• With: Dan Henninger, Kim Strassel, James Freeman, Jason Riley

    GIGOT: That doesn't work very well.

    FREEMAN: Another option is there are ways that Congress can effectively force votes, referenda on specific federal regulations. Again, you need a Senate to cooperate. But I think if you are someone who wants to set the constitutional limits again on the president, what you think about is at least forcing some of these votes, making those Democratic Senators, many of whom are up this fall, affirm whether or not they support the president's unilateral action.

    GIGOT: Dan, I also think this is part -- the politics isn't about the president reasserting his leadership. He had a terrible 2013. His base is demoralized. He wants to show them, look, I can still accomplish something. So look at me. I'm acting. I'm doing something. Even if he ends up exaggerating the amount of things he can get done.

    HENNINGER: There is always the little issue of what exactly it is he is doing. Substance at some level has to matter.

    And the problem with a lot of the Obama agenda, it's hard to see where any of the things he wants to do is going to produce more economic growth than we have had. Most of what the Environmental Protection Agency is doing, such as trying to suppress, if not shut down electrical utilities, has a downward effect on states out in the middle west who produce coal or use it in utilities. He went through this in his first term where you had Democratic Senators pushing back against the president's carbon control initiatives. If the economy continues to stay -- if employment stays high, there will be political pushback against what the president is doing.

    GIGOT: On that point, Kim, do you think -- I mean, we're seeing -- we had Ted Cruz write in our paper this week, "The Imperial Presidency of Barack Obama." Republicans seem willing to make this a big issue. But does this have traction politically this year? Is this something that is going to fire up Republicans and worry enough voters to make a difference?

    STRASSEL: Absolutely. That was the risk of this State of the Union address. Because, as you said, yes, he wants to reassure his own base that he has some juice. But this does not go over very well with Independents and obviously with Republicans. It's growing as a theme. He has energized that talking about it so much.

    One of the biggest problems that the president has is that when you look at the poll data looking at him, he lacks trust among the American people. This will not help.

    GIGOT: OK, thanks, Kim.

    Still ahead, fresh off his State of the Union speech, the president takes his inequality tour back on the road. But is economic mobility in America really on the decline? We'll check the numbers, next.


    OBAMA: Inequality has deepened. Upward mobility has stalled.




    OBAMA: A dangerous and growing inequality and lack of upward mobility that has jeopardized middle class America's basic bargain that if you work hard, you have a chance to get ahead. I believe this is the defining challenge of our time.


    GIGOT: That was President Obama in a speech late last year calling inequality and declining economic mobility America's greatest challenge.

    It's a theme he revisited in this week's State of the Union address, promising action on a host of issues he believes will level the playing field. But is economic inequality in America really on the rise?

    We are back with Dan Henninger, Kim Strassel and James Freeman. And Wall Street Journal Political Diary editor, Jason Riley, also joins the panel.

    So, Kim, the defining challenge of our time?

    STRASSEL: I don't think so. There is a reason politically that the president is doing this. It's a chance for him to roll out criticism of Republicans, claim that all the evils of the world, the fact they won't push his policy proposals, but it's also a chance, Paul, to divert attention away from his own failing economic policies.

    GIGOT: OK.

    So, James, you've been looking at the evidence here. Income inequality increasing? What about -- or not? And economic mobility, which, of course, I think is really, really what we care about, is that also declining?

    FREEMAN: Economic mobility is not declining. This is 180 degrees from what the president is saying and even what the Republicans are saying.

    Everyone in Washington now agrees that economic mobility is going away in America, and they are flat wrong. And the --

    GIGOT: All right, what's your evidence?

    FREEMAN: The evidence comes from Mr. Obama's own Treasury Department.

    Apparently, the memos aren't getting up to the secretary and then over to the White House. Because three economists at Treasury just published a study in "The National Tax Journal," and what it shows is tremendous economic mobility, the ability to start out in humble circumstances and to rise in America. It's roughly 70 percent of the population that begins in the lowest 20 percent of the income bracket, at birth, ends up in a higher bracket. This is just what you would hope for in an American system that allows people to rise on their talent and hard work.

    GIGOT: That was over about 20 years.

    FREEMAN: Right.

    GIGOT: It's a very long study, very detailed, IRS records. A lot of detail. Very, very comprehensive study.

    FREEMAN: Very thorough. And you are seeing people with the ability to rise. You are also seeing people with the ability to fall. There is a narrative that this 1 percent, the rich people that the president and others love to vilify, are locked in this permanent status above the rest of us. But the truth is they drop out of the 1 percent all the time, year- to-year. So you are seeing a very dynamic picture. And the American dream is alive and well.

    GIGOT: One of the fascinating things in that study, James, people are rich for a year.


    A lot of people just tend to be rich for a year. They are up there for 1 percent.


    GIGOT: They cash in a bonus, stocks they built up for a long, and then they fall out.


    RILEY: The left likes to study income brackets versus individuals who often move between brackets over the course of a lifetime. Study after study has shown -- A study put out a couple of years ago looked at a couple of thousand tax returns. It was pretty comprehensive. Found that in 1996, more than half the people who were in the 1 percent were no longer there 10 years later. And in the bottom 20 percent, more than half of them were no longer there 10 years later. So, not only is there mobility, it's working both ways, from the top and the bottom, which is what we want.