Opportunity to make policy shift

In his 1996 State of the Union address, President Bill Clinton declared, “The era of big government is over.” Neither his first nor last misstatement, as we know.

But surely we can now say the era of big State of the Union speeches is over. With every phrase in every potentially significant political address poll tested, road tested, focus grouped, pinned and Tweeted, when the big moment arrives, it’s already passed.

President Obama’s State of the Union speech last week posted the lowest ratings since 2000. It was unremarkable in the way these things generally are. Yet, there was a subtle shift in the rhetoric, reflecting responses the White House received on the road to delivery.

Obama emphasized opportunity more than inequality. In December, he said, “increasing inequality is most pronounced in our country, and it challenges the very essence of who we are as a people.” The words indicted our economic system as something requiring fundamental change. They were intended to justify even greater governmental intrusion in the economy.

By speech time, the words softened, as the president emphasized “ladders of opportunity.”

Part of the tone change is in keeping with the anodyne traditions of State of the Union addresses. They’re meant as much to reassure as to embolden, to find common ground as to exploit division. In his very long speech, Obama managed to both comfort and condemn.

The president still thinks the system is rigged to produce unequal outcomes. He favors a heavy federal thumb on the scales. The progressive policies endorsed in this speech have long been part of his agenda. Still, the pivot to opportunity acknowledges that most Americans don’t respond well to class warriors. That’s welcome.

Assuring that those at the bottom of the economic ladder have the opportunity to climb is the proper public policy focus. New research by a team of blue-ribbon economists led by Harvard’s Raj Chetty has reframed the debate. They find that upward mobility has remained relatively unchanged in recent decades. It’s not good enough. Too many people remain stuck. But contrary to the populist rhetoric, it has not worsened. As important, the researchers — hardly a conservative group — dismiss inequality as the problem.

“Much of the increase in inequality has come from the extreme upper tail (e.g., the top 1%) in recent decades, and top 1% income shares are not strongly associated with mobility…,” they write.

Critically, then, lawmakers must focus their attention on creating opportunities for the unemployed to become employed, for the employed to advance, and for employers to succeed, adding jobs in their communities. Achieving these ends begins by improving the business climate, creating conditions conducive to private sector economic growth.

As the president said, “The best measure of opportunity is access to a good job.”

The second adjective creates mischief.

In this season of low expectations and high partisanship, a number of bills have been introduced in Olympia that would destroy jobs that politicians don’t think are “good” enough. Legislation under consideration includes proposals to raise the nation’s highest minimum wage from $9.32 to $12 an hour, to require paid vacation and paid sick leave, and to increase labor costs by imposing an “employer responsibility penalty” on businesses with employees on state medical assistance programs. Passage of these measures will slow the already anemic pace of job creation and cost some people their jobs.

More positive steps are also under consideration. Gov. Inslee recommends extending a useful R&D credit otherwise scheduled to expire this year. Such a modest measure is commonplace in most states’ tax policies and should be made permanent here, home to one of the nation’s leading tech clusters. Additional changes in the state’s workers’ compensation system could reduce costs and promote better outcomes for injured workers.

Bipartisan agreement on transportation funding shouldn’t wait another year. Funding would create jobs. More important, it would begin work that has been too long delayed. Yes, reforms are necessary and always will be. But it makes sense to get to work now on fixing roads and bridges.

The presidential emphasis on opportunity represents a fine rhetorical shift. Lawmakers in Olympia have the opportunity in this short legislative session to make the corresponding policy shift.

Richard S. Davis is president of the Washington Research Council. His email address is rsdavis@simeonpartners.com