Update #2 ·

Obama: Income inequality threatens American Dream

From USA Today:

WASHINGTON — President Obama sought to revive the issue of growing income equality on Wednesday, saying it restricts economic mobility and threatens to shrink the middle class."I believe this is the defining challenge of our time," Obama said in a speech at an event hosted by the Center for American Progress, a pro-Obama think tank. "It drives everything I do in this office."

The growing gap between rich and poor can be closed by actions ranging from an increase in the minimum wage to better education to following through on his health care plan, Obama said.

Basically outlining an agenda for the remaining three years of his presidency — as well as next year's congressional elections — Obama repeated calls for legislation that would strengthen unions, reduce the pay gap between men and women, and make college more affordable.

During his speech, Obama said that since 1979 — the year he graduated from high school — the size of the American economy has doubled, but the top 10% of people have half the nation's income. Obama said the average CEO now makes 273 times the income of the average worker.

Stagnant incomes for the middle class hurt the ability of Americans to move to better jobs, Obama said. It also breaks down social cohesion as more Americans come to think that the system is rigged against them."

The combined trends of increased inequality and decreasing mobility pose a fundamental threat to the American Dream, our way of life, and what we stand for around the globe," Obama said.

The 49-minute speech gave the president the opportunity to mount a defense of government activism, ranging from Abraham Lincoln's championing of land grant colleges to the development of Social Security and Medicare.The modern income gap began growing dramatically in the late 1970s because of several factors, Obama said. Technology and globalization allowed employers to reduce manufacturing jobs, or move them offshore.

Politically, Obama cited "a trickle-down ideology" that reduced the power of unions, and led to tax cuts "for the wealthiest, while investments in things that make us all richer, like schools and infrastructure, were allowed to wither."

Obama also disputed the notion that income inequality and related problems affect mostly African Americans and Hispanics, saying these issues cut across socioeconomic lines. "The opportunity gap in America is now as much about class as it is about race," Obama said, "and that gap is growing."

Reducing inequality should help all Americans, Obama said. "We need to dispel the myth that the goals of growing the economy and reducing inequality are necessarily in conflict."

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