Why There’s An Enthusiasm Gap: An Illustration

Today (Monday) at a “town hall” sponsored by CNBC in Washington, the President took questions about the economy. When a hedge-fund manager complained that Wall Street executives “feel like we’ve been whacked with a stick” by the administration, Obama said most of his critics think he’s been too soft on the Street.

He noted he still hasn’t been able to end the practice of taxing some hedge fund and private-equity earnings at the capital-gains rates rather than the higher income-tax rates. “The notion that somehow me saying maybe you should be taxed more like your secretary when you’re pulling home a billion dollars…a year I don’t think is me being extremist or anti-business.”

Good as far as he went. But that’s as far as he was willing to go. It was a golden opportunity for Obama to connect the dots — to make the case that

(1) super-rich financiers on Wall Street and top corporate executives have grown even richer than they were before the Great Recession, even though most Americans are getting poorer or losing their jobs and homes and savings, and more Americans are in poverty.

(2) Yet the lobbyists for the financiers and top corporate executives, and their Republican allies have blocked or tried to block every effort of the Administration to widen the circle of prosperity, including enacting a major jobs program, providing major relief for mortgage holders who are under water, helping working families afford college for their kids, making sure states and cities have enough money to pay our classroom teachers, and cutting taxes on average working people.

(3) They almost scuttled the effort to make sure health care would be affordable to average Americans.

(4) The super-rich say the nation can’t afford any of this because of budget deficits. Yet at the same time their platoons of lobbyists are fighting off efforts to treat their income as taxable earnings rather than capital gains. So last year the 400 richest families in America, with an average income of $300 million each, were taxed at an average rate of only 17 percent. That’s the same tax rate paid by a family earning $30,000.

(5) And they’re fighting off efforts to end the temporary Bush tax cuts. If they’re successful, the richest 1 percent of Americans will get a windfall of $36 billion next year. Millionaire families will avoid paying $31 billion in taxes. Over ten years, they’d avoid paying $700 billion.

(6) And they’re fighting off efforts to restore the estate tax, which only applies to the top 2 percent of Americans, and which has been in effect since Abraham Lincoln introduced it to help finance the Civil War. How do we afford national defense if the richest and most privileged Americans won’t pay their fair share?

(7) Wealth and power in this country are so distorted that the top 25 hedge-fund managers each earned an average of $1 billion last year. $1 billion would support 20,000 classroom teachers. Yet who contributes more to this country — a hedge-fund manager or a teacher?

But he didn’t.

Instead, he challenged tea-party activists to come up with specific spending cuts. “It’s not enough just to say, ‘Get control of spending.’ I think it’s important for you to say, you know, I’m willing to cut veterans’ benefits, or I’m willing to cut Medicare or Social Security benefits, or I’m willing to see taxes go up.”

Robert Reich served as the 22nd United States Secretary of Labor under President William Jefferson Clinton from 1992 to 1997.  He blogs regularly at robertreich.blogspot.com, where this post first appeared.

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14 replies »

  1. sure inchoate its not like businesses can actually change their domicle or people give up their citizenship and stop paying taxes. Thankfully that isn’t at all possible so you are so right.
    Not sure naive means what you think it does, or you just used it in the most ironic sentenance possible.

  2. Continually amazing how naive Nate and jejune JS, with the feet of pudgy hedge fund billionaires firmly on their necks, can still squeal so profusely in their Gucci-loafered defense.
    I’d be concerned for health if I were not even more embarrassed by their foolishness.

  3. I’m not sure why Robert believes that Obama (or any administration) should have any claim to the financial assets of the wealthy. At some point, the wealthy will simple stop their engines, since they don’t really need to “do” anything with that money anyway. A lot of money would leave circulation. Then what?

  4. Dr. Frankie make that one up yourself? Sounds like one of those catch all ICD9s for when the Dr has no idea what they are doing and doesn’t want the patient to know they aren’t smart enough to figure it out.

  5. Nate and J.S.
    Two examples of what is called the Peasant Syndrome; worshiping and defending those who suppress their economic opportunities and soon, their civil rights too.
    Margalit is wrong; there is nothing comical watching this; it’s like having to endure the nocturnal loud ramblings of the village’s psychopath.

  6. I think Robert was just on NPR pettling the same income disparity BS. Wonder what would happen to the income disparity if you removed 12 million illegals? Granted only 6? million work but wouldn’t common sense tell you that if you import a large low class work force your average wage for low class people would drop?
    We have a huge population on welfare that never or barely work becuase we have a huge population of illegals that work for nothing then liberals complain about income disparity. And the NPR crowd eats it up. The first thing the right needs to do when they take over is defund NPR

  7. Mr. Reich, donations to pay off the USA public debt are TAX-DEDUCTIBLE.
    Your buddy Soros, the Kennedys, and the Heinz-Kerrys want to donate their billions — NO ONE is stopping them. I’ll be right behind them.

  8. He was referring to the arch conservative Soros always funding Republican enslavement of the poor working folk. Between him and John Kerry, and John Edwards pumping millions into right wing power grabs its amazing the poor have any rights at all left

    “The Super-Rich?” Says who? How much? Where’s his calculator?
    Answer: he doesn’t have one. He’s not an economist — he’s poly-sci. Just blah, blah, blah ..
    “Super-Rich?” How about St. Don Berwick and his multi-million-dollar paydays? And lifetime gold-plated medical insurance — no waiting lines for St. Don!
    And the $3B Kennedys, always lecturing the working class? Gimme a break ..

  10. Robert,
    BS and poorly thought out post. As far as leftist propoganda goes it is even weak.
    ” Yet the lobbyists for the financiers and top corporate executives, and their Republican allies”
    Are you so clueless you don’t know Wall Street and money mangers prefer Democrats or just so partisan you thought you could slip it through?
    “5 Largest Hedge Fund Donors All Lean Toward Democrats”
    So what was that you were saying Robert? Which Republican allies are you talking about?
    Take some notes and I’ll teach you why CEO v poor gap is spreading.
    Corporations are multiples bigger then they were during the great depression. They have multiple more employees. They have much shorter careers. CEOs are under greater pressure to perform and do it immediatly.
    Now lets look at the bottom tier. Lower IQ, Lower education, less healthy, poor work ethic. Why would a business pay such employees more? As long as we allow and support the quality of our bottom rung employees to decrease they will continue to see an increasing gap in compensation.
    Exactly what do you feel the appropriate compensation is for a high school drop out that smokes weed everyday and can’t make it to work more then 3 days a week? In 10 years when this average person knows even less, is less healthy, and can only make work two days a week what do you want to pay them?
    ” helping working families afford college for their kids,”
    More liberal BS. “Help” has only increased the cost of a college education. Have you really never notived the inflation in the cost of a college education? Why exactly is college increaseing at twice the level of inflation? Could it be all the free money?
    “making sure states and cities have enough money to pay our classroom teachers”
    As NJ as shown the problem here is teacher unions not the right. Undo their bloated pay and benefits and no teachers would need to lose their job, since it was never about the kids with the left this option was off the table.
    ” and cutting taxes on average working people.”
    Yes we all know what an unemployed person really needs is a cut to their tax rate or a $250 check in the mail their kids will have to pay back 10 times over.
    Driving up the cost of insurance is a great way to make insurance affordable.

  11. Hi…
    Dr. Corpuscle Connie
    Can you help me understand what you mean by: “Health care reform was purchased by those who stand to gain and is halfway technology…”?
    Who stands to gain from health care reform?
    What is ‘halfway technology?’
    Steve S.

  12. The disparity in wealth and the evaporation of the middle class is G. W. Bush’s legacy. However, WJ Clinton enabled him by signing the repeal of certain provisions of the Glass Steagall Act of 1932.
    The ramifications for foment by all who are suffering are formidable.
    Most are working harder to earn less, and have no time for leisure or to spend what little they earn, except for the robber barrons running for profit not for profit hospitals, corporations, or hedge funds. The corruption in this country at his time rivals none other.
    Health care reform was purchased by those who stand to gain and is halfway technology…does not solve many, if any, problems.

  13. “They almost scuttled the effort to make sure health care would be affordable to average Americans.”
    The word “almost” makes this a very optimistic view of health insurance reform. In my opinion “they” were rather successful here too.
    I do understand why all those powerful and wealthy are lobbying the way they are and I understand why corrupt representatives represent the rich and powerful, but it is beyond my comprehension why the much poorer, and never to become either rich or powerful, “activists” are toeing the same line with such great enthusiasm. It is almost comical.