A top economic adviser to New Jersey Gov. Chris Christie challenged President Obama's assertion that inequality is the "defining challenge of our time" in an op-ed published in the Wall Street Journal on Monday, writing that "like so many of his other pronouncements, the assumptions behind his defining challenge are misleading."
Robert Grady, a managing director at the private equity fund Cheyenne Capital Fund and the chairman of Christie's Council of Economic Advisers, also sketched out an alternative economic agenda to the one Obama mentioned in his Dec. 4 speech on the economy and inequality at an event in Washington hosted by the Center for American Progress. Christie, who won a second term in a landslide election this fall, is widely considered a leading potential candidate for the Republican presidential nomination in 2016.
In his Dec. 4 speech, Obama warned that "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," noting that "the income of the typical family has increased by less than 8 percent" since 1979.
Obama also promised that "over the course of the next year and for the rest of my presidency, that’s where you should expect my administration to focus all our efforts," and listed a number of agenda items for boosting economic growth that would boost all income levels.
Grady, however, criticized Obama for using inequality statistics that "ignore America's highly progressive income tax system and the panoply of benefits and transfer payments."
Grady noted that Congressional Budget Office statistics that take into account the system of taxation and benefits suggest that from 1979 to 2007 (the pre-recession peak) the middle two-thirds of American households by income saw income growth of just under 40 percent.
When economic growth is high, all income groups prosper, Grady suggested. He wrote: "The point is this: If the goal is to deliver higher incomes and a better standard of living for the majority of Americans, then generating economic growth — not income inequality or the redistribution of wealth — is the defining challenge of our time."
Grady also dismissed Obama's calls for more infrastructure spending and claimed that Obama's record on debt issues was a major impediment to growth, writing that "investors at home and abroad can readily see that his steadfast refusal to reform the country's entitlement programs threatens spending on physical infrastructure, education, university research and other items that will contribute to the future productivity of the United States."
Grady concludes by stating that broadly shared prosperity is a result of growth, not distribution.
In his Dec. 4 speech and on other instances, however, Obama has called not for large-scale redistribution but for relatively modest efforts to directly address inequality.
In his speech, for example, Obama mentioned only changing collective bargaining rules, raising the minimum wage, and addressing workplace discrimination in the context of "empowering workers."
Top Obama economic adviser Jason Furman suggested last week that the White House would not seek further increases in the marginal tax rate for higher income earners, following this year's raises that came as part of the resolution of the "fiscal cliff," but instead would seek to cut tax credits, deductions or exclusions that benefited the wealthy.
Otherwise, the policy goals in Obama's speech mostly concerned corporate tax reform, reducing deficits, increasing trade, reforming education, and other changes he said would reduce inequality by increasing economy growth.
The country “can’t tackle inequality if the economic pie is shrinking or stagnant,” the president said.