Top Story/Class Warfare?
President Obama is scheduled to reveal his deficit-reduction plan today, but the element of it that is already drawing the most fire is what’s coming to be known as the “billionaires tax” or the “Buffet Rule.” According to The New York Times, “Obama will call for $1.5 trillion in tax increases, primarily on the wealthy, through a combination of closing loopholes and limiting the amount that high earners can deduct.”
On Fox Sunday, GOP wunderkind Rep. Paul Ryan, chairman of the House Budget Committee, said: “Class warfare…may make for really good politics but it makes a rotten economics. We don't need a system that seeks to divide people. We don't need a system that seeks to prey on people's fear, envy, and anxiety. We need a system that creates job and innovation, and removes these barriers for entrepreneurs to go out and rehire people.”
“But congressman,” moderator Chris Wallace said, “this is being called the Buffett Rule because it comes after Warren Buffet, the multibillionaire owner of Berkshire Hathaway, said, ‘I end up paying a lower tax rate than my secretary….’ What about the question of fairness, sir?”
“What he forgets to mention [is]…that's a double tax. Capital gains and dividends are taxes on money that has already been taxed once before based on income. So, a person who's paying an income tax is paying the first level of tax on that money and then when you pay capital gains and dividends tax, you are paying that tax again on that money that earns it. [When] we have raised capital gains taxes and dividend taxes, we hurt economic growth, we stifle investment in our economy. …Class warfare will simply divide this country more. It will attack job creators, divide people, and it doesn't grow the economy.”
On Meet the Press, David Gregory asked Senate Minority Leader Mitch McConnell: “What's unfair about making richer Americans pay the same tax rates as middle-income Americans?”
“…If Warren Buffett would like to give up some of his benefits, we'd be happy to talk about it,” said McConnell. “I think that means-adjusting benefits is one of the ways that we're going to have to solve at least the Social Security and Medicare problems long term for the next generations. With regard to [Buffett’s] tax rate, if he's feeling guilty about it, I think he should send in a check. But we don't want to stagnate this economy by raising taxes. It won't just hit individuals…. You know, over 700,000 of our most successful small businesses pay taxes as individuals, not as corporations. That represents 50 percent of small business income and 25 percent of the American workforce.”
Jobs, Jobs, Jobs
“Mayor Bloomberg of New York has said this week that unless something is done to really address this unemployment problem, there could be riots in the street, unrest. Do you agree with that?” Christiane Amanapour asked Bill Clinton on ABC’s This Week.
“I don't know. There have been demonstrations in many other countries where the same thing is going on,” said the former president, whose Clinton Global Initiative conference opens this week in New York. “But the most important thing Mayor Bloomberg said recently is to offer land on Governor's Island or Roosevelt Island or the Navy Yard in Brooklyn for a new world-class science and technology research center. And he said that he'll kick in a hundred million dollars worth of investment if a group of universities will put one there because he wants New York, in effect, to rival Silicon Valley as a technology center. That's the kind of thing that works. If you want to put people to work, we've got to focus on what works. And what works is not all this back-and-forth fighting in Washington. …If we can't fix the housing crisis now -- which is probably not politically possible but should be done -- we can't return to full employment. But if we adopt the plan that the president outlined…it will create between a 1 ? [to] 2 percent increase in GDP growth. It'll put a million or 2 million people to work, and we'll be on the way back.”
China as Savior of the Global Economy
On CNN’s Global Public Square, Fareed Zakaria talked about who has a “big enough bazooka” to take on the problems plaguing Europe—especially Spain and Italy.
“So, who has the kind of money Italy and Spain would need? Take a guess. They have $3 trillion in foreign exchange reserves alone. Yes, China. In fact, today there are $10 trillion of foreign exchange reserves sitting around the globe. ?…The International Monetary Fund could go to the leading holders of such reserves - China, but also Japan, Brazil, Saudi Arabia - and ask for a $750 billion line of credit. The IMF would then extend that credit to the troubled E.U. economies, Italy and Spain particularly. But it would insist on closely monitoring economic reforms and granting funds only as restructuring occurs.That credit line would more than cover the borrowing costs of both Italy and Spain for two years.
“…Now, the Chinese would have to devote at least half the funds. What's in it for them? A new global role. This could be the spur to giving China a much larger say at the IMF. In fact, it might be necessary to make clear that Christine Lagarde would be the last non-Chinese head of the IMF.
“In a world awash in debt, power shifts to creditors. It's happened before. After World War I, European nations were battered by debts and Germany was battered by reparation payments. The only country that could provide credit was the United States of America. For America, providing desperately needed cash to Europe was its entry into the councils of power, a process that ultimately brought a powerful new player inside the global tent. Today's crisis is China's opportunity to become a responsible stakeholder in the global system. And if this doesn't happen, by the way, hold on to your seat, because we are in for a rough ride.”