I agree with George Will about as often as the Boston Red Sox agree with the New York Yankees, but as the law of broken clocks suggests, we must both be right at least twice a day. Will has recently suggested that conservatives should consider joining the effort to "break up the banks." As a progressive and populist I agree, and today I offer two separate proposals in the spirit of two late and great men, named Lloyd Bentsen and Jack Kemp.
First, regarding the breaking up of banks, let's enact a capital gains tax cut for long-term investors in "too big to fail" banks whose boards and shareholders voluntarily spin off component businesses to effectively restore the Glass-Steagall separation of financial businesses.
Second, regarding the repatriation of American multinational corporate finances that are currently sitting abroad, which could bring back to America up to $2 trillion, let's enact a tax holiday contingent on participating companies increasing their net American employment by 5 to 10 percent.
On the matter of banks, I have long argued that Glass-Steagall should be reenacted. But let's be honest -- the probability of the Glass-Steagall law being reenacted any time soon is lower than the probability that the College of Cardinals will summon Lance Armstrong to Vatican City to succeed Pope Benedict. But:
What would happen if the president and Congress, Democratic progressives and Republican conservatives were to all agree on a private-sector solution that would use the tax code to incentivize the rationalization of financial assets to achieve the widely favored concept of protecting consumers, investors and taxpayers from banks that are too big to fail, too big to understand, too big to manage, too big to indict and too big to govern?
What would happen, first, is that many of these assets would have more shareholder value as spin-off assets, owned and traded independently, than as indecipherable cogs in gigantic corporate blobs that create dangers and inefficiencies.
And then: Wall Street firms, large institutional investors, pension funds, private-equity funds, 401(k) managers and mutual fund holders would start calling CEOs and board members and suggesting that the rising tide of spin-off valuation could lift the boats of all investors large and small.
And then: Company insiders would be consulting with their wives and husbands about how they could spend the money created by the new value of their spin-off holdings (insider stock grants and options are not the noblest aspect of American capitalism).
And then: Someone in Congress would consult the congressional Joint Tax Committee, which might well suggest that a lower capital gains tax, levied on a higher volume of transactions on assets of higher net value, could bring more revenue and deficit reduction than a higher tax on fewer sales of lower priced assets.
In this scenario, some assets would be revealed as deserving lower value, which is what capitalism and markets are about. The spotlight shined on poorly performing assets would improve their management and efficiency.
Similar logic could be applied to enacting lower taxes for the repatriation of foreign-held assets tied to significant increases in domestic employment, which is what companies promise they will do anyway with repatriated funds. Because previous such promises have not been honored, requiring certification of employment gains would be necessary to create a program that repatriates jobs along with profits, and repatriates prosperity for the nation along with profits for the companies, rather than subsidizing and rewarding the exportation and destruction of American jobs.
We cannot know for certain whether Lloyd Bentsen and Jack Kemp would support these ideas, but we know for certain they would be working overtime to break through our gridlock with innovative economic ideas to create new wealth, jobs and prosperity.