Are Donald Trump’s And Joe Biden’s Approach To Income Inequality That Much Different?

We can debate, deliberate, and argue about the various positions, perspectives, ideas, and potential solutions to Income Inequality all day, every day… But what each of us can do that would have any actual impact is about zero.

Even drastic initiatives by the country’s largest corporations would actually do very little to tip the income inequality scale. What would happen if every fortune 1000 company CEO took a huge pay cut to bring their compensation packages in line with regular workers?  Probably not much more that a blip on a chart.

When it comes to really making an impact on Income Inequality only our fearless leaders and representatives in Washington D.C. can make any profound difference.

If fact, even if somehow, we (along with those Fortune 1000 companies) discovered the “Magic Bullet” solution to Income inequality those folks in D.C. could undo all our potential good in an afternoon of passing bone-headed laws.

How do I know this? It’s all part of sad history over the last few years…

Example one of this would be the recent Income Tax overhaul which is sure to hurt many people in the middle-income range and crush non-profits since the tax incentives to donate have been greatly reduce.  With more corporate profits dropping to the bottom line because of reduced corporate taxes those big Fortune 1000 players have more incentive than ever to cut costs. That means less jobs and less investment in their businesses and less growth fueling economic activity.

So this recent tax overhaul gets a “D-“ grade for Mr. Trump and probably is not a good thing for balancing income inequality since it pushes more cash to big corporations and away from middle-class workers and the Non-profits trying to level the playing field for those caught near the bottom rung of the income ladder.

But recently Joe Biden gave us a few hints on how he might attack income inequality…  Let’s see what his “letter grade” might look like compared to Mr. Trump’s…

In a recent speech Mr. Biden proposed a number of solutions that have been floated by the Democratic party’s most progressive members, like offering free college to everyone and banning tactics used by employers to keep workers from being paid higher wages.

But he noticeably stopped short of pushing some of the more radical proposals from the party’s left flank. Instead, Mr. Biden offered more mainstream ideas, like providing more federal funding for infrastructure projects and making the tax code less friendly to investors while expanding tax credits for low-income families.

He stayed clear of ideas some of the party’s rising stars like Senators Kirsten Gillibrand of New York and Cory Booker of New Jersey, have floated. Like a variety of potential initiatives including: A universal basic income payment for all Americans, and a government-funded jobs program that would guarantee employment to everyone willing to work.

Biden went on to point out that, in his view, growing inequality is creating frustration and hopelessness that ultimately undermines American democracy. “This gap is yawning,” he said. “And it’s having the effect of pulling us apart. You see the politics of it. And the country’s not going to stand for it forever.”

A plan to make higher education free, Biden said, could increase the number of people in college to 9 million. He estimated the measure would cost $6 billion annually, which he said could be paid for by eliminating the “stepped-up basis loophole” that allows heirs to reduce the capital gains taxes they pay on inherited assets.

We all know that more education can boost an individual’s income and potentially reduce the income inequality gap.  If it is the right career-oriented education employers demand.

To his credit, Biden recognizes that the impact of automation and technology on jobs, for example, will only deepen that inequality and demands a policy response.

An unintended positive consequence of this $6 Billion/Year higher-education program would be the systematic reduction, over time, of huge student debt going forward which should promote spending on big ticket items like homes and cars that could juice up the economy.

I would give Biden a “B” grade for his idea on promoting lower-cost or free higher education while avoiding universal basic income. He missed the “A” because he would do this on the backs of capital gains taxes on inheritance. Why should the results of someone’s lifetime work become property of the US Government?  They paid taxes on their income for their entire life why not leave them alone when they die.

Bottom line… Trump is not doing a good job on this Income Inequality problem while Biden may have some good ideas. He just needs to find a way to pay for them.

Clinton v.s. Trump… Who Will Do the Most To Fix or Amplify Income Inequality?

lady and manIncome inequality is not a good thing by any measure. More people earning more money and spending that money on everything from new homes to cars to groceries and vacations is what helps our economy grow for everyone. If only a few people control all the wealth and income, then the economy will continue to weaken and no one will win.

That said, boosting income for the lower 99% artificially through transfer payments (free money giveaways) and other economic tricks and tactics will only provide an unsustainable short term partial fix with a day of reckoning on the horizon where the 99% will ultimately feel most of the pain. If the upper 1% lose 90% of their income they will still have more than enough for the essentials. Not so for the lower 99%. An economic shock like that would be devastating.

99 - 1It is essential that this Income inequality puzzle is solved. It effects everyone in the country in so many ways and influences the ecology, our health, and personal safety.

So what will Hillary Clinton or Donald Trump do to improve or amplify Income Inequality if they get to the White House?

Recently the New York Times asked their readers to choose the most important question to them from a selection of fifteen possible questions. Nearly 90,000 readers responded and the Income Inequality question scored the second most burning question right behind a question on climate change.

While the televised presidential debates can look like a mud wrestling match at times the candidates’ responses in a newspaper story show only the actual words they are using not the rest of the distracting circus show.

The New York Times asked the candidates:  “What would you do to reduce extreme income inequality in this country?  The actual word-for-word text of their answers is in the actual article but I will summarize what they said here:

Hilary Clinton basically said how terrible income inequality is and laid out her proposals to help reduce it. Her list included promoting profit sharing for all employees, more jobs, support small businesses, 12 weeks paid family leave, universal pre-school for every four-year old, and a fairer tax system. She finished with the clinton-trumpstatement that; “We won’t raise taxes on people making less than $250,000.”

Donald Trump used his valuable New York Times ink to blast Hilary of course. He claimed that she is an extreme globalist who helps foreign corporations and governments raid wealth from U.S. workers. His solution to reduce Income Inequality is to control our borders and get the fair-trade agreements with our trading partners to be more fair. And he also proposes to “massively” reduce taxes, regulations and energy costs so “America can be the great jobs magnet of the world.”

Both responses are scary for anyone who knows how economies really work…

Hilary Clinton’s response looks like a typical politician desperately running for office who is offering the world to her potential voters without facing the realities of costs. When you do the math, if you taxed 100% of the income of the upper 1% you would not be able to sustain this kind of spending. Not to mention how fast the 1% would relocate to a more tax friendly country so the year two tax receipts would be zero. And she better not even think about a wealth tax. This will send people for the doors. That wall on the Mexican border would be to keep wealthy Americans in the USA so their wealth could be taxed away. You think  wealth tax would not get on the table?  It’s already there in the form of the property tax we all pay whether we own a home or rent. Yes renters… When the property tax goes up you rent will go up.

And Hilary’s promise of not raising income taxes for people making less than $250,000 a year feels a lot like Obamas affordable care healthcare program promises like how we could keep our own doctors and our insurance premiums would go down.

Donald Trump’s response seems to show that even though he is representing himself as some kind of business person he doesn’t know much about the real mechanics of operating an economy.

IE Chart1Scary…

So all we learned from this New York times article was that neither presidential candidate has any idea about what to do to get the US economy working again. All they care about is winning the election.

Where does that leave us?

Basically if you are counting on the fine people in Washington or your local city or state governments to magically wave their wands to solve the income inequality problem then you will probably be wrong. The Federal government consistently spends more than they take in right now and many state and governments are technically broke when you consider the huge municipal employee retirement obligations they are hiding.

The government in any of its many forms doesn’t have the money or motivation to tackle the income inequality problem.

It’s really up to us to tackle the problem ourselves…

To start, if every man, woman and child in this country made a commitment to better education for our children and not relying on strangers to do the whole job within ten years you would see a whole new income inequality formula. Without the right education a person cant even get on the first rung of the income ladder.

maxresdefaultBy commitment to education I mean little things like reading to our toddlers every night (even if it’s the sports page), making sure teachers know you are involved in your child’s education, and putting the priority on getting homework done every night.

And if there is any man, woman, or child who is not ready to make the commitment to their kid’s education then you might want to say that they have earned there spot and their child’s spot at the lower end of the income ladder.

Harsh… Yes, but that’s how economies really work. Without leaders that inspire people to commit to their goals you can’t ever tax/spend or deregulate/untax your way to a better economy.

The people need to do the hard work not the politicians.