Martin Bashir | February 22, 2013
>>> the reality based community has 3r0 deuced a most illuminating report today on income inequality and unlick previous research, which merely documented how far behind the 99% had fallen, this research tells us how we got here in the first place. as the author says, the reason income inequality has been increasing has been the rising income going to the top 1%. most of that has come in capital gains and dividends. this information comes with just seven days left until the so-called sequester cuts hit on march 1st . and you might think the data would have some affect on congressional debate about how to trim the deficit without strangling our economic recovery. and again washington never was much of a reality-based community. let's bring in professor michael eric dyson of georgetown university , author of "debating race." and william cohen , who, of course, is a columnist for bloomberg view and the author of "money and power." so, bill, as greg sergeant in "the washington post " points out, i will read you his fine writing. this finding is directly relevant to the current debate because the president and democrats want to offset the sequester in part by closing loopholes enjoyed by the wealthy, such as the one that keeps tax rates on capital gains and dividends low. now, closing loopholes is a fair way to do this. but if it would also help stop the decline of the middle class , why wouldn't people support it?
>> well, first of all, martin, the congress would have to be not on vacation and working away --
>> that is an important point.
>> let's remind viewers that. they are not working. they are on holiday.
>> the second thing, this is a very nuanced argument, in my opinion. because first of all the capital gains tax rate has gone from 15% to 20% at the first of year, so it's already gone up and then the taxes on the wealthy have gone up to 39.6% as of the first of the year. so there has been an increase in taxes. now, this is a very subtle argument but i think we need to make sure people understand it.
>> the reason that wealth has gone disproportionately to the 1% is because to a large degree they are the ones who are creating new companies for good or for worse, they are creating new companies, getting huge capital gains , and selling their stock into the stock market and they are getting capital gains as a result of that. you have to be very careful not to choke off that level of innovation by raising taxes too high on people who do, in fact, are willing to take risks with their capital.
>> but, bill, mitt romney paid an effective tax rate of 9% on $22 million of income.
>> which is absolutely obscene, absolutely obscene. however, he is not a job creator despite what we said. we've been talking about him not being a job creator for years now. but there are other people who take real risks with their capital and we don't want to snuff out that level of risk taking.
>> professor, i want your thoughts on capital gains , but i also want you to say something about the minimum wage because it's sort of fallen off the radar this week after being announced by the president at the state of the union address . his proposal is to raise the minimum wage to $9 per hour. would that also help bind the wage gap in this country? is that not true?
>> well, martin, every little bit helps, even though progressive economists have said it won't help as much as we might think. it does help more than not having that minimum wage . the people on the other side of the isle say if you raise the minimum wage , who is going to pay for it? the small business owners. they will get crunched and you're going to have a negative impact on the economy by giving a little bit to some but taking a lot from these small business owners. i don't buy that. when we talk about income inequal ilt, wages, interest, and taxes have decreased the inequality. business income and retirement income have exacerbated it, and capital gains and dividends have done it even more. so the reality is that, yes, i think brother cohen is absolutely right. we don't want to choke those off who contribute to this economy but we don't want their gains to choke the rest of us. the thing is we want to close the loopholes. what the president wants to do is to close loopholes to raise the revenue that could be gained by cutting some of these social programs that the conservatives want to do. they want their cake and they want to gorge themselves with it as well. the rest of us are saying let us enjoy some of that cake, blow out the candles on our birthdays, and have a reasonable distribution of income for the 99%.
>> bill, to professor --
>> dyson's point, it's also the case that it's not just income disparity and wealth disparity but also we're choking off social mobility in this country. this is becoming like britain and other parts of europe where there's somehow a kind of nobility which owns all the assets and no one else can get anywhere near that.
>> you're absolutely right. one of the beautiful things about this country is american dream . if you have an idea and you execute it beautifully, you can, you know, rise to whatever level in the society you can do from your own --
>> in any sector of life.
>> in any sector of life and the last thing we want to do is put ceilings on people's ability to achieve what their dreams are, and i think we've in effect done that some of the things we were talking about by nobilitizing wall street and the people that work there.
>> republicans are always using some trumped up controversy to thwart the president's agenda and, you know, the issue of capital gains we just discussed. they'll say this is some kind of boll she -- boll sha vic plot but there isn't much evidence to suggest higher capital gains diminishes economic growth .
>> if they think it's boll she vic they better trotz ski their way over to a better understanding. the inequality in america threatens the national security . literally. because what we haven't talked about so far, martin, besides the excellent point you made is this will gut the military. the sequester goes into effect and the borders of this country will obviously be much more vulnerable.
>> professor michael eric dyson , bill cohen , thank you, gentlemen, both.