We hear a great deal from luminaries who delight in (or are stressed out by) the “liberated” Obama, who is said to have found his mojo, and begun to take on inequality. A closer look reveals that, even if all the policies and changes in the tax code the President called for in the just-released budget were implemented completely, they would barely dent inequality. Moreover, the gap between his overblown rhetoric and his weak proposals is likely to add to the cynicism of the American people.   

Ben Wikler of liberal advocacy group MoveOn.org gushes that “on issue after issue, this is the President Obama we fought for,” celebrating the “progressive spring in the president's step” and asserting that Obama has embraced the anti-inequality agenda of Senator Elizabeth Warren. Anna Galland, also of MoveOn.org, praises the State of the Union address as “a remarkable reminder of why so many progressives worked so hard to elect President Obama.” The New York Times believes that Obama found a simple remedy to inequality: “Skim from the rich and redistribute to those below, while deploying other weapons to raise wages and increase jobs.”

On the other hand, Senator Orrin Hatch slams Obama for practicing “class warfare” and “redistribution” at the expense of “job-creating small businesses.” Congressman Paul Ryan accuses Obama of “envy economics” and “top-down redistribution.”

Actually, the measures Obama proposes do not amount to much. David Wessel, a highly regarded economic analyst at the Brookings Institution, put it succinctly when he told NPR that “even if Congress accepted all [Obama’s] tax proposals— which it won’t—the Treasury says they would touch only about 30 percent of taxpayers. Most taxpayers would see neither a tax increase nor a tax cut.” The amounts involved in many of the proposals are small. These include a paltry $500 tax credit for dual-earner couples and an expanded tax credit of up to $3,000 per child for child care (for families who earn less than $120,000). The budget includes many other good, progressive proposals, but most sound consequential only if one confuses the ten-year figures with annual ones. Thus, the call to provide affordable child care to 1.1 million children under age four seems ambitious, until one notes that this is not to be achieved until 2025. At the same time, the additional $900m to be spent on Pell Grants in 2016 is scarcely adequate to keep pace with inflation. It doesn’t take a degree in math to figure out that if you make, say, $40,000 a year, rent an apartment, and have to service a debt—and the other guy makes $300,000 a year, owns his home, and has a portfolio of stocks—even if you get $3,000 or so in tax benefits, this will do precious little to narrow the inequality gap. You may say, “Well, this is about all you can do in our kind of society.” Fair enough. But then do not run around telling people, as the President does, that he is out to help “folks afford childcare, college, health care, a home, retirement—and my budget will address each of these issues.”

Currently income from investments is taxed at much lower rates than income from labor. Obama might have taken a neutral stance, calling for both kinds of incomes to be treated in the same way. Instead, he is calling for income from capital to continue to be treated much more favorably than that from labor. He favors increasing the rate to 28 percent, a change that merely returns it to the level of the conservative Reagan era.

There is one measure Obama proffers that at first blush seems both more significant and truly liberal. He proposes to return estate taxes to their 2009 levels, reducing the size of estates exempted from taxes from $5,430,000 to $3,500,000 (while increasing the top tax rate from 40% to 45%.) This is important because inequality of assets is much more consequential than that of income. Differences in assets are often much larger than differences in income because they are accumulative (while most income is spent), and above all because they are passed from one generation to another. This means that those with affluent parents get a big head start over those with poor parents, not because they work harder or save more, but because their parents did.

It turns out, however, that all Obama is calling for here is to reverse his earlier steps that increased inequality! Bush had increased the size of the estates exempted from paying the tax from $1,000,000 in 2001 to $3,500,000 in 2009. This tax cut was scheduled to expire in 2010, restoring estate taxes to their previous levels. However, Congress (including many Democrats) instead passed—and Obama signed into law in 2010—a bill that not only extended but further increased the estate tax exemption to $5 million for individuals (indexed to inflation) and $10m for couples. This is what Obama now seeks to reverse.

Many of the proposals included in the President’s budget are good ones, even though most are rather modest. However, they do not bend the rising curve of inequality, and claiming that they do will merely add to the widespread dismay the majority of Americans feel towards Washington. If this is the inner, liberated Obama, he is a nice guy to have a beer with, but do not expect him to buy you dinner.