannot be redesigned and put back together again without harmful consequences for many Americans, President Barack Obama says in an essay published in the Economist Magazine.
Instead, Obama in the article published Thursday urged less dramatic steps to boost labour productivity, combat rising income inequality and ensure that everyone who wants a job can get one.
In an essay titled “The Way Ahead,” Obama wrote about areas of unfinished business in his presidency. He said a major source of the slowdown in labour productivity has been self-imposed constraints, namely an anti-tax ideology that rejects virtually all sources of new public funding and a fixation on deficits at the expense of maintaining the nation’s infrastructure.
Obama wrote that the political system has become so disagreeable that even previously bipartisan ideas like bridge and airport upgrades are non-starters. He also voiced support for lowering tax rates for businesses but tied such cuts to closing “loopholes” and making public investments in research and technology.
Obama said that the U.S. had often accepted more income inequality than other nations because Americans are convinced that hard work can lead to an improved station in life. He wrote that income gains last year were largest for those at the bottom and middle of the income ladder. He also noted that the top 1 percent of households now pay more in taxes. But he said those efforts still fall “well short” of what’s needed
Looking to the future, he called for unions to play a critical role by helping workers get a bigger slice of the pie while being flexible enough to adapt to global competition. He also pushed for increasing the federal minimum wage and expanding the Earned Income Tax Credit.
To help more people participate in the workforce, Obama proposed increasing access to community colleges and providing wage insurance to those workers who can’t find a job that pays as well as their previous one. He said paid leave and guaranteed sick leave would also encourage flexibility that could lead to more people working.
Obama said America should prepare for negative shocks to the economy before they occur. He said his successors should not have to fight for emergency measures in a time of need. Instead, he said, support for the hardest-hit families, such as unemployment insurance benefits, should rise automatically.