Why Republicans Should Take on Inequality

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Sheila Bair on Moyers & Company.
(Credit: Dale Robbins)

In an op-ed published in The New York Times yesterday, Sheila Bair, the George W. Bush-appointed chairwoman of the Federal Deposit Insurance Corporation from 2006 through 2011, wrote that recent research by economist Emmanuel Saez should prompt Republicans to rethink their policies.

Saez studies income inequality in America, which reached a 90-year-high in 2007, immediately before the financial crisis. And Saez’s recent studies have found that, since 2009, inequality is again on the rise. The economy’s gradual recovery is only a recovery for the one percent: In the last two years, the richest Americans have seen their incomes grow by 11 percent, while the bottom 99 percent of Americans saw their incomes shrink by 0.4 percent.

In the op-ed, Bair writes that tackling inequality is consistent with a free market ideology, and that her party should embrace it as their prerogative:

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. Read more »

In an interview with Bill on Moyers & Company about banking regulation, he asked Bair about the connections between income inequality and big banks. She suggests raising the capital gains tax as one way the tax code could be improved to lessen the income inequality gap. She tells Bill, “if you’re a hedge fund operator you pay 15 percent and if you’re a young person discovering the cure for cancer you’re paying 35 percent on your income? I don’t get that. So I think equalizing, making the capital gains on parity with income or income produce from work is something that could also help adjust this income inequality.”

Watch Bair’s full interview on Moyers & Company below.

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  • http://www.facebook.com/people/Mikki-Mack/1427792927 Mikki Mack

    And the richest one percent controll business, pricing, hiring of employees, etc., and they’ll keep their 11 percent increase and laugh all the way to the bank while the remaining 99 percent continue to struggle or cut back on their spending.

  • http://www.facebook.com/christina.niven.7 Christina Niven

    Awesome guest and interview. Finally, a Republican who is talking about making banks honest again. I like what Sheila Bair said about increasing the 15% capital gains tax and her reference to Margaret Thatcher…”back then it was about doing, now it’s about being”.

  • Jesse Glick

    We are in a critical juncture in our country. If the Grand Old Party doesn’t quickly return its roots and values, and abandon its current role as the Gridlock Old Party. Then we are in for another crash and a power struggle that could lock down our democracy. Hopefully the majority of the 98% will continue what began last year and elect an even larger batch of candidates who see through the lies of the Fix the Debt group, the NRA, and the Inaugural Day 2009 Group of Congressional Traitors, and sideline them beyond where they ever again can threaten the government of the people, by the people, and for the people.

  • The future is calling

    It appears at least a few in the Greedy Obstructionist Party are realizing that they’ve taken too much from their subjects and a backlash is brewing. Let’s not let them make minor tweaks to stave off the substantial changes that need made to our systems and society. Throw the emperor under the bus! Onward toward Cooperativism!

  • kjgreen

    And the 1% will continue to hoard the money while telling the rest of us that we need to tighten our collective belts and entire a shared sacrifice

  • Judi Schelble

    Just finished reading Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else by Chrystia Freeland which talks about this very issue in depth — fascinating & depressing commentary on the state of our country. At the same time I was reading this book I spent some time in NYC after a long absence and on a day when the temperature w/ windchills was around 10 degrees saw homeless people huddled on the sidewalk just a few blocks from a Doggie Day care where through the window I could see dogs lounging on sling beds in the warmth of a comfortable room. Spoke volumes …

  • lifeamongtheordinary

    “At the dawn of the 20th century, Theodore Roosevelt reflected that there have been ‘two great crises in our country’s history: first, when it was formed, and then, again, when it was perpetuated … .’ The third great crisis was upon us, the struggle ‘to achieve in large measure equality of opportunity.’ More than 100 years later all roads still lead to this place.”

    Read more at

    http://lifeamongtheordinary.blogspot.com/2011/11/welcome.html

  • http://twitter.com/aripapp ari papandreou

    thank you mr moyers,i must say that ms bair is the type of republican that i truely respect and always read and watch everything she does and says

  • http://www.facebook.com/jamestennier James Tennier

    “Real world consequences:” (to their actions) should not result in a tongue lashing and fines paid by unwitting shareholders.
    In the real world the Justice Department should/ would be all over the jerks in orange jumpsuits and serious jail time in the general population of the incarcerated…
    This is no longer the real world.

  • http://www.facebook.com/jamestennier James Tennier

    Are we to hold our breath though?

  • http://www.facebook.com/jamestennier James Tennier

    @18:25,” commercial savings and loan banks aren’t the problem, Ms. Blair worries about the other investment banks and their being insured by taxpayers as well as their trying to write the rules as they go, benefiting (only) themselves.”
    Is this a great way to conduct our banking needs or what?

  • http://www.facebook.com/carolyn.caffrey Carolyn Caffrey

    Agreed. And paying money from your own pocket isn’t enough either. We have millions of low-level thieves doing prison time while people who have committed massive fraud walk. WHY we think some of these people can be rehabilitated is beyond me. Many have already shown themselves to be serial offenders. Fines WILL NOT stop this, even if the money comes from their own personal accounts. Frankly, I cringe when I hear President Obama say our motto is “If you work hard and play by the rules you can make it in America.” Bull. Right now the real situation is “If you manipulate things to your advantage and make your own rules you can TAKE from everybody in America.” If this is not corrected, and soon, there will be a bloody class warfare and no rules at all. People are at the breaking point. This is NOT a point of compromise. And to have the courage to do this, the President is going to have to quit surrounding himself with people who are part of the problem! A “balanced approach” only works when there is a reasonable equity to start with. Everything is SO weighted towards the one percent at this point we, the people, are running out of things for them to steal.

  • tvphreesince93

    A reasonable, intelligent republican. Wow! I’m not trying to be sarcastic or partisan when I say I honestly didn’t know there were any left. If there are more of you out there, you need to stand up and be heard- the crazies seem to have completely taken over the gop.

  • tvphreesince93

    Also, when Bill asks her why there is no outrage, that’s easy to figure out: it’s the media stupid! Corporate consolidated media and representative government CANNOT coexist.

  • Mikeguru

    I have stock, as one of the 20% wealthiest who own 92% of ALL stock on Wall Street.
    While the bottom 80% own about 8% of all Stock (you have to make enough money
    above paying for housing, food, and transportation to have enough left over to
    buy a share of stock). Wage Suppression for 30 years has lessened the 80% from
    buying stock or save money).

    I read annual reports of Corporations and noticed that the Executive Compensation
    listed in the Corporations annual report did Not match what other sources like
    Forbes and Fortune listed. Only the CEO and Five Executive Vice Presidents were
    listed by law but the Corporation had 1% of the Company under the same
    standard, paid 90% annually with Stock Awards and Options that they
    “cashed in for greenbacks” as soon as the 15% tax rate qualified for
    the stock sale.

    I will give you an example.

    IBM listed their CEO as having $2 million in Salary in their annual report to
    shareholders. However, Forbes and Fortune listed the CEO at $20 million. So
    where was the $18 million coming from? I tried to figure out in the Annual
    Report, where the $18 million was being paid to the CEO. It was not apparent
    except for “Stock Awards and Stock Options” with no “cash
    value” estimated.

    The CEO and the 1% of the total employee workforce (Executives) were being paid 90% in Stock, taxed at 15%. Only $2 million was paid and taxed at Ordinary Income. The Stock Compensation applied to the 1% of the Company or 4,000 Executives at IBM.

    A typical Corporate Executive would Sell the Stock under the guise of
    “Capital Gains” and receive the Special Treatment of a 15% Tax Rate.
    I think this “Trick” of paying in stock to the 1% of all major
    Corporations started around 1980.

    Over the years, I noticed that employees of Companies, the 99%, were Not receiving
    increases in compensation matching Productivity improvements with their hours
    increasing and benefits grew less and less. In fact, over 30 years the increase
    of employees not paid with Stock Awards was a measily 3% compared to 400% of
    Corporate Executives. The Corporate Board of Directors(who are the Executives
    tools) were using Cash from Profit to “:Buy Back Shares of Stock”
    that resulted in “Boosting the Stock Share Price, artificially” that
    would not have occurred had the Executives not being paid 90% in stock.

    Recently I read a book, that listed the Richest Point 1% of the USA. About
    140,000 Households. About 49% of those Richest 140,000 Households are Former
    and Current Corporate Executives. The figure varies from 35% to 49% depending.
    However, it is apparent, Paying Executives in Stock, taxed at 15% made
    Corporate Executives very, very, wealthy while 99% were carrying the taxation
    load taxed at 39% ordinary income rates for the Country, not only with Revenue,
    but with their kids as the Corporate Executives kids escaped Military Service
    with no mandatory Military Service for all. (As a Veteran, the “Thanks for
    your Service comment from a Corporate Executive is insulting as his kids, never
    serve, only the Middle Class and Poor”.

    The next highest of the 140,000 wealthiest households were 19% Financial – Wall Street
    and Hedge Fund Managers, again – paid in Stock taxed at 15%.

    I
    chuckle when I hear “We are making this buyback, not giving employees
    raises” to “return value to Shareholders” at the Corporate
    Boards reports at Annual meetings (they loath to hold public meetings) where
    the “Shareholders they are speaking of are Them, the 1% Executives, the
    managers paid 90% at a 15% tax rate”.

    Another fact is the employees are “Contributing to their 401K” taxed at 39%
    when withdrawn and at least 75% are being poured into Stock that the 1%
    Corporate Executives “sell for Cash” taxed at 15% every year.

    With the “Hyper Computer buy and sell stock every “microsecond” and no
    Transaction fee, Wall Street, Corporate Executives, and the Wealthy are
    “skimming the 401K and IRA;s” of employees and retirees every year
    and also benefit from 15% tax rates while returns overall a decade are
    “lost” (the Recent returns can be “washed away” in a few
    days with a “pull the trigger” of those “in the Know”.

    The Billions paid to Wall Street firms like Goldman Sachs are with schemes like
    “hyper Stock Trading” and with Compensation being taxed at 15%.

    As Leona Helmsly stated “Only the Little People pay Taxes”.

    So, Look no further than Washington, DC for how the Wealth Disparity
    happened. Wall Street (paid at a 15% tax rate), Corporate Executives (paid at a
    15% tax rate) and the “Investment in Bribery from Lobbyists from Wall
    Street and Corporations” pulled off the greatest “Financial Coup” in the history of the World that caused this disparity of wealth. Check out the disclosure of long term US Senators, stock investments on http://www.opensecrets.org .

    How do we fix it? It is certainly Not keeping this Corporate “Compensation
    Loophole” in place of Corporate Executives and the “the Loophole
    Scheme of being paid in Stock taxed at 15% must be addressed” and the
    Republicans are Not the solution, they are enablers of this huge tax revenue
    loss to run the country unless, of course, they are pressured by the 99% who
    pay taxes at ordinary income rates of 39% and more.

    Remember, just becasue you have a 401K that is comprised of Stock, when you
    cash in the 401K the tax rate is 39%, Not 15%.

    Our Country is in trouble tax wise from the shift of paying Corporate Executives
    and Wall Street Bankers with the “Pseudo Cash of Stock” taxed at 15%.
    This “Loophole” needs to be plugged.

    THINK about it.

  • Socialmedic

    Republicans more than doubled inequality over the last 30 years and spat in the faces of anyone who objected to what they were doing. Most of them belong in jail. The rest should be placed at the back of the unemployment lines. After more than three decades of this crap, republicans can’t buy their way out of this the way they have everything else.

  • marq

    I’m against the extreme inequality we have. But, I oppose using the tax code to minimize the inequality. Instead, we should [1] open elections for members of Boards of Directors to dampen exhorbitant compensation to senior management; [2] auction all broadcast rights to highest bidders; [3] impose wage controls on academics making excessive compensation due to government sponsored student loans; and [4] cut all medicare and medicaid payments to physicians and hospitals. That will reduce inequality of income.

  • http://www.facebook.com/profile.php?id=733504611 Rich Klein

    Sorry, she’s a hypocrite and part of the very problem she identifies. Today’s LA Times reports that Ms. Blair allowed banks to conceal information about their settlements with the FDIC from 2007 to 2012. By protecting the banks, instead of the public’s right to know about the wrongdoings by the banks, Ms. Blair proved she was more interested in protecting her very rich banking friends than helping those at the opposite end of the income scale.