Former US Senator Bill Bradley believes a better tomorrow is within our grasp, despite the economic pain that the middle class is experiencing today.
He wrote his new book We Can All Do Better to address the growing despondency and resentment he sees among Americans. With the right vision, leadership, and civic participation, he believes we can work our way back to prosperity and growth.
Chris was honored and excited to speak with the former Senator, particularly to uncover what awareness there is of the Three Es among our top political leaders. Not surprising for a longtime insider, Senator Bradley looks through the lens of working within the current system — i.e., if we can fix its shortcomings, it will solve our problems. Potential structural limits to growth, such as Peak Oil, are less bright on the radar.
There is much to learn here about what our Congressional leaders are focused on and what they are not. Listeners will undoubtly find points to agree with, and possibly others that are out-of-alignment with the concerns presented in the Crash Course. We expect an animated discussion to ensue in the Comments section below.
We take it as a good sign that widely-known veteran politicians such as Senator Bradley are increasingly standing up to admit "there is a problem" — that's the first step towards taking corrective action. And we're very thankful for the time the Senator has given to speak to our community.
On What's Missing Most from the System Today
I think politicians generally have been viewed anywhere from humorously to angrily by citizens at various times in our history. I think right now we have a very specific problem and that is we have had a long run as the dominant country in the world, as the country where people come in order to make a better living because the economy is dynamic enough and there are far sighted investments made. I mean whether it was Lincoln doing land grant colleges and transcontinental railroad. Or Eisenhower doing the federal highway system or varieties of other examples. We have had times where we are able to think long term and we simply need to do that now. We need to do that because if we don’t we are going to have problems down the road that will potentially endanger our status as the number one economy in the world.
On Money in Politics
The Dodd Frank Bill is an improvement, but it didn’t deal with the basic question. I mean it is pretty simple: limit leverage, increase capital, divide the investment bank function from the commercial bank function and you are back in the business. You have an economy that is growing, you have people who are able to invest over the long term. And the financial system now is really not functioning as well as it could. I think you mentioned the five public policy errors that put us into the mess in 2007/2008. If we are going to seriously address the health of our financial system we are going to need to do the things that I just mentioned. I think that the key point here is what prevents us from doing that. That is where I get the money and politics. For example, in 2009 and 2010, those two years the financial sector, financial industry contributed $318 million to people in Washington, politicians in Washington. And so it shouldn’t be a surprise that we got a watered down financial reform bill instead of dealing with the basic questions, as you said. We kind of hid the fact we were not dealing with the basic questions in a morass of complicated regulatory and legal verbiage. I think that what we need to do is we need to peel back and address the basic questions that you raised in terms of leverage, in terms of capital adequacy, in terms of the investment bank function versus the banking function. I think the time should be over where large mega banks that in 1990 had 10% of the financial assets in this country and now have 75% of the assets speculate with depositors money.
I do think money is at the core of the problem. You have mentioned and we have talked about all of the changes that could have been made that weren’t made and all the mistakes that were made since the mid 90’s. Well if you go from 1990 to 2010 you have the financial industry contributed $2 billion to politicians in Washington. Because the Supreme Court says that money is speech and you can’t limit speech therefore you can’t limit money. The only way you can deal with this issue is by making a constitutional amendment that says the federal, state, and local government may limit the amount of money spent in a political campaign. It is that simple.
On What's Needed for Economic Recovery
There is no question that we have to both cut spending and increase taxes. The key is you don’t want to do that in the next year or two because that would make our economy worse; fewer people working, the deficit is bigger. What you want to do is you want to address the structure of programs such as Social Security. If you increase the retirement age from 67 to 69 over 50 years, well that is not going to have an impact on the budget this year or next year but it is definitely going to change your numbers of what it costs the taxpayer. And I think that we have to have that kind of far range thinking. I think that we need taxes in this country that are I think that those who have more should pay more, for example. But we also need to have a tax system that taxes things more than employment.
Right now 40% of federal revenues comes from Social Security tax, Medicare and unemployment taxes. And if we simply funded those programs with a tax on things, say aluminum, paper, various other products like that and inefficient buildings and cars. If you did that you would be able to have a tremendous incentive for people to hire. You would still preserve the programs but you would liberate the private sector to do what it needs to do which is hire more people at better wages.
Given that political discussion often brings out strong emotions on all sides, we remind everyone that we take a politically-agnostic approach here at Peak Prosperity. Please make any comments as objectively and fact-based as possible.
Click the play button below to listen to Chris' interview with Senator Bill Bradley (24m:42s):
by rje