Dylan Ratigan Show | December 02, 2011
>>> despite the president's best efforts, senate republicans defeated his plan for extending and expanding the payroll tax cut next year. an unfamiliar position for a party that usually favors less taxes. their argument, in this case, is that expanding tax cuts for most americans and paying for it by taxing the rich is simply unacceptable. but as think progress sums this one up, they're essentially raising taxes on 160 million middle class americans to protect the income of 350,000 millionaires. and in another bizarre political twist, more than two dozen republicans also voted to kill a plan backed by gop leader mitch mcconnell , that would have extended but not expanded the current tax break , and paid for it by slashing the federal payroll. so once again, we find ourselves at an impasse with the clock running out. sound familiar? and once again, both sides are digging in. listen to this.
>> we're going to keep pushing congress to make this happen. now's not the time to slam the breaks on the recovery. otherwise, congress may not be leaving. and we can all spend christmas here together.
>> we don't believe in higher taxes and we don't believe in more spending. but we do want to work with this president in terms of finding common ground and seeing how we can create jobs.
>> our specialist today claims raising taxes on the rich is what we need to do to create jobs. and that the real job creators aren't big business or big wigs, it's the middle class . nick hanover is a venture capitalist and the cofounder of second avenue partners. he's also co-author of the new book, "the garns dens of democracy," in stores now. welcome, nick. thank you for taking the time.
>> matt, thank you so much for having me.
>> you're going to be the newer, hipper, younger version of the enlightened capitalist, the role warren buffett has played for so long. a lot of people were angered by the provocative bloomberg op-ed you had out yesterday that basically said a little redistribution could help create jobs right now. and you're not a marxist making this case, you're a successful entrepreneur. explain your thinking, sir.
>> you know how people see the world is based on the assumptions they make about how it works. and most americans , certainly the republican party is in the grip of some very 19th century ideas about how the economy works. and they have this very sort of linear, mechanistic metaphor in their heads, that if you just poor money into reach people like me, that jobs will squirt out the other side. and clearly that's not happening. if you look at what's happened to tax rates on the very rich and the amount of wealth that people at the very top have accumulated, and the obvious jobs problem we have in this country. but if you understand the economy as it is, as a complex adaptive system , as literally an ecosystem, then what becomes transparently obvious is that it's a system of interconnected feedback loops and jobs are literally a consequence of the feedback loop between customers and businesses. so in that sense, middle class consumers are the engine of job creation and economy. look, matt, businesses hire when they have more customers and they fire when they have less customers. that's by a full order of magnitude the only thing that matters to businesses. what we've done in this country over the last 30 years is we have systemically impoverished the middle class to benefit a tiny minority of citizens, like me. and this is just -- this is -- it's crazy. and the only mathematically --
>> let me, nick, as i -- because you're singing to the choir in a way, i think what you're saying is so important. i want to make sure that some of our gurus on the panel get to ask questions that will help frame what you're saying. i know ari melber, jump in.
>> i'm here to frame. also, the space needle looks great behind you. i grew up in seattle, so i always like to see that.
>> thank you.
>> are you basically saying, then, that this is all about spending? a counterpoint to you would be, well, what if the people at the higher income brackets were required to spend all of any tax benefit or temporary tax relief that they got? would that change your analysis?
>> it's just not -- it's just not feasible. look, i literally make about 1,000 times as much as the average american , all right? and the problem is that my wife and i, we only have three cars. i buy a couple of three pairs of jeans a year --
>> have you thought about getting a fourth car? i'm here to frame this discussion.
>> i could. but, you know, the problem is is that we accumulate wealth and sock it away into hedge funds in new york and other things, you know, at 100 or a thousand times the rate at which we spend. as i pointed out in the article, for people like me, the one truly expensive thing that we spend money on is private air travel , which doesn't benefit the economy. you have this very insidious problem in this country, where you have pushed all the income to the very tippy-top. the top 1% now gets about 24, 25% of total income. but the top 1/10 of 1% gets half of that. and that money is literally clotted -- it's like a clot in the economic circulatory system . and this is the fundamental problem.
>> let's get krystal in. krystal's got a question.
>> hi, nick. have you thought about a thousand cars? no, just kidding.
>> no. no.
>> well, you mentioned in your lead up that you felt the middle class , which i agree with, has been systemically undermined. i agree with that, so i was wondering if you could talk about the policies that have been detrimental. and with a forward policy, what you think we could do to start to reverse this increasing trend of income inequality ?
>> that's a very long discussion, but there's simply no doubt that middle class americans have been trapped with stagnant wages and escalating prices for 30 years. part of the problem, of course, is income inequality . when people like me have a situation in which price is no object, we push prices for everyone else up and force people down the scale in the middle class to borrow, to keep up. so this is a, you know, certainly a significant part of the problem.
>> toure --
>> but fundamentally, we have the situation where we have pushed income to the top, right, in all sorts of ways, both economic and cultural, and we have decreased the rate at which we tax the top by 60, 70% over the last 30, 40 years. and the collision of these two things is devastating to the middle class . this country simply cannot afford to invest in the things that support the middle class , to enable them to continue to be robust participants in our consumer-based economy, in this feedback loop . and the way to get it started again is for people like me to begin to pay their fair share again and support our customers. the thing that drives me craziest about these policies is that these policies are destroying our customer base .
>> would you -- nick, i want to get toure in. we really need more people talking like this. toure , i know, has got a question.
>> so are you supporting massive tax cuts for the middle class ? and i would like to hear you unpack a little bit what you mean by middle class . are you saying that the upper middle class is really the -- or the lower middle class ?
>> the median family in this country makes like $32,000 a year. the median wage is $26,000, right? how do you afford health care and housing on $26,000 a year? i mean, it's almost impossible to conceive. and there are a million ways -- look, i'm not -- i'm not a policy person, but if the people at the top, in the top 1%, and of corporations, were paying taxes at historic rates, you could be recycling 300, $400 billion back into the economy in ways that would benefit the broad middle. look, the country -- let me give you a great example. the country currently spends about $400 billion a year on various kinds of tax breaks to help people create wealth. the country used to be in the business of helping people become wealthy. well, today, the bottom 60% of americans share just 4% of that benefit. the top 1% get something like half the benefit. so we don't -- we don't help people become wealthy in this country today. we pay the wealthy for being wealthy today. it's absolutely insane and upside down.
>> nick, it's a fantastic message. i'm so glad you're speaking out on this. i hope that this message is going to go viral, like elizabeth warren 's and like the warren buffett stuff, and you're going to keep at this. because we need more high net worth patriots like you to sound this call. thanks for writing this and thanks for coming in today. thanks, as always, to our mega panel.