The Fate of the Union: Obama’s legacy and the US ‘cost of living’ crisis

Joe Wright, 29 January 2014

The common complaint of politics is that there is no longer any difference between the choices of party realistically on offer. I have never really thought much of that opinion, even while Labour was New and Cameron was a moderniser. The dividing line on inequality, for example, was always there. One believed something could be done directly, the other did not. One believed in subsidising wages, the other did not.

In America, inequality has all of a sudden become the focus for the next year in US politics. In his State of the Union speech to congress, President Obama recalled the traditional dividing line between left and right. He spoke of what Milibandites might call ‘the US cost of Living crisis’, claiming ‘the cold hard fact is that even in the midst of recovery too many Americans are working more than ever just to get by, let alone to get ahead, and too many still aren’t working at all. Our job is to reverse these trends.’ He now wants to ‘build new ladders of opportunity into the middle class.’

Of course, with a global recession, it is inevitable that inequality will play a huge part in elections in developed countries. Huge gulfs in income are only tolerable as along as everyone’s wages are keeping pace with costs – there is no problem with rich people getting richer as long as others are doing fine. As the Guardian has shown this morning with recent polling, it is becoming more of an issue for Americans.

But in Obama’s case, now in his final term of office, this is a matter of legacy, his last chance. Thwarted at most junctures by congress to complete any of his pledges in last year’s State of the Union, Obama promised ‘Wherever and whenever I can take steps without legislation to expand opportunity for more American families, that’s what I’m going to do.’ The gloves are off.

It was, however, odd to hear the word ‘class’ deployed in an American speech about wealth distribution. In the past, US political speeches about income distribution have always been about ‘opportunity’, the implication being ‘America is a revolving door of riches rather than a permanent club of wealth.’ Obama wants to change the nature of that debate.

In the UK, meanwhile, the debate has taken a slightly less traditional turn. The cost of living crisis is not really a debate about equality, or even the opportunity to move up a class (as Obama put it). It’s entirely about affordability, about having basic necessities. Even Labour’s announcement of an intended return to a top-rate tax of 50p was pitched as only about paying down the deficit in a fair way. The implication being that it would be scrapped when (or if) the UK returns to a budget surplus. The debate in the UK now is simply that there should be a basic standard of living beneath which no one should fall. The Conservatives’ are happy to get on board with that idea to an extent – as they’ve shown with support for a raise in the minimum wage.