Causes of income inequity

I echo Musburger's comments wholeheartedely. To believe the rhetoric from any of these politicians or govt. officials who have stood to gain financially and to put out a piece about income inequality is disingenuous at best and egregious at worst.

1. I would go back further than Gramm does and add to Musburger's comments to state the ultimate origination of the causes of inequality started with passage of the Federal Reserve Act in Dec. 1913. This automatically created an unfair business advantage by establishing a banking cartel where powerful financial interests were served back then and moreso to this day.

2. The repeal of the gold standard in Aug. 1971 by Nixon. Tihs allowed govt. to inflate the monetary supply. Not so bad if you make a lot or have a lot of money, but this definitely has contributed to less money going into the pockets of public.

3. Private campaign contributions and lobbying - .The tremendous inequality in income, wealth, power and opportunity which is distorting and destroying our nation all flow from the inequalities enabled by bribery and tax avoidance. The only way to fix the nation is to eliminate bribery (campaign contributions and lobbying) entirely, and eliminate tax avoidance entirely by eliminating all deductions, exemptions, loopholes, etc. State total income from all sources everywhere on the planet, calculate tax, done.

The Link

The govt. is bought and paid for by lobbying interests. And those interests rarely serve the public's interests or why else would billions of dollars be spent to enact and pass legislation to benefit the few.

4. Creation of Executive Order - 12631 in 1988 aptly named the President's Working Group on Financial Markets or better known as the Plunge Protection Team signed by Reagan during Greenspan's tenure as Fed Chairman. This was created following Black Monday during the Oct. 19, 1987 crash in the markets. Sounded like a good idea at the time, but resulted in the markets being forever rigged and created a conduit for the Fed to funnel money to JP Morgan to buy large positions in the DOW and S&P futures to stabilize markets. Is that really a free market or creating an advantage for the well healed when their side of the trade doesn't go well.

5. In the mid-1980s a Federal Reserve Board stocked with Reagan-Bush appointees began reinterpreting Glass-Steagall in a series of actions that slowly expanded the ability of banks to engage in other financial operations. In 1990, the Fed, under former J.P. Morgan director Alan Greenspan, permitted guess who–J.P. Morgan–to become the first bank allowed to underwrite securities. It is noteworthy that if William Jennings Bryan had had his way about the Federal Reserve Act, Greenspan would have never ascended to the position that allowed him to weaken the act named for the father of the Federal Reserve System.

Four legislative attempts were made to weaken or repeal parts of Glass-Steagall from 1988-1996. One reason they failed is because smaller banks feared that opening the doors to allow banks to trade in securities would lead to the domination of larger banks–a fate that has come to pass. The biggest change came in 1996 when Alan Greenspan issued a ruling allowing bank investment affiliates to have up to a quarter of their business in investments.

6. The Gramm-Leach Bliley Act

The ” Citi-Travelers Act” went under the benign-sounding name of the Financial Services Modernization Act of 1999 and, like Glass-Steagall it has become known for the key sponsors of the bill as the Gramm-Leach-Bliley Act, for Republican Senate Banking Committee Chair Phil Gramm, House Banking Committee chair James Leach, and Virginia Representative Thomas Bliley. As the bill took form in Congress, the financial industry, particularly Citibank and Sandy Weill increased the pressure. Charles Geisst notes:


In the year previous to the Financial Services Modernization Act, the thing that overruled Glass-Steagall, Citibank spent $100 million on lobbying and public relations, which is a good indication. Yes. They spent a small fortune, a king’s ransom, if you will, getting rid of Glass-Steagall. In fact, when thrown in with other financial firms’ lobbying, it was closer to $200 million over the short period of time.
Both Clinton, Sany Weill, Gramm, Robert Rubin and Leach and Greenspan are to blame for this little "innocuous" bill that will make financial instrument a great tool to make the US and US businesses more competitive". So both Dems and Repubs are to blame for this one. Additionally, GLB repealed Sections 20 and 32 of the Glass-Steagall Act:
•Section 20 – prohibited any member bank from affiliating in specific ways with an investment bank;
•Section 32 – prohibited investment bank directors, officers, employees, or principals from serving in those capacities at a commercial member bank of the Federal Reserve System.

No conflict of interests there, you think?

7. The Commodity Futures Modernization Act of 2000 (CFMA) is United States federal legislation that officially ensured the deregulation of financial products known as over-the-counter derivatives. It was signed into law on December 21, 2000 by President Bill Clinton. It clarified the law so that most over-the-counter (OTC) derivatives transactions between “sophisticated parties” would not be regulated as “futures” under the Commodity Exchange Act of 1936 (CEA) or as “securities” under the federal securities laws. Instead, the major dealers of those products (banks and securities firms) would continue to have their dealings in OTC derivatives supervised by their federal regulators under general “safety and soundness” standards. Thanks Billy!

Right now there are over $700 Trillion in notional value of OTC derivates. You don't think that has had any cause in income inequality Phil?? So Phil you may want to rewrite that piece and add your own legislation as a reason for income inequality for starters.

When are you guys that support either the Dems or the Repubs. realize that both parties have contributed mightily to the income inequality in this country and that neither of these parties are the solution, they are the problem? I once read a blogger that said we are getting ****** by both parties. Dems willl overtly **** you, while Repubs will covertly **** you. Truer
 
**** the more I read about Phil Gramm, the more my blood boils. I can't believe that this dude has the audacity to even have WSJ publish an article about "real" causes of income inequality. That's rich coming from you Phil. I didn't realize he was the beneficiary of being hired by UBS as the VP. Hmmm. You force the repeal of Glass-Steagalll, you get rewarded by being offered a lucrative salary from UBS and then UBS gets bailed out by the taxpayer.

"In 1999, former Senator Phil Gramm (who is, incidentally, Senator John McCain's economic adviser and cochairs his presidential campaign) set out to completely gut the Glass-Steagall Act, and did so successfully, replacing most of its components with the new Gramm-Leach-Bliley Act: allowing commercial banks, investment banks, and insurers to merge (which would have violated antitrust laws under Glass-Steagall). Sen. Gramm was the driving force behind the Gramm-Leach-Bliley Act, as he had received over $4.6 million from the FIRE sector (Finance, Insurance and Real Estate donations) over the previous decade, and once the Act passed, an influx of "megamergers" took place among banks and insurance and securities companies, as if they had been eagerly awaiting the passage of Gramm's Act. Everything in between Glass-Steagall and Gramm-Leach-Bliley (i.e. Savings and Loan crisis/bust) was, in large part, the incubation period for what would take place over the nine years that would follow the passage of Gramm's Act: an experiment in deregulation.

Shortly after George W. Bush was elected president, Congress and President Clinton were trying to pass a $384 billion omnibus spending bill, and while the debates swirled around the passage of this bill, Senator Phil Gramm clandestinely slipped a 262-page amendment into the omnibus appropriations bill titled: Commodity Futures Modernization Act. It is likely that few senators read this bill, if any. The essence of the act was the deregulation of derivatives trading (financial instruments whose value changes in response to the changes in underlying variables; the main use of derivatives is to reduce risk for one party). The legislation contained a provision -- lobbied for by Enron, a major campaign contributor to Gramm -- that exempted energy trading from regulatory oversight. Basically, it gave way to the Enron debacle and ushered in the new era of unregulated securities. Interestingly enough, Gramm's wife, Wendy, had been part of the Enron board, and her salary and stock income brought in between $900,000 and $1.8 million to the Gramm household, prior to the passage of the Commodity Futures Modernization Act.

In 2003, Gramm left the Senate to join UBS, which had acquired investment house PaineWebber due to his deregulation bill. At UBS, Gramm lobbied Congress, the Fed and the Treasury Department. During Gramm's tenor at UBS and as a lobbyist, Congress passed the Responsible Lending Act, billed as an anti-predatory-lending measure, but was called the "Loan Shark Protection Act" by consumer advocates, as it was designed to preempt stronger state laws against anti-predatory lending. The Fed largely ignored the underlying and growing problems within the subprime mortgage/housing markets, as Bernanke famously acknowledged the housing market in April, 2007 as, "[showing] signs of softening," but said that a "sharp slowdown," is unlikely. Then, according to Mother Jones magazine, Henry Paulson became the Treasury Secretary in July, 2007, when, "In 2005, [at] Goldman [he] securitized $68 billion in residential mortgages and $23 billion in 'other assets' primarily related to CDOs," (Mother Jones, August, 2008). With such self-interest, and a lack of the nation's interest, we can see how this subprime mess was allowed to escalate to such great proportions."
The Link

The Link

And ******** like Phil Gramm have the balls to pontificate to anyone that will listen about the "real" causes of income inequality and ***** about having to pay more taxes. And not that I believe the rich should pay more in taxes. To the contrary, I believe we should do away with the the tax codes and have EVERYONE pay a certain percentage of taxes and eliminate the loopholes that allow the rich to take advantage of these tax codes.

"Proposals to raise taxes on high-income Americans in the name of "fairness" not only threaten economic growth. The experience of nations with large governments shows that this argument is simply a red herring for a massive tax increase on middle-income Americans.

In the end, taxing is about feeding government, not redistributing wealth. What nation ever set off on the road to big government promising to tax middle-income workers, and what nation ever got big government without doing it?"

Wow Phil show me where I benefitted from continued growth in my job as a result of you paying less in taxes. It was you and your crony capitalists (both Dems and Repubs) that resulted in downfall of the US economy and the loss of my job in 2009. And not 1 of you ******** have served any time in jail for the malfeasance and fraud perpetrated on the US public, like those that were jailed during the S&L crises in the '80s.
 
what a fascinating editorial! I agree with Musberger and UT1986 that there were things left out, but the stuff they included was fascinating. I didn't know that the US was the most progressive country in the world in terms of taxation. To hear people moan, we are one of the worst in the Western world. I also wholeheartedly agree with many other points made within the editorial.
 
The article did mention the differences between the standard rates of taxation and the preferential capital gains rates. A top rate of 15% for capital gains allows the super wealthy to retain 85% of their gains. A hedge fund manager that "earns" $30 million gives up just 15% of that windfall. Meanwhile, a small business owner of moderate success might pay 15.3% (13.3% this year) of SE tax and another 25% of income tax and possibly state tax on top of that. He's lucky to retain 50% of what he "earns."

At the bottom, tax filers tend to be credit recipients more so than taxpayers. Typically, a low wage earner with dependents not only pays no net taxes, but also usually receives a refund that surpasses the amount of SS tax and Medicare tax (payroll taxes) deducted from their pay. This also favors the mega corporation. How?

By having the nations taxpayers subsidize wages via EIC, Food Stamps, etc. it makes it possible for workers to accept a lower wage than they would otherwise be willing to accept. The corporation (Walmart for example) can choose from thousands of applicants whom otherwise would not look for work do the fact the compensation would be insufficient to live off of. The tax subsidies in essence flow to the mega rich who now pocket the difference on the backs of the middle class taxpayer.

You don't see this dynamic in the article either do you?
 
You must log in or register to reply here.

NEW: Pro Sports Forums

Cowboys, Texans, Rangers, Astros, Mavs, Rockets, etc. Pro Longhorns. The Chiefs and that Swift gal. This is the place.

Pro Sports Forums

Recent Threads

Back
Top