Hillary's 2016 platform committee.

Photographer Mark Wilson/Getty Images

It's Obama-Warren for the Democrats in 2016

Francis Wilkinson writes editorials on politics and U.S. domestic policy for Bloomberg View. He was executive editor of the Week. He was previously a national affairs writer for Rolling Stone, a communications consultant and a political media strategist.
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By the time Hillary Clinton announces her presidential campaign, President Barack Obama may have written large chunks of her platform, with tonight's State of the Union speech providing much of the scaffolding.

Obama sketched out a crucial social element in November when he announced his plan for a broad immigration amnesty enabling perhaps four million undocumented immigrants with roots in the U.S. to avoid deportation and apply for work permits.

Like most Obama proposals, public support for this one was sharply polarized along partisan lines. In a December Pew Research Center/USA Today survey, seven percent of Tea Party sympathizers approved of the president's action. But Hispanics approved of it by 81-to-15, which may have contributed to Obama's rising poll standing among Hispanics. And support grew as the age of the surveyed cohort declined. In other words, the younger, growing segment of the electorate was more favorable toward it than the older, declining part of the electorate.

Now comes Obama's tax plan. The White House previewed tonight's State of the Union speech with Obama's proposal to raise about $320 billion over 10 years to pay for middle-class tax cuts. He does so in part by increasing the top capital gains and dividend tax rate from 23.8 percent to 28 percent. To undermine Republican objections, the White House highlighted that the 28 percent rate was in place "under President Reagan." In addition, the president would significantly raise taxes on inherited wealth.

It's unclear how long members of Congress plan to allow tax policy to aid the steadily increasing concentration of U.S. wealth. Federal Reserve Chair Janet Yellen seems to be trying to jostle people out of complacency. "The past few decades of widening inequality can be summed up as significant income and wealth gains for those at the very top and stagnant living standards for the majority," she said in an October speech accompanied by what a Washington Post report called "a series of jaw-dropping charts."

Income Inequality

The jaw-dropping redistribution of income and wealth from the middle to the top, which has been going on for years, is deemed the terrain of Democratic Senator Elizabeth Warren of Massachusetts. No one has staked out the issue more cogently or succeeded in attracting elite and news media attention to it (and herself) more consistently.  

While alarm bells have been ringing in Warren's speeches, the rest of the fire company is conflicted about how, or even if, to respond. House Republican budgets in recent years have effectively supported greater concentration of wealth through tax cuts for the wealthy and spending cuts for the poor. (Impoverishing consumers in an economy powered by consumption makes no sense as a growth strategy. But if your premise is that the Democrats' "coalition of the ascendant" is in fact a coalition of "takers" eager to vote themselves ever larger helpings of tax revenue from the "makers," then building a political bulwark -- such as a Tea Party -- against the rapacious masses is a strategic necessity.)

Obama's plan -- dead on arrival as legislation but alive and well as a framing device for 2016 -- targets wealth more than income, aiming for the very top. According to the liberal Center on Budget and Policy Priorities, the top 1 percent of U.S. households owns about 42 percent of total wealth, an accumulation aided by a tax code that favors income from capital over income from labor.  

In analyzing Obama's new tax proposals, CBPP President Robert Greenstein wrote:

The Treasury estimates that 99 percent of the revenue raised by these reforms (raising the capital gains rate and taxing some unrealized gains at death) would be paid by the top 1 percent of tax filers. Indeed, more than 80 percent of the added revenue would come from the wealthiest 0.1 percent of Americans.

Obama appears eager to make inequality and the struggles of working- and middle-class Americans the central agenda for the 2016 campaign, forcing Republicans -- and perhaps a Democrat not named Warren -- to respond. The concentration of wealth and political power at the top is said to be Warren's passion. She may not be running for anything. But if Obama joins her in pressing the inequality case, the Democrats could end up with the equivalent of an Obama-Warren ticket just the same.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Francis Wilkinson at fwilkinson1@bloomberg.net

To contact the editor on this story:
Zara Kessler at zkessler@bloomberg.net