The New York Times reports today that investment bankers make more than 10 times what other Americans working in the private sector make. And that multiple is conservative, as it takes into account the secretaries and other office workers who are employed at investment banks. According to the Bureau of Labor Statistics, "]i]nvestment banking paid an average weekly wage of $8,367, compared with $841 for all private sector jobs." Your typical hedge funder makes more than that still.
If I can quote the departing Senator Larry Craig (R-ID) for a moment: "Jiminy God!" That is a lot of money. It seems that the greatest problem facing your typical investment banker is "What in the hell do I do with all this money?"
A far cry from the problems facing real working Americans. Problems with real life implications that are tearing apart the social and economic fabric of our society (though you might not know that, given how poorly the news media covers these issues).
"I just don't think that as a country we've conceptualized that this is not our father's or our grandfather's economy," Mr. Stern said in an interview. "We're going through profound change and we have no plan."
"We're ending defined benefit pensions in front of our eyes," said Mr. Stern. "I'd say today's retirement plan for young workers is: 'I'm going to work until I die.' "
"Workers are incredibly, legitimately scared that the American dream, particularly the belief that their kids will do better, is ending," said Mr. Stern. He is trying to get across the idea that in a period of such profound change, the old templates, the traditional ideas and policies of even the most progressive thinkers and officeholders, will not be sufficient to meet the new challenges.
"We can't be the only country on earth that asks our employers to put the price of health care on its products when a lot of our competitors don't," he said. "And job security? Even if you want to stay with your employer, as in the old economic model, we're seeing in many industries that your employer is not going to be around to stay with you."
A comprehensive new approach is needed, but what should that approach be? Franklin Roosevelt always hoped to inject a measure of economic security into the lives of ordinary Americans. But the New Deal was seven decades ago. Workers are insecure now for a host of different reasons and Mr. Stern wants the labor movement to be part of a vast cooperative effort to develop the solutions appropriate to today's environment.
He told me, "I'd like to say to the Democrats that we are as far today from the New Deal as the New Deal was from the Civil War."
He wants more people to pay attention to the big issues that affect not just union workers but all working families: How do you bring health care to all? What do you do about retirement security? How will the jobs of the 21st century be created?
And what about schools, energy, global warming, the environment?
With that in mind, I'll say what I've said many times before. The super rich should pay higher income taxes. Significantly higher income taxes. As recently as 1963, people who made more than $400,000 a year were paying marginal tax rates of 91%. So let me suggest something that is less than radical. People who make $10 million or more a year - mostly CEOs and investment bankers - should pay a 90% marginal tax rate. With no deductions of any kind allowed. That would give them at least $1 million a year to live on. Not too shabby, eh? And since I'm a nice guy, I'd be willing to phase in their new tax rate over a 3 year period, so they could shed some of their additional properties and useless luxury cars before they get hit with a full 90% income tax rate. We can reduce the rate progressively from there - for example, people with incomes between $5 million and $9.99 million could pay an 85% marginal tax rate. Those on the low end of the scale would still get to keep $750,000 or more. But you still wouldn't be able to take any deductions at all until your pay scale drops below the $1 million a year mark.
However, there is the risk that this could increase the number of people who die, tragically, each year from taxes. I think the country can carry that burden, though. With a smarter, fairer tax plan, wiser use of federal tax dollars and a reduction in overall federal spending, we could actually start to beat down the national debt that the Reagan/Bush/Bush administrations have handed down to the children and grandchildren of the baby boomer generation [remember, Bill Clinton had 4 years of budget surpluses in his administration...].