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OP-ED CONTRIBUTOR
Grand Old Parity
By SHEILA C. BAIR
Published: February 26, 2013


For Op-Ed, follow @nytopinion and to hear from the editorial page editor, Andrew Rosenthal, follow @andyrNYT.
LAST month Emmanuel Saez, a celebrated economist at the University of California, Berkeley, issued another depressing report on income inequality. Among other things, Mr. Saez examined how real family incomes changed in the United States from 2009 to 2011, the first two years of the recovery. The richest 1 percent of Americans, he found, saw their incomes grow, on average, by more than 11 percent. As for the other 99 percent? You guessed it: incomes shrank by nearly half a percent.

The phenomenon is hardly new. The yawning gap between rich and poor has been growing since the 1970s and reached a 90-year peak in 2007, just before the financial crisis. The Great Recession narrowed the gap a bit, but now, once again, the richest Americans are vacuuming up what wealth is out there, a trend that Mr. Saez expects to continue.

I am a capitalist and a lifelong Republican. I believe that, in a meritocracy, some level of income inequality is both inevitable and desirable, as encouragement to those who contribute most to our economic prosperity. But I fear that government actions, not merit, have fueled these extremes in income distribution through taxpayer bailouts, central-bank-engineered financial asset bubbles and unjustified tax breaks that favor the rich.

This is not a situation that any freethinking Republican should accept. Skewing income toward the upper, upper class hurts our economy because the rich tend to sit on their money — unlike lower- and middle-income people, who spend a large share of their paychecks, and hence stimulate economic activity.

But more fundamentally, it cuts against everything our country and my party stand for. Government’s role should not be to rig the game in favor of “the haves” but to make sure “the have-nots” are given a fair shot.

President Obama, who has rightly made income inequality a signature issue, cannot be pleased that the über-rich have gained under the policies pursued by his administration, while the bottom 99 percent have not. Unfortunately, his economic team, populated by acolytes of the former Treasury secretary Robert E. Rubin, has relied on the same “growth” policies that got us into trouble precrisis: generous treatment of the financial sector and easy money from the Federal Reserve. These strategies have done little to encourage sustainable economic growth, but they have worked wonders to increase Wall Street profits and inflate the value of stocks and bonds — which are disproportionately owned by the rich...

Some may say I am tilting at the windmills of Tea Party orthodoxy in making these suggestions, but I believe that most Republican politicians would be sympathetic to them, if only they could overcome their fear of primary challenges and the loss of Wall Street money. Having worked for Senate Republicans in the 1980s, I remember a time when Republicans stood up to special interests and purged the tax code of preferences for investment income and other special breaks.

They managed to survive re-election by showing leadership, taking principled positions and defending them vigorously. It’s time for the Grand Old Party to return to those roots.

kalm wrote:This op-ed piece by Sheil Bair was mentioned on Morning Joe, and it flat out fucking nails it. Bair is the former Chair of the Commodities Futures Trading Commission under Clinton, and the head of the FDIC during the heart of the financial crisis. There's arguably no one who had a better view of what went down, the sham that continues to be our financial system, and how the Republican Party has lost its way.

I don't see how any conk worth his salt can argue with this, but I'm sure a few of you will.

(Warning, if you think the cause of the financial crisis was government lending money to poor people or if you have ever whined about class warfare, you probably won't understand this)

OP-ED CONTRIBUTOR
Grand Old Parity
By SHEILA C. BAIR
Published: February 26, 2013


For Op-Ed, follow @nytopinion and to hear from the editorial page editor, Andrew Rosenthal, follow @andyrNYT.
LAST month Emmanuel Saez, a celebrated economist at the University of California, Berkeley, issued another depressing report on income inequality. Among other things, Mr. Saez examined how real family incomes changed in the United States from 2009 to 2011, the first two years of the recovery. The richest 1 percent of Americans, he found, saw their incomes grow, on average, by more than 11 percent. As for the other 99 percent? You guessed it: incomes shrank by nearly half a percent.

The phenomenon is hardly new. The yawning gap between rich and poor has been growing since the 1970s and reached a 90-year peak in 2007, just before the financial crisis. The Great Recession narrowed the gap a bit, but now, once again, the richest Americans are vacuuming up what wealth is out there, a trend that Mr. Saez expects to continue.

I am a capitalist and a lifelong Republican. I believe that, in a meritocracy, some level of income inequality is both inevitable and desirable, as encouragement to those who contribute most to our economic prosperity. But I fear that government actions, not merit, have fueled these extremes in income distribution through taxpayer bailouts, central-bank-engineered financial asset bubbles and unjustified tax breaks that favor the rich.

This is not a situation that any freethinking Republican should accept. Skewing income toward the upper, upper class hurts our economy because the rich tend to sit on their money — unlike lower- and middle-income people, who spend a large share of their paychecks, and hence stimulate economic activity.

But more fundamentally, it cuts against everything our country and my party stand for. Government’s role should not be to rig the game in favor of “the haves” but to make sure “the have-nots” are given a fair shot.

President Obama, who has rightly made income inequality a signature issue, cannot be pleased that the über-rich have gained under the policies pursued by his administration, while the bottom 99 percent have not. Unfortunately, his economic team, populated by acolytes of the former Treasury secretary Robert E. Rubin, has relied on the same “growth” policies that got us into trouble precrisis: generous treatment of the financial sector and easy money from the Federal Reserve. These strategies have done little to encourage sustainable economic growth, but they have worked wonders to increase Wall Street profits and inflate the value of stocks and bonds — which are disproportionately owned by the rich...

Some may say I am tilting at the windmills of Tea Party orthodoxy in making these suggestions, but I believe that most Republican politicians would be sympathetic to them, if only they could overcome their fear of primary challenges and the loss of Wall Street money. Having worked for Senate Republicans in the 1980s, I remember a time when Republicans stood up to special interests and purged the tax code of preferences for investment income and other special breaks.

They managed to survive re-election by showing leadership, taking principled positions and defending them vigorously. It’s time for the Grand Old Party to return to those roots.

http://www.nytimes.com/2013/02/27/opini ... .html?_r=0" onclick="window.open(this.href);return false;

Baldy wrote:

kalm wrote:This op-ed piece by Sheil Bair was mentioned on Morning Joe, and it flat out **** nails it. Bair is the former Chair of the Commodities Futures Trading Commission under Clinton, and the head of the FDIC during the heart of the financial crisis. There's arguably no one who had a better view of what went down, the sham that continues to be our financial system, and how the Republican Party has lost its way.

I don't see how any conk worth his salt can argue with this, but I'm sure a few of you will.

(Warning, if you think the cause of the financial crisis was government lending money to poor people or if you have ever whined about class warfare, you probably won't understand this)



http://www.nytimes.com/2013/02/27/opini ... .html?_r=0" onclick="window.open(this.href);return false;

Say wut???

She's anti-TARP, anti-Bailout, anti-TBTF, anti-HARP, and anti-Geithner. All Conk read meat issues. What's not to like?

Pwns wrote:Exactly what I was thinking. The people who are gnashing their teeth over income inequality don't have any real ideas about how to fix it. Raising the minimum wage? Gimme a break. And as hideous as our income inequality supposedly is, the amount of the budget deficit that the tax increases on the rich will close is almost negligible even if it isn't overly optimistic.

IMO, we need to get the wealthy investing in America so that the wealth will trickle down instead of trying to artificially engineer economic outcomes. That means creating jobs in America and ensuring people have the skills that are needed. All the money the federal government wastes with its ridiculous "every-kid-can-grow-up-to-be-an-orthopedic-surgeon-if-only-we-are-willing-to-work-hard-for-them" no child left behind philosophy could be used to subsidize technical school educations which would be a heck of lot more valuable than $40,000 four-year degrees.

Pwns wrote:Exactly what I was thinking. The people who are gnashing their teeth over income inequality don't have any real ideas about how to fix it. Raising the minimum wage? Gimme a break. And as hideous as our income inequality supposedly is, the amount of the budget deficit that the tax increases on the rich will close is almost negligible even if it isn't overly optimistic.

IMO, we need to get the wealthy investing in America so that the wealth will trickle down instead of trying to artificially engineer economic outcomes. That means creating jobs in America and ensuring people have the skills that are needed. All the money the federal government wastes with its ridiculous "every-kid-can-grow-up-to-be-an-orthopedic-surgeon-if-only-we-are-willing-to-work-hard-for-them" no child left behind philosophy could be used to subsidize technical school educations which would be a heck of lot more valuable than $40,000 four-year degrees.

kalm wrote:

Pwns wrote:Exactly what I was thinking. The people who are gnashing their teeth over income inequality don't have any real ideas about how to fix it. Raising the minimum wage? Gimme a break. And as hideous as our income inequality supposedly is, the amount of the budget deficit that the tax increases on the rich will close is almost negligible even if it isn't overly optimistic.

IMO, we need to get the wealthy investing in America so that the wealth will trickle down instead of trying to artificially engineer economic outcomes. That means creating jobs in America and ensuring people have the skills that are needed. All the money the federal government wastes with its ridiculous "every-kid-can-grow-up-to-be-an-orthopedic-surgeon-if-only-we-are-willing-to-work-hard-for-them" no child left behind philosophy could be used to subsidize technical school educations which would be a heck of lot more valuable than $40,000 four-year degrees.

But then what would the for-profit colleges and folks making money off of education loans do?

Baldy wrote:

kalm wrote:
But then what would the for-profit colleges and folks making money off of education loans do?

Why single out for-profit colleges without even mentioning the exponential increase in tuition at state run colleges?

Ivytalk wrote:

Baldy wrote: Say wut???

She's anti-TARP, anti-Bailout, anti-TBTF, anti-HARP, and anti-Geithner. All Conk read meat issues. What's not to like?

ASUG8 wrote:Flat tax. It would be hard for a person making $20K to fault a person making $200K if they're paying the same percentage without all the loopholes and spurious deductions.

It feels to me like this administration is really trying to unsuccessfully equalize pay and put everyone on the same level, which flies in the face of a meritocracy. The more some wealthy folks are taxed, the more creative they and some of their taxation attorneys and accountants will continue to self-interpret the myriad IRS regulations that are rarely black and white, but shades of grey.

US citizens have a responsibility to care for those in our society that cannot take care of themselves. A flat tax or drastic change to our current taxation system would eliminate much of the IRS bureaucracy while likely providing the government with a more reliable revenue stream. I don't begrudge those who have accumulated wealth either by inheritance or concerted effort on their part, but we really shouldn't be trying to make everyone who has that luck guilty of committing some wrongdoing simply for having more than others. Fix the system so that it benefits and/or penalizes everyone equally, including (especially) companies who are the biggest offenders.

kalm wrote:

Baldy wrote: Why single out for-profit colleges without even mentioning the exponential increase in tuition at state run colleges?

True.

GannonFan wrote:

ASUG8 wrote:Flat tax. It would be hard for a person making $20K to fault a person making $200K if they're paying the same percentage without all the loopholes and spurious deductions.

It feels to me like this administration is really trying to unsuccessfully equalize pay and put everyone on the same level, which flies in the face of a meritocracy. The more some wealthy folks are taxed, the more creative they and some of their taxation attorneys and accountants will continue to self-interpret the myriad IRS regulations that are rarely black and white, but shades of grey.

US citizens have a responsibility to care for those in our society that cannot take care of themselves. A flat tax or drastic change to our current taxation system would eliminate much of the IRS bureaucracy while likely providing the government with a more reliable revenue stream. I don't begrudge those who have accumulated wealth either by inheritance or concerted effort on their part, but we really shouldn't be trying to make everyone who has that luck guilty of committing some wrongdoing simply for having more than others. Fix the system so that it benefits and/or penalizes everyone equally, including (especially) companies who are the biggest offenders.

The flat tax is never going to happen and, IMO, that's a good thing. A progressive tax rate is here to stay, and there's nothing fundamentally wrong about having rich people pay more in percentage of tax than the less wealthy. And your comment about the guy making 20k being fine with paying the same percentage as the guy making 200k is just silly - you can't honestly believe there would be many people making 20k who would be fine with that situation.

If the attraction of the flat tax is simply the cleaning up and streamlining the tax code, you can do the same thing with a pretty basic progressive tax system. There's no need to go so drastic as a flat tax just for the purposes of making things simpler. Heck, just calling any source of income, realized or not, as taxable and having no deductions of any kind and then having a fixed number of tax brackets makes things pretty simple and you still have the rich person pay more in percentage than the less rich person. That's pretty simple without having to go a step further and go to the flat tax.

ASUG8 wrote:Flat tax. It would be hard for a person making $20K to fault a person making $200K if they're paying the same percentage without all the loopholes and spurious deductions.

It feels to me like this administration is really trying to unsuccessfully equalize pay and put everyone on the same level, which flies in the face of a meritocracy. The more some wealthy folks are taxed, the more creative they and some of their taxation attorneys and accountants will continue to self-interpret the myriad IRS regulations that are rarely black and white, but shades of grey.

US citizens have a responsibility to care for those in our society that cannot take care of themselves. A flat tax or drastic change to our current taxation system would eliminate much of the IRS bureaucracy while likely providing the government with a more reliable revenue stream. I don't begrudge those who have accumulated wealth either by inheritance or concerted effort on their part, but we really shouldn't be trying to make everyone who has that luck guilty of committing some wrongdoing simply for having more than others. Fix the system so that it benefits and/or penalizes everyone equally, including (especially) companies who are the biggest offenders.

GannonFan wrote:
The flat tax is never going to happen and, IMO, that's a good thing. A progressive tax rate is here to stay, and there's nothing fundamentally wrong about having rich people pay more in percentage of tax than the less wealthy. And your comment about the guy making 20k being fine with paying the same percentage as the guy making 200k is just silly - you can't honestly believe there would be many people making 20k who would be fine with that situation.

If the attraction of the flat tax is simply the cleaning up and streamlining the tax code, you can do the same thing with a pretty basic progressive tax system. There's no need to go so drastic as a flat tax just for the purposes of making things simpler. Heck, just calling any source of income, realized or not, as taxable and having no deductions of any kind and then having a fixed number of tax brackets makes things pretty simple and you still have the rich person pay more in percentage than the less rich person. That's pretty simple without having to go a step further and go to the flat tax.

houndawg wrote:

ASUG8 wrote:Flat tax. It would be hard for a person making $20K to fault a person making $200K if they're paying the same percentage without all the loopholes and spurious deductions.

It feels to me like this administration is really trying to unsuccessfully equalize pay and put everyone on the same level, which flies in the face of a meritocracy. The more some wealthy folks are taxed, the more creative they and some of their taxation attorneys and accountants will continue to self-interpret the myriad IRS regulations that are rarely black and white, but shades of grey.

US citizens have a responsibility to care for those in our society that cannot take care of themselves. A flat tax or drastic change to our current taxation system would eliminate much of the IRS bureaucracy while likely providing the government with a more reliable revenue stream. I don't begrudge those who have accumulated wealth either by inheritance or concerted effort on their part, but we really shouldn't be trying to make everyone who has that luck guilty of committing some wrongdoing simply for having more than others. Fix the system so that it benefits and/or penalizes everyone equally, including (especially) companies who are the biggest offenders.

If the flat tax is on all income, including investment income.

kalm wrote:

GannonFan wrote:
The flat tax is never going to happen and, IMO, that's a good thing. A progressive tax rate is here to stay, and there's nothing fundamentally wrong about having rich people pay more in percentage of tax than the less wealthy. And your comment about the guy making 20k being fine with paying the same percentage as the guy making 200k is just silly - you can't honestly believe there would be many people making 20k who would be fine with that situation.

If the attraction of the flat tax is simply the cleaning up and streamlining the tax code, you can do the same thing with a pretty basic progressive tax system. There's no need to go so drastic as a flat tax just for the purposes of making things simpler. Heck, just calling any source of income, realized or not, as taxable and having no deductions of any kind and then having a fixed number of tax brackets makes things pretty simple and you still have the rich person pay more in percentage than the less rich person. That's pretty simple without having to go a step further and go to the flat tax.

Totally agree. Gotta find some balance while streamlining.

Also,iIf you had a true meritocracy, the inheritance tax would be 100% and everyone would start from scratch.

ASUG8 wrote:

GannonFan wrote:
The flat tax is never going to happen and, IMO, that's a good thing. A progressive tax rate is here to stay, and there's nothing fundamentally wrong about having rich people pay more in percentage of tax than the less wealthy. And your comment about the guy making 20k being fine with paying the same percentage as the guy making 200k is just silly - you can't honestly believe there would be many people making 20k who would be fine with that situation.

If the attraction of the flat tax is simply the cleaning up and streamlining the tax code, you can do the same thing with a pretty basic progressive tax system. There's no need to go so drastic as a flat tax just for the purposes of making things simpler. Heck, just calling any source of income, realized or not, as taxable and having no deductions of any kind and then having a fixed number of tax brackets makes things pretty simple and you still have the rich person pay more in percentage than the less rich person. That's pretty simple without having to go a step further and go to the flat tax.

Flat tax is likely an extreme, but the abomination of tax code in the US needs a serious overhaul. You throw flat tax out there as an option, get a little steam behind it, and you end up with improvement to what we have now even if it's still some form of progressive tax. A flat tax is hardly a silly proposition given that it would require wealthy individuals and corporations to abandon the deductions - legislation right now is largely targeting individuals, not revising corporate tax code where billions of dollars are going unreported.

GannonFan wrote:

kalm wrote:
Totally agree. Gotta find some balance while streamlining.

Also,iIf you had a true meritocracy, the inheritance tax would be 100% and everyone would start from scratch.

Even further in pursuit of true meritocracy we could have all children removed from their parents at birth and all raised in the same, state run, orphanages.

ASUG8 wrote:

GannonFan wrote:
Even further in pursuit of true meritocracy we could have all children removed from their parents at birth and all raised in the same, state run, orphanages.

So you're a socialist?

Why penalize people for having a gift and capitalizing on it? Some people reach for the brass ring and reap the reward, others miss it or never try in the first place. You, like many of us on here, probably had something of a head start vs. your classmates that allowed you to go to college and pursue a career that pays a bit more. My wife didn't have crap but has busted her ass over the years to reach a pretty high place in her company.

Regarding a true meritocracy, why should the government be entitled to a windfall every time a person who acquired wealth in their lifetime dies? They already get an inordinate amount through estate taxes, but that's a different topic.

GannonFan wrote:

ASUG8 wrote:
So you're a socialist?

Why penalize people for having a gift and capitalizing on it? Some people reach for the brass ring and reap the reward, others miss it or never try in the first place. You, like many of us on here, probably had something of a head start vs. your classmates that allowed you to go to college and pursue a career that pays a bit more. My wife didn't have crap but has busted her ass over the years to reach a pretty high place in her company.

Regarding a true meritocracy, why should the government be entitled to a windfall every time a person who acquired wealth in their lifetime dies? They already get an inordinate amount through estate taxes, but that's a different topic.

Shirley, you can't think I'm serious about the orphanages?

GannonFan wrote:

kalm wrote:Also,iIf you had a true meritocracy, the inheritance tax would be 100% and everyone would start from scratch.

Even further in pursuit of true meritocracy we could have all children removed from their parents at birth and all raised in the same, state run, orphanages.