President Obama appeared on This Week for an interview.This follow up question stood out for me:
Full Transcript: President Obama Speaks Exclusively to George Stephanopoulos on ‘This Week’Really Mr. President? One of the reasons Americans wanted a change in 2008 was to reverse the growing economic inequality squeezing millions of Americans out of the Middle Class. Following the 2009 financial and then economic bubble burst Disaster Capitalists smelled blood. Smelled vulnerability. Smelled desperation and took full advantage, ruthlessly cutting wages and benefits in lockstep across most US industries, and increasing workloads on those who weren't laid off.
GEORGE STEPHANOPOULOS: 95% of the gains to the top 1%. That is so striking.
PRESIDENT BARACK OBAMA: It– it is. And the folks– at– in the middle and at the bottom haven’t seen– wage or– income growth, not just over the last three, four years, but over the last 15 years. And so everything that I’ve done has been designed to, number one, stabilize the economy, get it growing again, start producing jobs again, number two, trying to push against these trends that had been happening for decades now.
That’s why we made sure that we had a tax system that was a little bit fairer by asking people to– pay more at the top. That’s what the Affordable Care Act– health care reform is about, is making sure that folks who– have been left out in the cold when it comes to health care are able to get health care.
That’s why we strengthened the entire banking system so that, you know, “too big to fail” is far less likely to be in place– if, heaven forbid, there’s a crisis the next time. Because we’ve said, you know, “Banks, you’ve gotta double the amount of capital that you have so that you can absorb losses when you have ‘em, so taxpayers aren’t bailin’ you out. If you do– start goin’ under– you’ve gotta have a plan– a living will, we call it, so that we don’t have to come in and clean up after you. You’re gonna be on your own.”
GEORGE STEPHANOPOULOS: Okay, but you do all these things–
PRESIDENT BARACK OBAMA: Yeah.
GEORGE STEPHANOPOULOS: –and still, 95% of the gains go to the–
PRESIDENT BARACK OBAMA: Right.
GEORGE STEPHANOPOULOS: –top 1%. Do you look at that, four and a half years in, and say, “Maybe a president just can’t stop this accelerating inequality?”
PRESIDENT BARACK OBAMA: No, I think– I think the president can stop it. I– the problem is that– there– continues to be a major debate here in Washington. And that is: How do we respond to these underlying trends? If– if you look at– at– at the data– couple of things are– are– are creating these trends.
Number one, globalization. Right? Capital, companies, they can move businesses and– and jobs– anywhere they want. And so they’re lookin’ for the lowest wages. That squeezes workers here in the United States, even if corporations are profitable. Technology. If you go to– a lot of companies now, they’ve eliminated entire occupations because they’re now robotized. We don’t have travel agents. We don’t have bank tellers.
Mr President you told Speaker Boehner he wouldn't be getting anything in return for raising nominal income tax rates on high earners following your reelection, when in fact Boehner did get to keep preferential treatment for unearned income in the form of Capital Gains, and Dividends taxes. The kinds of income which the top 1%'s income is disproportionately derived from, while raising them back to late Clinton levels of 20% from 15%.
It was Bill Clinton who reintroduced those preferential tax rates for the wealthy in 1997, lowering the Capital Gains, and Dividends tax rates from 28% to 20% following Treasury Secretary Robert Rubin and Wall Street's self-serving advice.
So President Obama I have to ask why did you keep preferential tax rates for the top 1% instead of returning to a more equatable tax-structure with the leverage your freshly won election mandate gave you?
Ending Tax Shelters for Investment Income Is Key to Tax ReformThere is nothing new or radical about expecting the wealthy to pull their weight either.
...former Treasury Secretary Larry Summers noted in a recent op-ed: “What’s needed is an element that has largely been absent to date: [reducing] the numerous exclusions from the definition of adjusted gross income that enable the accumulation of great wealth with the payment of little or no taxes.”
The problem addressed by these proposals is partly related to the problem posed by the special, low rates that apply to capital gains and stock dividends. (Congress certainly needs to eliminate those special rates, so that investment income is taxed just like any other income.)
The breaks and loopholes criticized by Larry Summers and explained in CTJ’s new working paper allow wealthy individuals to delay or completely avoid paying taxes on their capital gains — at any rate. It does not matter what tax rate applies to capital gains so long as the wealthy can use these shelters to avoid paying any tax at all.
The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities, that is, in proportion to the revenue which they respectively enjoy under the protection of the state. ~ Adam SmithIts appealing but the effective tax rates on top earners just keeps dropping. Historical Average Federal Tax Rates for All Households
The Obama's Administration's contribution to the government's MISERABLE FAILURE to slow or reverse the the slide toward in creasing inequality is undeniable. Should working Americans look foreward to living in a country where the top 1% are able to capture all 100% of US economic gains?
As Paul Krugman wrote so pointedly.
Paul Krugman: Years of Tragic WasteSo Mr President don't try to blame America's appalling growth of income inequality on increasing reliance on ATMs and the rise Travel Websites. Those sounds more like you are making excuses, than leveling with us.
Still, I think it’s important to realize how badly policy failed and continues to fail. Right now, Washington seems divided between Republicans who denounce any kind of government action — who insist that all the policies and programs that mitigated the crisis actually made it worse — and Obama loyalists who insist that they did a great job because the world didn’t totally melt down.
Obviously, the Obama people are less wrong than the Republicans. But, by any objective standard, U.S. economic policy since Lehman has been an astonishing, horrifying failure.
Its time to talk to us like adults Mr. President. We can see the playing field is still tilted toward those at the top.