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Obama's inequality push vs. 'Big government drives inequality' argument

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Against a background of President Obama's recent vow to govern for change in economic mobility or inequality, a Wall Street Journal analysis by Republican economist David Malpass was published Jan. 15, 2014. Malpass concluded that big government was no fix for inequality because "Big government drives inequality."

Malpass was attempting to point liberals and conservatives away from what he considers a flawed argument, that "big government expansions" are needed to mitigate poverty. In his opinion, big government, no matter how well intended, often thwarts mobility, profits primarily the financial industry and harms those with modest incomes.

Pointing to the Affordable Care Act (ACA) as a perfect example of a "big government" solution to alleviate inequality which has gone awry, Malpass wrote: "It piles on opaque regulations, complex tax rules and countless independent agencies, producing a system that works against small businesses and the middle class. The Affordable Care Act takes pains to exempt Congress, government, corporations and unions, but leaves the rest severely exposed, adding to inequality."

It appears his analysis was spurred, in part, by the recent congressional budget deal which Malpass suggests is more about cronyism than about lifting Americans economically. Of that deal, Malpass suggested once the "nearly $1.1 trillion in discretionary spending for 2014' was divvied up by "Washington's elite legislators and lobbyists," the spending for lobbying as well as debt underwriting costs would mostly enrich the rich. Ultimately, he posited that the burden of the extra debt would be on the middle class.

With the balance of power at stake in the next election cycle, it appears that both parties may stress job creation as one of their strongest themes. There should be plenty of contrast notable about the way in which each party hopes to solve the problem of dismal employment rates by calling for a government solution.

Even if Malpass is correct in each point he makes, neither Republicans nor Democrats can answer three questions:

  1. Which government programs should be kept and which should be obliterated?
  2. How does one effectively dismantle government programs that don't work?
  3. Who has the answers to real job creation, whether it be with more or less government?
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