Good article by Reich. This is the stuff the public needs to focus on.
Getting the big money out of our political process is step five?
Big money in our political process is the main obstacle to solving almost every other problem. It is the first step.
The question of how is never addressed in articles such as this with any real plan of action, just empty platitudes.
To come up with a real plan of action you have to understand the problem.
The problem with big money corrupting our political system is that when big money legislators pass legislation it is designed to benefit the big money interests and not ordinary citizens.
As the big money interests have no interest in getting the big money out of politics, legislation (including Constitutional amendments) cannot solve the problem. The only way to pass legislation to get the big money out of politics is to first replace the big money legislators with small donor legislators.
The problem has to be solved BEFORE legislation to solve the problem can be passed.
While most activists, politicians, etc. promoting legislation mean well and are just doing what they were taught to do all they are accomplishing is providing an excuse for candidates and citizens to not have to take any action now while still feeling like they are doing something.
There is a possible solution that can be accomplished by citizens taking action now- stop voting for big money candidates.
If you keep voting for big money candidates you will keep getting big money legislators.
Ordinary citizens can declare at www.onedemand.org now that they will only vote for small donor candidates for Congress and/or president in 2020 to create and demonstrate demand for small donor candidates.
Citizens can also declare they will contribute to small donor candidates in 2020. Just 10% of presidential election cycle voters committing to just 100 dollars in contributions would total over 1 billion dollars.
The contributions will be made DIRECTLY from participants to the candidates, not through One Demand to give the participants control of who they support.
Citizens have a choice. They can keep listening to all the chatter from the pundit class offering empty platitudes or they can try taking real action now offered by another ordinary citizen.
Mr. Reich: you used to have the ear of the President. You still have some pull. Although the centrist Democrats are in no hurry to do anything that might upset their corporate donors, at the very least, you should force their hand by testifying in front of Congress about these five steps. Yes, it would require that someone in Congress call for a hearing, so some work will need to be done.
My point being that there are thousands of online communities with comments sections and in many of them people are calling for these types of changes. Yet, nothing will ever happen if we don’t take these demands in front of Congress and demand them in person every single day. Even then, I doubt very seriously that merely making demands will force their hand in Congress. However, it will force the next candidates for office to be ready to insist upon these changes when running against the incumbents currently in office, most of which need to be un-elected. There are only a few that deserve to remain in office for having done the will of the people. We all know who the good ones are.
How about all the new gamers in the last 20 years or more which continues today.
Privatization of military and military contracts. Any contracts with the government. Creating million/billion dollar CEO’s every years.
If you are a con artists and know politicians you are a instant millionaire with a simple scam of the taxpayers coffers. Our government ran by repubicans and neoliberal/corporate democrats have privatized way too much in the form of contracts to their buddies who then become millionaire/billionaires.
As is usual of Mr Reich , he fails to acknowledge The Clinton administrations role in helping to create the environment for this flim flam to occur. He was in Cabinet at the time and is allegedly a trained economist so should be fully aware of it.
In 1997 Bill Clinton passed into law a bill lowering the tax rates on capital gains by 8 percent.
In other words prior to this legislation one paid 8 percent less in taxes if income earned via capital gains over wages or salary. After the passing of this legislation the tax savings jumped to 20 percent.(when the 2+ percent hike to the top marginal tax rate factored in)
If a CEO received a 1 million dollar raise in salary over and above the top tax rate he would pay 400000 of that in income taxes. If that same CEO took that raise in stocks instead and earned an extra million via Capital gains he would pay 200000 in taxes.
It was after the passing of this bill that more and more CEOS started demanded stocks over salary increases as they recognized full well that the tax savings advantages would be huge. They started that scam because Clinton created the environment for it to happen.
A more obvious fix and one of the first would be to tax incomes from any source at the same rates. A guy working the line in a steel mill earning 1000$$ a week should not be paying a higher rate of taxes then someone flipping stocks and garnering 20000$$ a week.
Why is capital gains taxed at a lower rate? Is it because only a small percentage of the people earn any significant amounts through capital gains and that small percentage of people is the 1 percent?
As to the first step to stopping the scam, why not just tax buy-backs at perhaps 50%, rather than prohibiting them. That would negate the advantage to current big shareholders, and if a corporation did a buyback anyway, at least the treasury would capture the benefit. I’ve been suggesting such a course for some time.
Apparently Mr. Reich doesn’t understand current US tax law.
Companies are already not allowed to deduct compensation in excess of $1M. That was part of the last tax reform package.
Section 162(m) (enacted back in 1993) capped the deductibility of executive pay at $1M, unless it was “performance related” (the reason why companies began paying their executives primarily in stock - to retain the tax deduction). The most recent tax act repealed this exception.
I would expect him to be better informed.
I’m wondering if these measures are due in part to diminishing liquidity ?
You pay the CEO’s in shares - then you increase shareholder value thru buybacks.
At the same time, divestment from predatory corporations is escalating.
I have wondered for some time why we have not been seeing the effects of these divestments in the press, as regards the diminishing liquidity they surely must be effecting.
Probably this is an academic point of inquiry, but as a one time stockbroker it interests me.
“Gaming the stock market” is possible only because of decriminalization of reform era and New Deal regulations (media calls it deregulation), a majority of which occurred when Bill Clinton was POTUS and Reich was Secretary of Labor.