Krugman on whether Obama will keep talking about inequality:
All indications are that President Obama will make inequality the central theme of his State of the Union address. Assuming he does, he will face two different kinds of sniping. One will come from the usual suspects on the right, shrieking “class warfare”. The other will come from a variety of people, some of them well-intentioned, arguing that while sure, inequality is an issue, the crucial thing now is to get the economy growing and create more jobs; these people will argue that populism is a diversion from the main issue.
Here’s why they’re wrong.
First of all, even on the straight economics inequality and job creation aren’t completely separable issues. There’s a decent though not ironclad case that rising inequality helped set the stage for economic crisis, and may be holding back recovery; there’s an even stronger case that weak employment is depressing wages and increasing inequality. So Obama can and one hopes will treat inequality-and-jobs as a single theme, and do so with a clear intellectual conscience.
Beyond that, there’s the political economy.
It has been painfully obvious, to anyone willing to see (a group that unfortunately doesn’t include a large part of the press corps) that deficit obsession hasn’t really been about deficits — it has been about using deficits as a club with which to smash to welfare state, and hence increase inequality. Even the supposedly nonpartisan players have this remarkable habit of including “reducing marginal tax rates” as a key goal of deficit reduction strategies, which is a dead giveaway to what it’s really about.
Conversely, talking about the need to help struggling families is also a way to shift the focus away from deficit obsession, and pave the way at least for a relaxation of austerity, if not actual stimulus.
And I think we also have to face up to an awkward political reality: moderate populism has a broad popular constituency, Keynesian macroeconomics doesn’t.
On the first point, recent Gallup polling shows that most Americans are class warriors, at least in a mild sense:
Go read the rest!