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Barron's
Editorial Page Editor for Barron's, a national business and financial weekly, published by Dow Jones & Company; author of A World of Wealth: How Capitalism Turns Profit into Progress
PROFILE
Tom Donlan
Guest
FROM Tom Donlan
To the Point
Economic Inequality Fuels an Angry Electorate Five days before the Iowa caucuses, the presidential campaigns of both political parties are more chaotic than ever. Donald Trump is dropping out of tomorrow's final debate in a battle with Fox News. Bernie Sanders spent part of today with the President in the Oval Office. Meantime, prospective voters face a troubling reality: wealth is concentrated in fewer hands since the 19th-Century and the days of the Robber Barons. Democrats and Republicans are appealing in different ways to Americans who fear they're being left behind by a booming economy and a changing culture.
To the Point
Is Economic Recovery Increasing Economic Inequality? Today's Dow Jones Industrial Average jumped over yesterday's record high. It's a "golden age" for corporate profits, which are the largest share of the economy since 1950. But the portion that goes to employees is close to the lowest since 1966. Both liberal and conservative economists are worried because the gap between the rich and the poor is growing so fast. The gap is also alarming Democrats — and some Republicans. Eighty-five billion dollars in federal sequestration could increase unemployment by 700,000 jobs without making a dent in the markets or corporate earnings. How much is the Obama Administration to blame? Is there a potential fix that might appeal to partisans on both sides?
To the Point
Gerrymandering and Political Gridlock on Capitol Hill Republicans warned about voter fraud in last year's elections, while Democrats said the big threat to a fair outcome was voter ID. But the real crime was gerrymandering, the re-drawing of Congressional district boundaries so that Republicans got a much bigger majority than they deserved. That's according to a Princeton scientist who wants the task of reapportionment every ten years transferred from state legislatures to independent commissions. Are the Red States of the South less Red than they appear to be? Is gerrymandering the reason Congress can't get anything done?
To the Point
The Continuing Disconnect between Wall Street and Main Street Although it's down a bit today, the Dow hit 13,000 this week for the first time since May, 2008. NASDAQ flirted with 3000. One US company, Apple, is now valued at over $500 billion, higher than the gross domestic product of Poland, Belgium, Sweden, Saudi Arabia or Taiwan. Yet manufacturing growth has slowed, construction spending has slipped, and consumer spending remains weak. Both housing construction and Americans' after-tax income actually fell in January. What accounts for the disparity? How important is it? What can be done about it? And how will all this play out in this year's elections?
Which Way, L.A.?
Tax Fairness and the Presidential Campaign Is America's tax system fair? President Obama calls progressive taxation " the defining issue of our time ," an question of "economic fairness." The Republicans call it "class warfare." Elizabeth Warren, who helped the Consumer Protection Bureau and is now a Democratic candidate for the US Senate, recently spoke out against the tax disparity on Jon Stewart's The Daily Show. Should the rich pay a higher tax rate? Is that a penalty for achieving the American Dream?
To the Point
Tax Fairness and the Presidential Campaign When Mitt Romney released his tax returns, they showed a rate of just 14 percent on $20 million in profits, dividends and interest. The next day in his State of the Union address, President Obama called for tax reform that's become known as the Buffett Rule, calling economic fairness "the defining issue of our time." The President called for a 30 percent minimum tax on millionaires. "Tax fairness" will be part of his reelection campaign. Romney says it's all about "envy," and Republicans call it "class warfare." We ask a prominent pollster if Americans really care. Whatever happened to "progressive" taxation, where the richest pay the highest rates of all? With lower rates, do they really invest in creating new jobs? If their rates are increased, will they be penalized for achieving the American Dream?
To the Point
Wealth Inequality in America Whether Washington allows a federal shutdown or not, massive cuts are being made in federal programs for the poor and the hungry. Last week, New York Times food-writer Mark Bittman and 4000 others associated with a group called Bread for the World fasted to focus on increased suffering that will barely make a dent in the deficit. They also pointed to growing inequality, with the richest 400 people now owning more wealth than 50 million American households combined. But, is it government's job to level the playing field? We hear from Bittman, an investment banker who wants to pay more taxes, economist and and others.
Which Way, L.A.?
Barack Obama and the Perils of Populism The New York Times reported last week that President Obama has derided Wall Street " fat cats ;" he's called health insurers "greedy;" he said West Virginia's Massey coal company put, "their bottom line before the safety of their workers." In the aftermath of the Gulf oil spill, he's been scathing in his attacks on BP. What are the long-term consequences of short-term politics?
To the Point
Barack Obama and the Perils of Populism Tony Hayward spent this weekend watching his yacht race off the Isle of Wight, another black eye for the CEO of what used to be called British Petroleum. But while BP is British owned, it employs 20,000 Americans, twice its payroll in England. Some 40% of its shares are held in the United States. As President Obama and the Democrats bash BP — along with Toyota, health insurers and Wall Street, do many Americans see a threat to pensions and jobs? Do they distrust government as much as they do corporations? While Obama's populism might have short-term political value, what about the long-term? Is it time for him to cool his rhetoric or turn up the heat?
To the Point
Unemployment: How Long Can This Go On? The Senate's newest member, Scott Brown of Massachusetts, was one of 13 Republicans who voted this week in support of a jobs bill, which provides $35 billion for highways, mass transit and tax credits for employers who hire new workers. With 15 million Americans out of a job and unemployment still close to 10%, it might create or save as many as 1 million, hardly a dent in the long-term problem that worries economists most. The author was Leading Democrat Harry Reid, whose bid for re-election is in serious trouble. How did his latest effort go down with the folks back home in Nevada? What are the social and psychological impacts of unemployment? Could it lead to unrest? Is it time for another New Deal, even if that means more deficit spending?
Which Way, L.A.?
Profits of Doom: Breaking Wall Street's Addiction to Greed President Obama says free enterprise should reward hard work, but that "it does offend our values" when executives get huge bonuses, at the same time their companies are getting taxpayer bailouts to stay alive. So his so-called "pay czar" has cracked down on executive compensation at AIG, General Motors and five other companies.
To the Point
Profits of Doom: Breaking Wall Street's Addiction to Greed President Obama says free enterprise should reward hard work, but that "it does offend our values" when executives get huge bonuses at the same time their companies are getting taxpayer bailouts to stay alive. So his so-called "pay czar" has cracked down on executive compensation at AIG, General Motors and five other companies. At the same time, the Federal Reserve has issued guidelines to discourage short-term risk-taking, prevent pay practices that endanger the long-term health of American banks, and reward long-term successes. Are the real villains being punished? Will unprecedented government interventions protect against another recession or is free enterprise the best protection after all?
To the Point
The G-20 and the Future of the Global Economy As the old G-7 becomes the G-20 , there's talk of economic "recovery," but good times may be limited to the financial industry. In the so-called "jobless recovery," millions of people still can't make ends meet, and protesters in the streets of Pittsburgh claim Wall Street is running the government. Even some market fundamentalists say they're right. Are the same people who presided over one disaster in charge of preventing another? Will the G-20 approve new regulations to crack down on excessive risk that endangers the world economy?
Which Way, L.A.?
Can Barack Obama Save the Failing Economy? Two weeks before inauguration day, President-elect Barack Obama is lobbying Democrats and Republicans for a stimulus package that is 60% federal spending and 40% tax cuts. He calls it " The American Recovery and Reinvestment Plan ," and today he emphasized accountability and transparency .
To the Point
Obama Pushes Stimulation, but How Much and How Soon? Two weeks before inauguration day, President-elect Barack Obama is lobbying Democrats and Republicans for a stimulus package that is 60% federal spending and 40% tax cuts for individuals and for business. The major goal of his " American Recovery and Reinvestment Plan " is three million new jobs, mostly in the private sector. It's the New Deal, Keynesian economics used during the Great Depression. Obama is hoping for buy-in from fellow Democrats and Republicans, but supporters fear it won't be big enough, soon enough to make a difference. Opponents call it an "anti-stimulus" plan that could lead to stagflation. We hear both sides.
To the Point
Europe Pushes to Rework the Global Financial System In this weekend's meeting with the Presidents of France and the European Commission , President Bush agreed to a series of summit meetings that could change the way capitalism is practiced internationally. The countries of Europe are pushing hard for more regulation of the global economy. Heads of state will begin meeting right after the US election. The goal is curbing the reckless excesses that led to the current crisis, which could mean restraints on tax havens, hedge funds and executive compensation. The Bush White House and American business interests are warning against over-reaction, asserting that risk-taking is the keystone to prosperity. Do the Europeans want an international super-regulator? Since the crisis began here, will the US have to make some concessions? What's at stake for individual Americans and the credit-card economy?
Recommended
To the Point
Ex-FBI Director Comey tells his side of the story Today, former FBI Director James Comey came close to calling the President who fired him a liar. The White House denied the claim and called it insulting, but Republican Senators did not challenge Comey’s truthfulness. Many questions remain: did the President try to obstruct a federal investigation? Later, we’ll go behind the “velvet rope” for a look at 5-Star health care for the richest Americans.
To the Point
Replacing Obamacare: Now you see it… now you don’t As the Senate deliberates replacing Obmacare, health coverage for millions of people is at stake. There've been no public hearings, and a draft measure won't be made public. Is the House version so unpopular that that Senate is hiding a version that looks much the same?