Reagan charged up the hill of Big Gov't -- now it's Obama turn on Big Inequality. Lowry and vanden Heuvel debate whether that's become the "defining crisis" of our era and if government can do anything about higher executive pay, lower worker wages. Then: Is Boehner's tantrum a one-off or a strategy?
According to President Obama this week, inequality/immobility is a core problem that government can mitigate. The head of The Nation since 1995, Katrina vanden Heuvel, agrees...but Rich Lowry, the head of The National Review since 1997, thinks it's the result of free markets. The pairing on the issue.
On Obama's Mission Against Inequality. In a lengthy address and analysis in the impoverished community of Anacostia in Washington, D.C., President Obama this week declared that he would devote the remainder of his second term to fighting growing income disparity in America. "The decisions we make on these issues will determine whether or not our children will grow up in an America where opportunity is real."
Lowry agrees that inequality is growing, "a trend seen around the world,. But the fact of inequality is inherent to a free society." He condemns Obama's Anacostia address as "tendentious and dishonest in the way it disparages bashes the rich and condemns success -- envy is not an American value."
Vanden Heuvel dismisses the class warfare charge by citing Buffett -- "there is class warfare -- my class started it and is winning." She believes that Obama's remarks were "deeply aspirational about our basic bargain -- that if you work hard, you can support your family. Instead, the system is rigged; why is wealth taxed so much less than work?"
The two then clash on basic Smith-Keynes economics: he lauds the spur of wealth provoking investors to create jobs to make money; she contends that galloping income disparities means too little consumer demand "and customers are the real job-creators."
Lowry: "if you confiscated all of Mark Zuckerberg's money, how would that help the poor?" That began an exchange less about Zuckerberg than whether higher top rates could provide revenues for such anti-inequality programs as SNAP, WIC, student loans. "How about going back to Eisenhower rates?" Katrina says.
On Raising the Minimum Wage. The Nation editor argues that a $10+ an hour federal minimum wage -- "which is supported by large majorities in polls" -- is one way to fight inequality and encourage growth. The National Review editor counters most studies show that would reduce jobs, especially among teenagers who need such starter positions. "It's good if incomes go up but that has to be tied to productivity unlike the liberal fantasy that pays workers more than they're worth through government coercion. How about a $25 per hour minimum wage? Or do you hate workers?"
Katrina answers that it should vary by region but, if productivity is the key, why does 90 percent of productivity gains go to just the top one percent? Why have we gone from top executives at large firms making 25 times more than line workers in the '50s to 250-1 ratios now?
He attributes increasing income inequality to globalization, as bigger firms bid up executive pay for super-talented managers. She adds that the decline in labor unions played a big role in the growing disparity. She lauds say-on-pay reforms of the kind envisioned under Dodd-Frank, like the pending SEC rule that companies disclose these ratios. He doesn't object to this transparency but concludes that "inequality may be uncouth but it doesn't hurt anyone."
Concluding: Lowry acknowledges that, if he had his way, there'd be no minimum wage at all. Katrina thinks that the "problem is the opportunity deficit more than the fiscal deficit."
Something's happening when Goldman Sachs CEO Lloyd Blankfein says that "our system produces wealth well but doesn't particularly distribute it well."
Increasing inequality in the Gilded Age spurred the populist response of Teddy Roosevelt as the Depression did the New Deal. Is the rise of inequality since 1979 and flattening of median incomes -- along with Obama's Osawatomie and Anacostia speeches, the Pope's condemnation of "trickle down" economics, wage protests in 125 cities, the passage of minimum wage referenda -- signs of a new progressive era economically?
On the Deficit Deal. Is the Ryan-Murray two year budget deal small step forward (Ryan) or a "joke and betrayal by Beltway politicians" (Stockman)? Each thinks the agreement small beer and the best way a) for the GOP to avoid another ruinous shutdown and b) for Democrats to reduce the severity of the Sequester on domestic spending. Lowry complains that spending now for promises of cuts later is unpersuasive while vanden Heuvel is angry that there's no billionaire's tax or closing of multinational loopholes.
What do they think of the way that Speaker Boehner morphed from Dean Martin to Howard Beale when he attacked outside Tea Party groups for their early, acid attacks on the agreement? Could it mean that he'll also ignore their continuing complaints about, say, immigration reform? Lowry wonders "why he's so angry when the stakes in the deal are so small. He may have still been upset that he was previously forced into a shutdown strategy [by Tea Party groups] when he knew it wasn't smart."
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