WASHINGTON -- Unless Democrats and Republicans can agree to raise taxes on the earnings of hedge-fund and private-equity managers, there is little chance the nation can make a meaningful dent in poverty, President Barack Obama said Tuesday.
Obama, whose long-standing proposal to raise taxes on what is known as carried interest has gained little traction in Congress, said fairness demands that the nation's wealthiest pitch in as more and more Americans are falling behind.
"If I were able to close that loophole, I'd be able to invest in early-childhood education," Obama said Tuesday. "If we can't ask from society's lottery winners to make that modest investment, then really this conversation is for show."
The president has often said the wealthiest Americans must make sacrifices to better life for poorer people. In addition to urging higher taxes for investment managers, he questioned whether the pay of some corporate chief executives is justified.
"A previous CEO of a company might have made 50 times the average wage of a worker," Obama said. "They might now make 1,000 times or 2,000 times, and that's accepted practice inside the corporate boardroom. That's not because they're bad people. That's because they've been freed from a certain set of social constraints."
Obama has said he hopes the 2016 campaign to succeed him as president encourages discussion and action on income inequality, which has grown in the U.S. during his presidency, and on dealing with conflicts tied to race, two issues he said were related but distinct.
"It is a mistake for us to suggest that somehow every effort we make has failed and we are powerless to address poverty," Obama said.
Obama made his remarks at an anti-poverty event at Georgetown University in Washington, D.C., where he appeared with Harvard University public policy professor Robert Putnam and Arthur Brooks, the president of the nonprofit American Enterprise Institute.
U.S. history suggests optimism that a newfound focus on haves and have-nots can lead to less economic inequality, Putnam said.
"This is the kind of problem Americans have faced before and have solved," he said, citing the Gilded Age at the end of the 1800s. "There was a great gap between rich and poor, and we were ignoring a lot of kids."
While concern about income inequality largely has been associated with Democrats, some Republicans are raising the issue as well, including former Florida Gov. Jeb Bush and U.S. Sen. Rand Paul of Kentucky.
Ron Haskins, a former Republican congressional aide who was instrumental in the 1996 overhaul of the federal welfare program, said years of enmity and mistrust between Obama and the Republican-led Congress probably precludes any major anti-poverty initiatives before the 2016 elections.
But he said he is more optimistic about the next administration because both Republicans and Democrats running to succeed Obama have made poverty a central theme of the campaign.
"There's way more discussion already -- especially among Republicans," he said.
On the Democratic side, upstart candidate Bernie Sanders, a Vermont senator, is challenging former Secretary of State Hillary Rodham Clinton to focus more on poverty, as is Massachusetts Sen. Elizabeth Warren, who commands a following among the party's liberal wing.
Warren joined with New York Mayor Bill de Blasio and economist Joseph Stiglitz, who popularized the term "the 1 percent," at a separate event in Washington on Tuesday.
Stiglitz said Obama doesn't understand the wealth gap. Stiglitz released a report calling for changes to U.S. rules to reduce income disparities.
"I don't think he understands what's happened in the last third of a century in terms of the growth of inequality," Stiglitz said.
Information for this article was contributed by Heidi Przybyla, Richard Rubin, Toluse Olorunnipa, Alexandre Tanzi and Henry Goldman of Bloomberg News.
A Section on 05/13/2015