What’s your short list of actionable complaints?
After reading this article from the New York Times about what Volcker says still needs to be done about the financial system (the title of his speech was “Three Years Later: Unfinished Business in Financial Reform”), I’m wondering if he wants to join the #OWS Alternative Banking working group. He’s got his own “short list of actionable complaints” list, not that different from mine:
- make capital requirements for banks tough and enforceable,
- make derivatives more standardized and transparent,
- ensure auditors are truly independent by rotating them periodically,
- end too big to fail,
- create and enforce reserve requirements and capital requirements for money market funds, and
- get rid of Fannie and Freddie, or at least make a plan to.
He also pointed to the weakness of the ratings agencies as one of the big reasons for the credit crisis, so I assume that “making the ratings agencies accountable” may be on the list too, at least in the top 10.
I was interviewed last night about being on the Alternative Banking working group for #OWS (I will link to the article if and when it comes out), and I mentioned this speech as well as the general fact that many of these problems named above are really non-partisan, especially “Too Big to Fail”. This column from the New York Times, written by former IMF chief economist Simon Johnson points this out as well.
That makes me encouraged and depressed at the same time. Encouraged because there really does seem to be a consensus about what’s terribly wrong with at least some of the most obvious issues, but depressed because in spite of this we haven’t solved any of them. To make this vague sense of depression precise, just take a look at what has happened to the original “Volcker Rule”: it has expanded by a factor of 100, from 3 to 300 pages, making it impossibly difficult to understand or probably to follow (unless you have fancy lawyers who do nothing else besides find loopholes). It’s reminiscent of our tax code. Speaking of which, here’s yet another “short list of actionable complaints” to fix that.
I’m enjoying how many people are now coming up with personal short lists of actionable complaints (even if it’s in response to complete stalemate of the political process). It’s a way of claiming and maintaining our freedom and agency. It isn’t as easy at is seems, because you have to sort out the important from the annoying, and the actionable from the existential. If you haven’t already, I encourage you to write your own short list, and feel free to post it here.
mathbabe 
Although there are some people such as Volcker making simple and sensible suggestions, I am quite pessimistic about the situation. Too many people on Wall Street have too much at stake here, and their lawyers and lobbyists are quite experienced and adept at turning simple things such as the Volcker rule into a complex morass of exceptions, undermining the original intent completely. The Dodd-Frank legislation is only the latest example of this. Without a strong political leader (President, Speaker of the House, or Senate majority leader) who understands this well enough to cut through the BS, I don’t see much hope.
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Your points reminds me of the saying that change occurs when the current system becomes obsolete.
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Let’s hope.
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Volcker remains a fucking rock star. Loved that article too.
FoW
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Cap compensation. Something like 500,000 to begin with, something more reasonable later. No institution receiving any kind of public assistance (“bailout”) should be allowed to pay any employee more than standard public sector pay grade. No institution with a responsibility to shareholders should be able to pay (any form of compensation) any director/employee more than twice (to pick a threshhold) the median annual compensation of all its employees.
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I’ll bite:
1-Universal basic health coverage. I think that this is the single best way to encourage entrepreneurship.
2-Campaign spending caps. I’m pretty sure this would require a constitutional amendment.
3-Fund ratings agencies through trading fees so that they are more accountable to investors.
“get rid of too big to fail” seems really vague to me. How is that actionable?
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Nice list.
Agreed that “get rid of too big to fail” is not a specific action- but there are plenty of ways to approach. For example:
1) Make the top salary at a protected bank the same as at the Fed. Most people will leave and the result would be a utility bank. This won’t get rid of the bigness but will get rid of the root problem, which is risk at the taxpayers’ expense.
2) Force a progressive tax structure on absolutely everything in sight depending on size. This will decrease the size of the institutions in question very quickly.
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Sorry, but the short-list of actionable complaints to “fix” the tax code that you’ve linked is complete garbage — it’s just a typical right-wing regressive wet dream. Simplifying the process of filing income taxes and making the tax system vastly more regressive are orthogonal goals, but the article treats them as equivalent. Most of the rest of the “plan” doesn’t consist of anything — at least two of the five “steps” are completely content-free, and another is not actionable. And, of course, there is exactly zero evidence that the plan would do anything to achieve the goals it allegedly is aimed at. Why link such trash?
Ok, sorry; I should say that actually I enjoyed your post quite a lot and I just don’t understand why you would throw a link to nonsense in the middle of what is otherwise an interesting and compelling piece.
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Great, what is your tax code short list? I admit I don’t understand taxes at all, but I’d love to learn.
Cathy
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Ha, okay, fair enough :). Though given my status as “random person on the internet”, I don’t think I have any more expertise than your average person who understands how marginal tax rates work.
Things I would like to see as far as personal/household taxation is concerned:
1) Increased progressivity in the tax code, most easily achieved in three ways:
a) just adding brackets and raising marginal rates in the income tax (I support confiscative tax rates on very high incomes)
b) taxing capital gains as regular income
c) raising the cap on Social Security taxes (already done for Medicare taxes)
2) Income tax simplification: I’ve used the 1040EZ for almost my entire life, except one year when I did some odd jobs, was paid as an independent contractor, and had to use the full 1040 form, which is terrifying. If we eliminated the most common deductions (mortgage, children, ??) then the IRS could just mail most people an already-filled-out form to look over and mail back. (“Get rid of the most popular deductions” should be paired with changes and the low end of the tax scale to make this hit not matter for, say, people in the bottom 4 quintiles. This suggestion will probably never happen.)
3) Regional tax-sharing for property taxes: the current system of local tax rates varying drastically from one place to another is bizarre and inequitable.
4) I’m not sure what the current setting of the estate tax is, but I think it’s hard to see a case for tax-free transfer of more than a million or two dollars of assets; I’d be happy with a return to Clinton-era estate tax (something like 55% kicking in between half a million and a million dollars).
I really don’t know much about corporate taxes in the US, except that we have high nominal rates and low actual rates. This is obviously a silly situation, and so I guess I’m in favor of changes that would make corporate taxes more uniform (probably in a way that results in nominal and actual rates meeting in the middle), but I don’t have a clue what the “right” way to go about this is.
Finally, I think the principle of “sin taxes” is a good one and should be applied to things other than alcohol and cigarettes — in particular, some form of carbon taxation is urgently needed (though I’m personally ok with cap and trade, too) and I’m all in favor of financial transactions taxes (I think this has been discussed here some time not so long ago?).
Unlike the article you quoted, I won’t pretend that anything I’ve mentioned is about creating jobs or increasing economic growth; most is aimed at a more equal and equitable society, while the last couple suggestions aren’t really “about” taxation at all.
So, what do you think? 🙂
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