As masters of the universe gather in Davos, Switzerland, to discuss income inequality amid caviar and champagne, as their lobbyists gather in Washington to dismantle and destroy the Dodd-Frank financial reform law, as the 2016 presidential campaign looks to become a battle between America’s “royal families,” and as the Real Clear Politics summary of polls suggests Congress has become unpopular with nearly three-fourths of the nation, consider the following.
A good opposition research team could create a powerful plan to lump together Mitt Romney, Jeb Bush and Hillary Clinton as royal family candidates and run against them all in Democratic or Republican primaries, from the right or from the left. The one candidate with the best ability to fight this approach — and to gain from it — is Hillary Clinton, if she is savvy enough to understand the risk and seize the opportunity.
Let’s consider three proposals that would position Clinton and Democrats as populist capitalists in ways that would break up the big banks, rebuild U.S. infrastructure, create huge numbers of high-wage jobs, bring perhaps a trillion dollars of foreign-held capital back to America, unlock enormous asset value, lift markets and have a significant chance of being enacted into law with bipartisan support.
Proposal One: Break up the banks through market mechanisms by lowering the capital gains tax rate to 5 percent for the sale of assets of spinoff stocks from major banks that voluntarily “break up.”
Proposal Two: Modernize America’s infrastructure by lowering the corporate tax rate to 5 percent for repatriated capital of multinational corporations brought home if that capital is used to purchase Rebuild America bonds. Note that corporations employing repatriated capital to purchase these bonds could sell them on public markets and use the proceeds from those sales for any business purchase they those.
Hillary Clinton could support, and Congress should enact, a bill sponsored by Sen. Elizabeth Warren (D-Mass.) and supported by Sen. John McCain (R-Ariz.) to restore a partial, modernized version of the Glass-Steagall Act.
Rep. John Delaney (D-Md.) has offered an important bill employing a similar strategy that has received high praise from former President Clinton and support from numerous Democratic and Republican sponsors, including Sen. Roy Blunt (R-Mo.).
Proposal Three: Hillary Clinton could support, and Congress should enact, a bill sponsored by Sen. Elizabeth Warren (D-Mass.) and supported by Sen. John McCain (R-Ariz.) to restore a partial, modernized version of the Glass-Steagall Act.
One of the most brilliant people I ever worked for and learned from was then-Sen. Lloyd Bentsen of Texas, who later served as Treasury secretary under Bill Clinton. Before entering the Senate, Bentsen was a CEO and financier, and in government he sought to achieve liberal goals through both government- and market-based strategies. In a perceptive essay in The New Republic, Paul Wieck labeled Bentsen a “progressive capitalist,” which is the rationale for the populist capitalist phrase I coin here.
Lowering the capital gains tax rate for sales of spinoff financial asset sales would unlock huge value for investors, generate significant political support from investors who would reap great profits from these transactions and dramatically reduce the risk from “too big to fail” that will almost certainly and shamefully cause a future crash and bailout.
The deal for repatriation in exchange for Rebuild America bonds would finance a gigantic upgrade to our infrastructure without requiring government spending that would increase the deficit. It would generate substantial revenue from mass transactions that would not otherwise occur, with the revenue used to reduce the deficit or fund vital programs. It would create a vast new program for high-paying jobs from a dramatic rebuild that would not otherwise occur.
These plans would empower Clinton to seize the jobs issue, draw a dramatic contrast between this populist capitalism and crony capitalism, create a powerful alliance with Warren behind her bill to restore a partial version of Glass-Steagall, and take a national leadership stand for higher wages and less income inequality that would modernize the great economic legacy of the Bill Clinton presidency.