The wide gap between the richest and poorest Americans has not
often been the topic of choice for the Bush administration's two
previous Treasury secretaries.
So it was notable this week that Henry Paulson, the president's
latest Treasury head, chose to put that issue on his short list - as
one of the nation's four prominent, long-term economic challenges.
Mr. Paulson's head-on approach during one of his first public
appearances as secretary differs from his predecessors' strategies,
some analysts say.
The wealth gap is hardly new, but income inequality has been
growing in America over the past quarter century. Even as average
worker productivity has surged, average hourly earnings have
stagnated. Meanwhile, the nation's economic elites have prospered.
"Amid this country's strong economic expansion, many Americans
simply aren't feeling the benefits," Paulson said during his first
major speech as Treasury secretary, at Columbia University's
business school in New York on Monday. "Their increases in wages are
being eaten up by high energy prices and rising healthcare costs,
Paulson's comments were not merely a blunt acknowledgement of the
problem but also a call for solutions - a sign that the income
inequality may rise higher on the US policy agenda in the years
"There's nothing in this problem that suggests a quick fix," says
Douglas Holtz-Eakin, a former Chief Economist on President Bush's
Council of Economic Advisers, who is now at the Council on Foreign
Relations in Washington. "What is interesting is he chose to include
it in his first address, as a way to set the priorities that he sees
A major challenge for the Bush administration - and especially
its two previous Treasury chiefs - has been to win credit for the
economy's performance. Despite rising oil prices, the 9/11 attacks,
and weakness in the European and Japanese economies, the nation's
economic output has grown solidly in recent years.
America's gross domestic product is now $13.2 trillion as of this
summer, up from $10.4 trillion four years earlier. But a widespread
perception - one born out by other statistics - is that workers
aren't commensurately better off.
The other three issues Paulson highlighted as long-term
challenges were energy policy, maintaining global trade and
investment, and - his first priority - reforming entitlement
programs such as Medicare and Social Security.
Those are all longstanding administration goals. Focusing on the
income gap, in addition, may reflect several practical concerns. …