Robert ReichBack to OpinionRobert Reich

An offer to the president

President Franklin D. Roosevelt is shown at the White House as he signed the Glass-Steagall Banking bill, Aug. 23, 1935. Photo: AP

Mr. President, we heard what you said last week in Kansas – about the dangers to our economy and democracy of the increasing concentration of income and wealth at the top.

We agree.  And many of us are prepared to work our hearts to get you reelected – as long as you commit to doing what needs to be done in your second term:

—  Raise the tax rate on the rich to what it was before 1981.  The top 1 percent has an almost unprecedented share of the nation’s wealth and income yet the lowest tax rate in 30 years. Meanwhile, America faces colossal budget deficits that have already meant devastating cuts in education, infrastructure, and the safety nets we depend on.  The rich must pay their fair share. Income in excess of $1 million should be taxed at 70 percent – the same rate as before 1981.

—  Raise capital gains taxes to the same level.  It’s absurd that the 400 richest Americans – whose wealth exceeds the wealth of the bottom 150 million Americans put together – should pay an average 17 percent tax on their incomes, the rate day laborers and child-care workers pay.  That’s because so much of the income of the super-rich is considered capital gains, now taxed at only 15 percent.  Close this loophole.

—  Tax financial transactions.  A tiny tax on every financial deal would yield billions of dollars more.  It would also slow speculators and reduce the wild gyrations of financial markets.

—  Use the bulk of this money to create good schools, give our kids access to a college education, and build a world-class infrastructure, so all our children have a chance to get ahead.

— Resurrect the Glass-Steagall Act, that used to separate commercial from investment banking. It was put in place after the Great Crash of 1929 to prevent financiers from gambling with peoples’ bank deposits.  But it was repealed in 1999 – and its repeal contributed to the Crash of 2008. Wall Street lobbyists have made sure the new Dodd-Frank law has enough loopholes to allow financiers to continue to gamble with other  peoples’ money.  The only way to stop this is to bring Glass-Steagall back.

—  Cap the size of Wall Street’s biggest banks and break up the biggest.  They were too big to fail before the bailout.  They’re even bigger now.  And because of their huge size they get preferential treatment from the Fed, giving them an even greater competitive advantage over smaller banks.  Cap their size and break them up before we have to bail them out again.

— Require the big banks that got bailed out to modify the mortgages of millions of Americans now under water, who owe more than their homes are worth.  It’s not their  fault the banks created a housing bubble that burst, causing home values to plummet.

Mr. President, we know nothing good happens in Washington unless good people outside Washington are organized and mobilized to make it happen.

So here’s the deal: We’ll reelect you. We’ll stand behind you. We’ll give you a mandate to do all this – and more – in your second term.

As long as you stand behind us.

Deal?

Published by arrangement with RobertReich.org.

Robert Reich is Chancellor’s Professor of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written 11 books (including his most recent, “Supercapitalism,” which is now out in paperback).

 

Comments

  • J.V.Hodgson.

    The firs batch of common sense ideas I have heard in along time. However som eis abit over the top like 70% tax on the rich, but iagree with raising capital gains tax to 30 % and treating dividends as income i.e along with salary and bonus, not at a flat rate of 15%
    Financial transaction tax does not work unless its internationally applied on the same basis.
    Agree Glass steagall at the basis level of separating retail banking and bank mortgage lending in one entity and Investment banking in another. If banks want to operate hedge funds that’s another entity. with strict rules on inter division contact and trading matters with extrmely strict insider activity prevention.
    We also need an internation return to the nonsense of Currency speculation. back to basic economics please if you dont have a transactional need for a currency based on a contract to buy or sell something you cant deal in that currency. having little mom’a and papa’s dealing in FX to make money is ridiculous.
    Great article thanks
    Hodgson.

  • Ashaw14

    Just which one of those duties you gave the President can he peronally do.  All of the things you state reuire a wiling congress.  You failed to give him that winning congress.  If you want those things done get the congress to supoport him

  • Ashaw14

    Just which one of those duties you gave the President
    can he personally do? All of the things you state require a willing congress. You
    failed to give him that willing congress. If you want those things done get the
    congress to support him

  • Anonymous

    Robert Reisch is right on. I read books on what caused this financial mess, the most recent is “The Great American Stickup” and “Retirement Heist” and the report by the “Finanical Crisis Inquiryg Commission”. Then I listen to Rush Limbauhg, Fox News and the responses I receive from my US Senator and Representative.
    My conclusion, our government is corrupt. Tainted by Money and a “Secret Financial System” that benefits the Rich, Corporations, and a Government ( mainly the 435 members of Congress) , the Supreme Court being stacked with Corporate Friendly Lawyers, even the Federal Courts, and the White House, all influenced by Money, flowing into the halls of Congress by entitiies who know how to make Money from Money, and not from work. These people have made their fortunes, not from inventing something Tangible, but by creative shams of the likes of Derivatives, CDO’s and CDS’s, with no transparentcy.
    We, the People, have been replaced by “We, the Corporation Executives and CEO’s and disgruntled Billionaires who have disconnected themselves from the population. CEO’s now have food tasters, have bullet proof work places and cars, and have body guards if they happen to intermingle with their employees citing “the current attitude of the economy”.
    I look back to the CEO of a Fortune 5 Company I worked for. When I started, we had a CEO, a son of the founder, who served in WWII flying a B-17 in Europe. He knew his “tail gunner” and crew were the difference between life and death. He appreciated the contribution of people.
    Today, we have a crop of CEO’s that came out of the Ivy League Schools who have not served in the military. When we lost the draft, their kids have not served in the Military where a cross section of the country comes together.
    We have a “Mercenary Army” that goes to war to protect the interests of those, that have no connection with the people who serve. The hiring rate of returning Military, where the Corporations made huge profits, but none of their kids served.
    We now have a Mis-information Media, like Fox News. When I hear politicians that use the term “Not taking responsibility” for their actions, or referring to Social Secuirty as “Entitlement” that I contributed 15% of my wages for more than 4 decades, I get mad as hell.
    Stock Incentive Options is an example, A recent article about CEO’s and Corporations are paying little in taxes with a loophole that allows the Corporations to write off Incentive Stock Compensation and allows the CEO’s and their Executives who are 1% of the workforce to pay taxes at Capital Gains rates of 15%. Employees who are not CEO’s were convinced that the Stock Incentive Stocks granted to CEO’s and Employees were taxed as ordinary income, like their stock awards. Many were surprised to learn that the “Incentive” stock of CEO’s were not taxed as Ordinary income. Looking at the Compensation of CEO’s, 90% of their compensation is stock taxed at 15% Capital gains, and qualifiing for the “Incentive award of stock” is just the “board saying thanks”
    Fox, Limbaugh, along with our Congressmen who take bribes along with submitting bills written by and for Corporations from ALEC that my Congressman, submit into the law making process.
    Money that flowed into Congress in 2009 and 2010, over $1 Billion to defeat Health Care reform, mainly Universal Health Care for all, but in the meantime, 900,000 families experience bankruptcy every year from medical bills for a $10,000 a day hospital stay, $43 a minute Surgery, and $333 an hour recovery room. While other countries like Australia, have Universal Health Care for all at 1.5% of taxable income, make $50,000 a year – a monthly premium of $62 a month and no Medical Bankruptcies and little out of pocket. Australia’s dollar is on par with the US dollar and they have as many doctors and hospital beds as the USA.
    Corporations, the Great Sucking sound. that Ross Perot predicted came true but even Mexico experienced the “Build a plant out of 15 year materials – shut down the plant and move to another site – firing the employees”. There is no Commitment to employees.
    Going back to the WWII CEO’s who did have a connect when we had a 92% top marginal tax rate. “Loopholes” like a deduction for providing employee health care, defined benefit pensions, adoption services, Senior parent care, education reimbursment, dental care, all benefits for the workers” Corporations did not necessarily provide those benefits because they were good guys, it was our “Government” that laid the groundwork that helped create a middle class that has been under assault for 30 plus years.
    Today, after losing 100,0000 defined benefit plans over the last 30 years with M&A schemes of the likes of Bain Capital, and removing tax on Stock Trading that has opened the door with “hyper computer trading of 70% of all trades” that skim $Billions every day from the 401K contributions into Wall Street.
    People forget, that the Bribery of our Congress was not acceptable 30 years ago until a Senior US Senator who was being hammered by a millionaire opened the door to Lobbyists Bribes.
    The Occupy Wall Street know our system of Government is Corrupt. We, the people, need to Think, that being Conservative or Liberal is not a position to take, and need to Think American and do the right thing for the Country and quit labeling anyone who is not Conservative or Not Liberal or any other label and recognize we are a blended Country.
    The Problems are not going to be solved with a “different team” who is either Conservative or Liberal. It is going to be fixed by Americans, the same kind of effort that we say after 9/11. There was no rhetoric about Conservative or Liberal, we teamed togehter.
    We have to accept, the Middle Class and Poor have been “mugged” by the laws passed and not passed by our Congress aka Government. People who make their living from other peoples’ money, like Rubin, Greenspan, Poulson, and countless others, have taken this country to the cleaners.
    Looking forward, the groundwork is not being laid to go after the only money left, “the Seniors” mainly with increased health care costs not paid for by Medicare of Medigap Insurance.
    We can only fix what is wrong is stop the Bribery, replace those in office who are in office to Make Money, unpack the Federal and Supreme Court of the Corporpate Attornies who also make money.
    I think the evil of Money has invaded our Government. Decisions are being made, not for the benefit of the Country, but for the benefit of the people who have money, like the 1% who take 25% of the GDP and the 400 Forbes Richest, 65% who are on the list from moving money around, and the propaganda of convincing people making less than $50,000 a year to vote for the agenda of the Rich, that will keep open the door to the “American Dream”.
    The road to the American Dream has been detoured, it is now in places like Australia, New Zealand, and Denmark.
    We have the system to change what is going on, but because we have been “boiled like a frog in cold water to start eventually killing the frog as the heat is turned up and not jumping out” these past 30 years.
    We need to get out the vote, but as I watch election laws changed, to stifle the average American to vote, we can still win as we “outnumber” the people with the money who have bribed our Congress and Government.
    Out Democracy has been under assault for 30 years, we have to turn off the TV, stop renting DVD’s and pay attention and get involved and not become “labled as Conservative or Liberal” and Think as Americans.
    I plan to get off my butt and get involved to get our government back to “We the People” Instead of “We the Corporation and Rich”.

  • DaveC

    Nice wish list, but if the President really wants to get re-elected he only needs to do one thing.  It is one thing that will gain him support across the entire political spectrum – liberals, moderates, and even conservatives.  That one thing is to direct the Attorney General to create a taste force to investigate and prosecute financial organizations and the directors of those organizations for the laws they broke which created the financial crisis.  Americans want accountability for this lawlessness and malfeasance.  
    However, it appears that Mr. Obama does not want to bite the hand that feeds him – the same financial directors who contribute to his re-election campaign.  That is why liberals are feed up with him and why, as distasteful Mitt Romney is as a candidate, he actually has a good chance of being elected the next president. 

  • Jvkfai

                The crux of the problem is simple, the millionaire policy makers manipulate the economy with the premise that the rich create jobs and thus channeling the wealth of the economy to Wall Street! This lopsided ideology couldn’t be more corrupt, which is evident by the instability of the global economy teetering on the edge of collapse and the increased worldwide social unrest brought on by mass poverty!
    In 1995 the DOW (DJIA) was at 4000, it peaked in 2007 at 14000, more than doubling the cost of living. With every rally comes a recession, the bigger the rally, the bigger the recession, simply because overvalued markets increase inflation and reduce demand! The markets must be allowed to return to center, painful for investors or not!
    Anyone, who says the economy is recovering because the markets are climbing, is probably a member of congress or a Wall Street executive! Stupidity is rampant in Washington and politicians are either corrupt or clueless! Increasing the wealth of Wall Street without increasing demand for its products only leads to increasing the price of its products and executive pay, further shrinking demand and slowing growth!
                The economy is stalled because the policy makers have done everything in their play book (Bank of China), to keep the markets (cost of living) elevated! The longer the markets are held at an artificially high level, the weaker the base becomes risking total collapse and further global anarchy (pressure seeks it’s own level)!
    To correct this mess you need to…
    ·       The federal government needs to cease all market stimulation!
    ·       Eliminate investor tax incentives, tax loopholes, bailouts, subsidies, tax breaks, tax caps, caps on fines & penalties, etc.
    ·       There needs to be a matching tax on oil, when the price of oil goes up, the tax goes up. This will force conservation and promote alternative resources! I suggested this post crash when the price of oil dropped to $60 a barrel.
    ·       The Fed needs to raise interest rates back up to 6 or 7 percent to motivate intelligent investors to move their money out of high risk markets and back into local banks where companies with sound, legitimate business plans can borrow it, thus creating local jobs and a stable economy!
    ·       Congress needs to be held accountable for their ongoing fleecing!
    Social Security needs logic as well! There is currently a cap on the amount an individual is required to pay, even though there is no cap on the amount they are allowed to earn. If an individual earns 100 times what the average person earns, they should pay 100 times more!
    SEC stands for “Sucks Executive C___” (Regularly)! FED stands for “Failed Economic Disaster”! Congress stands for “Corrupt, Clueless and Fowl Smelling Stagnation”! Obviously I have little respect for our government, mainly because with power comes abuse, corruption and more damned holidays at $75 million each, not to mention lost productivity and excessive benefits, which also have to be paid for!
    I personally, would like to see Congress replaced by an online program, which would allow any citizen or citizens to create or amend laws, list pros & cons, solving all problems before advancing to be voted on (pure logic). This would also eliminate the need for political parties, while shaving billions off the annual budget! After all it’s not just the hundreds of congressional members, but the thousands of support staff, expenses, pensions, holidays, limo’s, blunders, corruption, lawsuits, elections, etc… What a disgrace… Their approval consists of their immediate family, support staff, Wall Street executives, lawyers, stockbrokers, bookies, D.C. message therapists and hookers!
     
    John Kelsch, Fairbanks, Alaska (Fed-up Voter)

  • Corradini

    Nice points; not so sure re: your Rx’s.

    * Last I heard, tax rates fall under Article I (S7/C1) – not Article II. Or are you buying into the GOP line that the Exec is responsible for the economy and thus can/has failed to fix it? * 70% ?!? Look, *I* want a magical pony for Xmas, too — but I’m planning on a sweater and maybe some steak knives. And, moving from political reality to economic theory (having at least sporadically attended that class at some old b-school in west Philly) — Laffer was appropriately named, sure — but that curve still has 2 ends.* Frankly, pretty much all your tax points are at the other end of PennAve. Sure, Obama could campaign on ‘em, but Camp and Boehner (or, soon maybe, Cantor) ain’t going to hand-deliver with a bouquet of roses.* What the Exec has, economic-power-wise, is agencies and regulations and directives. He could steer military contracts, or SBA loan guidelines, or Commerce and FDA regs, etc.; he could work through Education to effectively modify NCLB; he can work through SEC and Treasury to pressure banks (and hedge funds – don’t get me started)….etc. There are MANY small levers in the regulatory apparatus, but the thing about levers is that they have leverage.* While you’re on it about Glass-Steagall and Dodd-Frank, btw (and I agree fully) – McCain-Feingold and Citizens United come to mind. Again, other end of the Avenue and now across the street, but (a) there are ways and (b) that’s as good a stump item as your points – Adelson being a case in point (if Obama could finesse that to avoid his own petard).(BTW – We’ve talked at RW, I believe. I worked in the Senate; have had a few good chats with Luntz; in my immed. family was a 2x press-sec who later won 2 terms w/ Axe/Plouffe as team. Not to puff – I’m anon – just b/g.)

  • http://www.somebodyswebpage.com/ Mayor McCheese

    I agree wholeheartedly with Reich, but I think Obama would probably laugh his ass off these proposals. Don’t you know his big business advisors would never allow any of this to take place? The Audacity of Selling Out.