Good morning, everybody, and welcome. It's really a pleasure to have all of you here with us at the special conference honoring Ned Gramlich and the importance of policy research. I'm Susan Collins. I'm the dean of the Gerald R. Ford School of Public Policy at the University of Michigan, and this is a really special event for us. Before I go any further, though, I do want to give a very warm welcome to Ruth Gramlich, who is Ned Gramlich's wife and a number of members of their family. Ruth, it's wonderful to have you here and Rob and others as well, especially because this is another important day for them as well. Ruth and Ned's granddaughter, Rachel, is graduating from high school, and I understand she'll be joining us for part of the lunch, so a special day for them, and we're particularly pleased that they are spending part of it with us today. Well, today's conference honors two centennials, as many here in the room may know. It was 100 years ago this year that the 12 Federal Reserve banks first opened for business, and it was 100 years ago as well that the first policy program at the University of Michigan was launched. Of course, it was known by a different name in 1914. It was a program that was started as part of the University's Political Science Department. It expanded over time. It evolved as an institute, and finally in 1995 a school. In 1999, we were named for President Ford. Well, Ned Gramlich played key roles in both of those institutions. As you'll hear, he was here as a governor at the Fed for five years, and he was truly a founding integral part. He was one of the founding fathers of the Ford School. He was a driving force behind the University's decision to make us a school with the ability to grant tenure and to take our place among the outstanding professional schools on University of Michigan's campus, and he was in fact our very first dean. So how better to celebrate the importance of research for good policy as we recognize both the great policy school and also one of the most important policy institutions in the world than a conference in honor of Ned Gramlich. In a minute, our conference organizers, Paul Courant and Dan Kovitz, will tell you more about his remarkable legacy. I would simply like to say at this point that for 100 years, the Ford School has produced many policy leaders and many faculty who we remember fondly and of whom we are truly proud, but really none has been more accomplished, had a greater impact, or been more beloved than Ned Gramlich. I'd like to thank the Federal Reserve for their work and their assistance with today's conference. Dan Kovitz and his colleagues have really been behind this idea 100 percent and have been a great joint partner in putting this together, and that's really a testament to Ned's ability to link together his students, his academic colleagues, and policy practitioners. I'd also like to thank Adarsh and Ranveer Trehan for their generous support, which helped to make this conference possible. Today's event is attended and viewed online by many, many of Ned Gramlich's friends, colleagues, his former students, and I'd like to thank all of you, whether here in the room or watching us online or being streamed, for joining us today. And with that, it is my pleasure to turn things over to our conference organizers. Paul Courant, who was the Harold T. Shapiro Professor of Public Policy and Economics, and Dan Kovitz, who is Associate Director of the Federal Reserve's Division of Research and Statistics. Paul and Dan. Thank you, Susan. Thank you all for being here. It's really a great pleasure to be able to honor Ned Gramlich and his work, much of which was done here. I'm at the Federal Reserve Board and, of course, much at the University of Michigan, which are the two institutions that we represent. I also have to say, in a lifetime of co-authoring with people with the letter C, right, I'm COU. He's COV, so if he goes second, it's the... So we've had a tremendously good time putting this symposium together, calling on old friends and colleagues of Ned's and some younger folks who may have known Ned less well but whose work was shaped by him either directly or via the simple fact that it's really hard to find any important topics in policy economics that Ned didn't work on. The old friends were especially gratifying. All of us, almost all of us in this room, have put together conferences over the years. And, of course, the people you want to have as participants are busy and hard to get. In this case, all we had to do was say the magic words, Ned Gramlich. And everyone we asked who did not have a pre-existing plan to be hundreds, at least hundreds, in some cases, thousands of miles away, said, of course, thank you for asking. That would be great. When is it? I'll be there. And frequently, they'd say, there's no way I could turn down something that would honor and celebrate Ned. Many of the people in this room can speak to both the joys of being Ned's colleague and his friend. Ned and I wrote something like 10 papers together, as well as a book on budget deficits that unfortunately nobody read. We unfortunate because we didn't get any royalties and even more unfortunate because if they'd read it, things would be in much better shape. So we like to believe. So we also went to dozens of baseball games, argued over the definitions of many crossword puzzles, went to basketball games. Ned always played basketball together, and Ned always won. That's obvious. And played tennis together, and sometimes I won that. That was better. He was fun to work with, and he was fun to play with. And although he was always serious about his work, and for that matter serious about his play, no one flat out enjoyed the work as much as Ned. As you can see from the topics that we will be discussing today, Ned had great taste in problems. Issues that he worked on 40 years ago and more are still generating interesting arguments. And among the many reasons for mourning his untimely death is that although he would have been frequently angry and frustrated, who isn't, by the political economy of the past seven years or so, he also would have really enjoyed being part of it, talking about it, writing about it, even finding humor in it, and it would have been a pleasure to share that experience with Ned. Importantly, there is more that we left out than we were able to fit into a one-day symposium. Among other things that we aren't discussing today, Ned worked on poverty, income distribution, like she did poverty, we will mention, income distribution generally, public employment, minimum wages, school finance, tax limitation, the demand for public services, baseball compensation schemes, and the fiscal systems of several other countries. He was also an institution builder, as Susan pointed out. He was the founding dean of the Ford School, an engaged member of the Board of Governors, interim provost of the University of Michigan, acting director of the CBO. In all of these settings, he tinkered and conjoaled in design systems that made things work better, and that continues to serve us today. And known to many of you, but not all, he was a great teacher, again both serious and playful. His students talk about him in much the same way that his colleagues do. He was fun to work with, he helped to make the work interesting in no small part because he found it so interesting, and of course there isn't a great deal in the world of public policy that tickles the, there is a great deal in the world of public policy that tickles the funny bone, and that fact was not lost on Ned. This conference has pulled together, was pulled together to celebrate Ned and the importance of policy research, and our method, of course, is to bring together leading policy researchers of our time to talk about the issues of the day that are related to Ned's work. Ned was an exponent of positive economic analysis who was motivated by scientific considerations, how do things work, but even more by normative considerations, how can we make the world better? He loved economics, and he loved thinking like an economist, about pretty much everything. All of this leads to what might be termed the Gramlech's theorem on policy economics, which is as follows. I don't have a slide, so you'll have to pay attention. One, there are interesting problems out there, problems that matter for human well-being. Two, the intelligent application of economics to many of these problems, perhaps all of them, will yield understanding and provide direction for policy. Three, therefore it is our ethical duty to use economic methods to do policy analysis and to do it well, and honestly, the way Gramlech would do it, and then apply it to the policy arena. That's a little too serious, because we have to add that it's also our duty to have fun along the way. Again, following Ned's example. And now it's my pleasure to introduce my colleague Dan Kovitz to say a few more words. Thank you, Paul. On behalf of the Federal Reserve, I would very much like to welcome all of you to what promises to be a very interesting and meaningful day. Like Paul, it has been a pleasure for me to help put together this symposium. I have known Ned's family for many years, and I had the privilege to work closely with Ned on a loan guarantee board when he served as a governor here at the Fed, his second tour of duty, the first being a stint early in his career as a Fed economist. As governor, Ned engaged effectively in the monetary policy process, but was also deeply committed to issues relating to consumer affairs and community development. As Paul mentioned, finding enough topics and participants for the program was not difficult at all, given the breadth of Ned's work and his connections to so many involved in economic research and the implementation of economic policy. However, some topics had to be left off the program, including some that Paul already mentioned, and my personal favorite, federal loan guarantee programs. Ned was on several loan guarantee boards, some of which he chaired, and he also gave a speech on the economics of federal loan guarantee programs. So while all of Ned's work will not be discussed today, the topics we chose are among the most important issues in policy that Ned worked on during his career. Our hope is that the sessions generate lively and in the spirit of Paul's addendum to the Gramlich theorem, fund discussions. Before we begin, however, I'd like to thank the Ford School for co-sponsoring the conference, as well as a colleague of mine in the Research Division, Rodney Ramcharan, for helping us to think through which areas of Ned's prolific career to highlight in the conference. I would also like to thank staff both here and at the University of Michigan for their substantial support. And finally, I'd like to add that we are especially pleased that the Gramlichs, all of the Gramlichs, Ruth, Rob, Mary, Rachel, Sammy, Kate, Jack, and Jake, are all joining us for various portions of today's program. So with that said, let's get started with the celebration of Ned, his work, and the role that economic thinking and research can play in shaping good policy. Paul will introduce our first moderator. So the first session will be moderated by Marina Whitman, Ned's colleague and mine. There's information in the large program sheet about Marina's career, which, like Ned's, is too long to recount, and she'll introduce her panel. So you have a brief biography of her, as I said. I'll just say that in addition to a distinguished academic career, very distinguished, because many of us were required to read papers of hers when we were in graduate school. She's also been a member of the Council of Economic Advisors and a Vice President of General Motors and Marina. The show is yours. Thank you, Paul, and Dan. I can't tell you what an honor and privilege it is to be part of this event, even though our substantive fields, Ned's and mine, didn't particularly overlap, but Paul graciously found something for me to do. I came, Ned and I got to know each other fairly late in life, quite late in mine and moderately late in his, but it didn't take any time at all for me to become part of the legion of Ned Gramlich, fans and loyalists. The biographies of our speakers are in your program. Each of them is a titled professor or researcher at the various institutions they're at, so I won't repeat that information, except to say that I believe one piece of it is already wrong. That is, Sheldon Seger, who is president of the Russell Sage Foundation, is listed as being on leave as a distinguished university professor at the University of Michigan. I believe that Sheldon has now cut that cord, is that correct, and retired December 31st. Okay, we already had his retirement party, which misled me, but while we will continue to admire his work from afar, we do not realistically expect him back full time. And it's hard to believe this, but Sheldon has said that in the 12 minutes he's allotted, and by the way, I have time cards here, which I will utilize if necessary. He intends to talk about the link between fiscal policy solutions and the inequality debate, the trade-off in income tax reform, between promoting, preserving, saving an investment and preserving distribution of neutrality, and also some thoughts on broader tax reforms that is going beyond the income tax. So without further ado, Sheldon. There you go. Somebody look great. Thank you. Actually, Marina, I think you read somebody else's blurb. I don't know anything about savings, but that's okay. But that's fine. And I think I'm afraid I read Bill Gales, which I guess means that I won't have to read Bill Gales again. So I'm honored to be able to speak at a conference that commemorates Ned's contributions to policy research. And one of the things I did, which was a true pleasure, was to go back in Google Ned. One of the things Paul said, it's remarkable how many papers and books were widely read, but I picked out a few in my area on poverty and inequality. And just from reading a few papers, you get Ned's deep interest in applying economics to real world problems. He wrote about the minimum wage and the distributional effects of the minimum wage versus the disemployment effects in a 1970 something Brookings paper. He wrote about the distributional effects of unemployment after the recession of the 70s and focused on the extent to which unemployment and other transfers were cushioning the earnings losses differently for higher income or lower income workers. And he wrote about the welfare system. So I start with a few quotes and I guess we'll have to speculate whether the recent trends, which I would say are worse than they were when Ned was writing, would have made Ned less of an optimist. But I don't think so, but I focus on this because it's certainly it's the kind of thing I've said recently and then I went back and saw it with the Ned's in the 60s and I would say the 70s when I started there was a view that policy should be far-sighted toward the future and generous toward those of low incomes and I know Gene Sterley is going to talk about that today. Today it is harder to make all arguments I personally feel we've replaced too much optimism with too much skepticism. This is not the only domain of life where we are sadder but wiser we still push on and I think that's important for those of us who think we've had policy solutions whether it's the deficit book that Paul and Ned wrote or policies, anti-poverty policies that don't get much traction. So more closer to the topics that I've been involved in, two selections of Ned's research on the safety net. This is very relevant there are some people who argue that unemployment insurance caused the great recession to be as long as in deep it as it was certainly I think Ned wouldn't agree with that but again this notion of focusing both on the disincentive effects and the distributional effects come through this and then I found a paper which I didn't remember and then I printed it from Google and found out that it was actually in a book that Peter Gottschalk and I edited but after I read it I thought that was a really good paper I'm glad we asked Ned and his colleagues to write it but again this is really this is 1993 and as I'll suggest unfortunately things are a lot worse largely because of the decline in the relative importance of transfers the increase in the share of transfers received by high-income elderly persons the rising importance of social security taxes tax and transfer policies worsened this disparities by a notable amount and he was talking about growing inequality between the late 70s and the late 80s. So let me briefly talk about the poverty issue which I think most people are aware this is the 50th anniversary of the war on poverty and at least some people say well the war on poverty must be a failure because poverty remains high and spending is high therefore spending is ineffective and if there's anything we at the Ford school and Ned when he was teaching would have emphasized it's that correlation is not causation and indeed I've argued in work over a long period that the rising transfers were needed just to keep poverty from rising even further and so you need to think about the counterfactual certainly something that Ned tried to teach our students and so in my view poverty is high because we went from this golden age when it really was the case that a rising tide lifts all both that economic growth was trickling down to the poor the middle class and high income workers and during this period poverty fell rapidly and inequality fell slightly but that since the early 70s we've lived in this gilded age of rising inequality and obviously the quote from Ned in the early 90s was sort of at a period when some people were arguing well the increase in inequality we've seen as a temporary phenomenon it'll it'll be self correcting 20 years later it's obviously it's not we're in a period where inequality has increased rapidly and I'm just gonna skip because of my time a very simple picture of what it means to say a rising tide lifts all boats is the slide on the left that's roughly inflation adjusted family income at various points in the income distribution and all the bars are tall and they're pretty similar if anything the 95th percentile was a little bit less little bit less of an increase than the 60th percentile and we have this much prettier step ladder on the right which is what we mean when we say a rising tide no longer lifts all boats that income gains were lowest almost non-existent at the bottom and higher at the top but obviously a period in which all the bars are lower than they were on the left and so the argument which I've made in greater detail elsewhere is that it's the failure of the economy not the safety net that the poor would be much worse off without the war on poverty variety of causes that most economists have in the early years were arguing which one is 15 percent which one is 20 percent but I think the consensus is that all of these are important in various ways over this really remarkable 40 year period in which the real earnings of full-time full-year male workers has hardly has hardly changed I don't have time to do the footnotes about the details much the same about the counterfactual is said about the stimulus so Alan Blinder has a book in which he argues and there's a lot of research across the spectrum Robert Hall that basically the stimulus worked it just wasn't as big as it should have been in retrospect but again people are saying missing the counterfactual and focusing on correlation gee we spent all this money on the stimulus the unemployment rate is still high therefore the stimulus failed this is where we are now and that's why I'm grumpy and depressed and I wonder whether Ned could still be optimistic unemployment is high five years into the recovery I don't see any prospects for real wage growth for less educated workers we haven't had any for 40 years why we should why should we expect it now income and wealth inequalities are at high levels indeed wealth inequality I think has really increased more than income inequality since the Great Recession there's this relentless what I call deficit mania that threatens the safety net as we know it I'll just quickly jump to here a few policy recommendations and I think I'd like to think that Ned would agree that these are relevant given this 40-year period of inequality related to the quote about rising inequality of the 90s from his paper there were changes in the food stamp in the unemployment insurance program and the stimulus that it expired an example was that I guess it it may be less important now but the coverage of Cobra health insurance for laid off workers I don't know enough about how the ACA works note to know whether they'll be able to quickly get subsidized on the exchange the probably most important thing that came out of the welfare reform experience and then the recession experience is that it's fairly clear that we now have a safety net that works primarily for low-income workers if you're a low-income worker you get subsidized by the EITC but the experience of the 20 years post welfare reform is that there's a substantial group of people who are disconnected from work and welfare Robert Moffat recently wrote about this and it was picked up in the Washington Post and so if you really want to have a work-based safety net which is what we have what we're missing is the focus on providing a low-wage job of last resort by which people who can no longer get on welfare the long-term unemployed who are terminated from unemployment insurance ex-offenders who virtually nobody wants to hire end up now in a safety net without the kind of minimum benefit that I think Ned would have proposed expanding the EITC for childless low-wage workers and raising the minimum wage I think are less controversial but I think all of these are consistent with Ned's analysis that one can look at these issues I'm going to stop now and I know that Bill and Jean will have something to say about the revenue needed to pay for these program expansions thanks thanks Sheldon since I've already told you what Bill Gale is going to talk about I don't have to do that now let me just say then that you now know from my goof why I and many others really dislike those strings of messages that Gmail forces on us one tiny substantive point I guess it's something that Sheldon's very last comment reminded me of is that a lot of the things that seem to be stuck at the federal level and the minimum wage is one of them are being implemented and this ranges over a wide range of policies in various ways by various states and the state of Michigan is well on its way to raising the minimum wage in the state of Michigan I think to 925 an hour it's been passed by both houses and the governor said he signed it he will sign it so apparently the apparently somewhat hopeless block on legislation at the federal level is proceeding at the state so at certain states so without further ado I will introduce Bill Gale who's CV distinguished CV you have here to talk about all the things that shall I said Sheldon was going to talk about I very cleverly named my talk the Gramlich presentation so there might be a few of those up there where we get here okay great thanks so I was a little worried that I just been scooped when I heard the Marina's description of Sheldon's talk but then I thought maybe it's just a case of brilliant minds thinking alike and we we had the same we had the same thoughts anyway let me let me start by saying what an honor it is to be to be asked to speak here an event in honor of Ned I was one of those people that Paul referred to who eagerly accepted the opportunity to speak here Ned was both a first rate scholar and a truly nice guy I find myself continuing to stumble across his scholarly work in a whole variety of areas income distribution housing low-income family fiscal policy I was kind of depressed to hear your story Paul about nobody reading your book on fiscal policy because I'm in the process of writing a book on fiscal policy and so so I can't say I promise that won't happen but it's a it's a it's a useful lesson but let Ned is a classic example of a scholar doing interesting work on important and durable issues he's also a great example we're emphasizing policy research here he's a great example to me of someone who has the mind to do first rate academic work but and chooses to do that work in the policy arena there's a lot of work in the world that is brilliantly conceived and utterly useless in terms of thinking about the real world and Ned's work does not fall in that latter category on top of that he was a truly kind and generous person I probably did not know him as well as most people here but I found him utterly gracious entirely willing to take time to talk to people like me about ideas to solicit ideas to respond to feedbacks and one of the joys of the profession was working is working with people like him so let me having said all that I hope I haven't said the bar too high for my own talk but I hope that the talk fall sort of falls in the tradition of issues and substance that that that Ned would think was a useful contribution so I want to talk about three things as as Marina noted the first is to highlight the relationship between inequality in the fiscal problem I'll say more of that in the second in a second the second is to highlight the relationship between inequality and promoting saving and tax reform there's I think there's a lot of confusion about this in the literature or in the policy world and I think there's a very simple way to clarify and cut through the issues and the third is to talk about road the role of distributional effects and inequality in the analysis of particular taxes like carbon taxes of the VAT and the points are going to be remarkably simple and so if you're think that that you're missing something that I'm really saying something deeper I promise you I'm not I'm I'm making very simple points here alright so let's start with two facts when we talk about the long term fiscal problem the reason it's a concern is that chronic debt is thought to drag down the economy that is if we could get the fiscal house in order the reward would be stronger economic growth a larger future economy higher future standards of living etc that's that's if that weren't the case we probably wouldn't care at all about fiscal policy so that's point one point two is if you look over the last 20 years the distribution of growth has gone mainly to the high end of the income distribution I put up two separate numbers here two sets of numbers one from picketty sias and one from cbo's estimates of market income sheldon had some stuff a census money income which would be the cbo market income is a is a is a more general number that includes things like health insurance that that money income doesn't and so picketty and sias and cbo agree on the distribution of income 20 years ago in the early 1990s they get somewhat different of quite different estimates for the share of income growth over this over the subsequent 17 years picketty sias have almost all of it going or all of it going to the top 10% 60% going to top 1% cbo has 31% going to the top 1% 28 to the next 9 and 42 to the bottom 90 what's interesting what I want to highlight in both of those is that the distribution of income that sorry the share of income growth over the over that period has been disproportionately weighted toward the high end their issues with both sets and numbers and we can talk about them if you want but I think as a as a stylized fact except the fact that growth has been disproportionately weighted toward high-end people will combine that with the first point and if the main benefits of solving the fiscal problem or a stronger economy and the main benefits of a stronger economy go to high-income households okay at the risk of oversimplifying then then the benefits of fiscal solutions would accrue mainly to higher income households okay and that has a number of implications first the let me be clear here the goal is not to down play the importance of fiscal problem I just wrote a paper called without an hour about called forgotten but not gone about about the fiscal problem nor is it argued to argue that the bottom 90% of the population shouldn't care about the fiscal solution although you can see why they might not care if they're not going to benefit from from the growth that that would occur rather it's to emphasize that if these two facts persist it has big implications for what the right what the fair what the just fiscal solution is that is how much you place on low income how much you place on middle income how much you place on high income because there's two aspects of it one there's bearing the burden of the loss in government spending or the increase in taxes that somebody has to pay and then there's generally there's obtaining the benefits of a stronger economy so if most of the benefits or if those benefits are going disproportionately to high-income households then that suggests that a solution should be weighted more toward high-income households than otherwise would be and this last point is is too technical and I will I'll just give it I want to I would rather stay consistent with the fact that I'm saying simple points than at a complicated point okay so that's point one point two is tax reform everybody wants to either preserve distributional mentality and tax reform or in hand or or be progressive on the one hand and everybody wants to encourage saving on the other hand there's no tax reform that that people advocate as anti- saving okay but pro-saving and pro- progressive tax reform turn out not to I won't say they're impossible but they are very difficult if you're trying to do it just in the income tax and that's a function of the current distribution of income and the current distribution of income tax liabilities but let me let me talk you through this so let's go through three prominent recent tax reform proposals both Simpson Romney and representative camp in a lot of ways they look the same but it turns out that their distributional effects differ and their distributional effects differ because they treat saving differently and that's that's the key so if you look at the three proposals of the lot of this like a Sesame Street thing and you know these ways are similar and these ways are different they have basically the same top rate although camps sir tax is a little higher they all repeal the alternative minimum tax they all do something to itemize deductions basically cap them or restrict them the top corporate rate is either 25 or 28 they all move to a territorial system and they're all basically revenue neutral both Simpson actually raises more revenue than than current policy with the campus current policy and Romney was very explicit he wanted to raise the same amount of revenue as current policy so what are the differences the differences are in two things the distributional effects and the treatment of saving both Simpson was actually progressive relative to existing system camp is neutral within with an asterisk that's because there's some budget gimmicks it's the distributional neutral over the first 10 years after that it looks like it's regressive but but you know this is Washington and let's keep a sense of humor about it and roughly speaking roughly speaking it's I'm willing to call it distributionally neutral Romney's plan I estimated with a couple other people would be regressive that it was that is it would have to raise taxes on the middle class if it did everything else that it wanted to do and so the question that's come up over the years is well how did camp do it how did he come up with a distributionally revenue neutral distributional neutral revenue neutral reform that looks a lot like Romney's how come his is distributional neutral Romney's is regressive and the answer is the treatment of saving and it listed a number of ways here Romney quote wanted to promote unquote saving which we interpreted as not increase the taxation of saving and camp instead raises the taxation of saving massively so Romney would repeal the estate tax camp would retain it Romney would keep capital gains at 15 camp would raise it to 25 Romney would repeal the high income surtaxes associated with the health care reform act camp would retain them Romney would not restrict 401k contributions or or muni bond income camp would in the in the surtax which is sort of a pseudo AMT everything that camp does both Simpson does even more and both Simpson would even tax unrealized capital gains of death which is which is actually a big money item as these differences in the plans which generate the differences in distributional considerations and the reason that's the problem is that that we want a tax reform to be pro-saving generally people want to be distributionally neutral and it turns out that that's a very hard combination to come up with currently given the existing distributionally neutral relative to the current system which remember is more progressive than it was in the Clinton era because we kept the the Bush tax cuts for low income people but but not the top rates and the income distribution has become more skewed so it's it's just it's much harder to do tax reform now because of the changing progressivity of the system and the changing distribution of income so something's got to give in tax reform for closest all right the last point is just about specific taxes I personally am a huge fan of a carbon tax every time a report comes out I remind they're talking about which part of Antarctica is about to fall or the which part of the ice on Antarctica is about to fall into the water I remind myself of that I think there's also a fairly strong case for a bat it's more nuanced than it depends on other factors but I want to make a I want to link these things to inequality in the few minutes I have left the standard objection to both of these is that they're regressive Larry Summers has famous quote about the bat the carbon tax is also regressive my point is that it's a totally valid point it should not get in the way of implementing these taxes even if you care about distribution and regressivity and there's two reasons one is there a way to design offsets to these taxes we should basically first figure out what the best taxes and then if we want to offset those effects that's fine and second is what we care about is the distribution or the regressivity of the entire system not a particular components of it and if there happen to be particular components that are good for other reasons we should do them and then deal with the systemic effects as part of as part of the overall system so this is wiped from the paper from my colleague at Del Morse it basically indicates the regressivity of a carbon tax by income desile I think the the vertical axis is carbon taxes as a share of income so more is worse low-income household or worse this is from a paper by Eric Toder and others at the tax policy center on the value-added tax the bluish gray lines show the distribution of a straight broad-based value-added tax and remarkably it's not regressive that's because of some issues in the way they define income which we can talk about but but it's about proportional but then the what do you call those the coral colored lines show the effects of adding a refundable credit to the VAT which essentially gives people back the VAT on the first like ten thousand or fifteen thousand dollars of their income and you can see that's a progressive tax shift those two income and combination and so we shouldn't be scared of the distribution effects of what we might otherwise think of as good taxes for reasons relating to efficiency and saving and administration and environment and stuff like that so let me just conclude I think very much in the vein of things that Ned talked about and cared about and things that I learned about from him inequality is increased that makes policy formulations more difficult politically these emphasis on distribution of neutrality revenue neutrality is all status quo based and because the underlying baseline has changed the policy choices defined in terms of distribution of neutrality have become more difficult second we want to take that into account in terms of generating solutions that are both fair and politically workable it nothing is going to stay in in place if it's not broadly considered to be fair and you know consistent with with broad-based public goals I just completed writing a chapter for this this aforementioned book on fiscal history and in the US and one of the really interesting things to think about is which parts of the system stick and which parts of the system don't and it turns out that a lot of the things that people really want to change like getting rid of the income tax getting rid of tax expenditures massively forming social security and Medicare those are the things that have been with us for very very long times and the things that don't tend to last long are low tax rates or broad-based so so we need to take account of inequality if for no other reason than people's notions of what's fair and what's politically viable to pen dramatically on the current distribution of resources so we should last point we should take it account but we shouldn't be afraid of it there are ways of dealing with this stuff that should not should not constrain us to you know and best policy maybe we can move up to n minus one best policy anyway thank you very much thank you Bill and you actually did cover them all in the allotted 15 minutes our final speaker in this session is Gene Sterling now of the Urban Institute but who's had a distinguished and varied career both in government and the nonprofit sector and he's going to talk I believe about some thoughts in a book he has just published called Dead Men Ruling which I guess is a kind of paraphrase of John Maynard Keynes famous remark about the hand of some scrivener of the past in other words the fact that despite the fact that we are a very rich country legislators of the past from both parties have so tied our budgetary hands with permanent entitlements that there is zero leeway for new discretionary spending does that sum it up thank you Marine and it's an honor to be on a panel with you and Sheldon built three people who might very much admire and of course we're all here because we all especially admire Ned Gramlich and I was thinking of him today as I came to the conference because I actually went to the office a little early to make a last minute adjustment to a slide and I was walking down 21st street and those of you who live in Washington know that Ned often walked from his home on Connecticut Avenue and actually would often come by 21st street and walk right down here it's about a two mile walk mile to work and I saw I kept thinking of them as I as I came down here we also had a chance to work together over time at the time of his death he was actually working at both Michigan and the Urban Institute putting out books on the subprime mortgage before the actual full impact of the great recession had hit and earlier we had written a book together called the government we deserve with two other co-authors which actually dealt with some of the same issues today you can income distribution and fiscal policy and so on in fact I've still used that title the government we deserve for a column I do today so it's an honor to as I say to be here with everyone else to honor him I should mention also just as a matter of housekeeping we did a film a tribute to dead ground like several people in the room here actually contribute that film maybe you might raise your hand sees the bunch of them here and that film is now available online there was a couple of things in there was slightly sensitive early on but now everyone has given us permission we just made it available and maybe Susan Paul we could send an email to everybody with with with with that film or we can maybe listed outside at the table too so if you if you want to look at it there's some great tributes to him but not just the people as I mentioned this room but people like them Bernanke and Alan Greenspan so what do I want to do in in my brief period of time here I basically want to convince you of two things on this slide says I've got got four but but the two things are that we live at a time of extraordinary possibility so I don't think this would be a surprise to anybody in this room you know if you take any projection from the Federal Reserve or from Congressional Budget Office and you project out a number of years we project economic growth that might be economic growth at a rate we're not happy with it might be lower than we've had historically but it doesn't mean we're still not the richest richer than we've ever been in the past and we're going to get richer in the future and a large amount of what I wrote about this book dead men ruling is nothing more as let's recapture the ability to allocate that growth in ways that we think is useful and that we have extraordinary possibilities before us and when we talk about this being an age of austerity it's just wrong we yes we have constraints but they're largely self-imposed upon us they're a straight jacket we wrap around ourselves and to make it even more complicated in many cases if not most they're a straight jacket we tie around ourselves because of good things happening to us we live longer we're getting better health care I have this dream that sometimes that I'm sitting in the ways and means committee room and someone from the National Institute of Health comes in and shows your Rico we found this cure though expensive for cancer and when the audience is sitting back you know feeling pretty good about you know the possibility of our logger lives with those of our relatives and I look behind the podium and the members of Congress are sweating and wiping their browsing oh my gosh what's this going to do to the social security and Medicare trust funds the deficits are going to be even worse and that's that's really really what's going on in our fiscal situation I do want to make one very strong point which is which is a little more academic I think diagnosing this problem is that of a deficit is incorrect the deficit is a symptom of this larger problem the larger problem is basically the extent to which over decades this is built up over decades we have attempted to control the future in ways it's just not possible a future that cannot possibly be known fully certainly has uncertainties this attempt to control that future is what's really boxing us in and when you define it only as the deficit you're looking only at one one symptom it has implications not just for the way we conduct fiscal policy so we didn't distinguish between as people in this room know between short term and long term policy but it has implications for the way we do our our our econometric and and fiscal studies as well so as one proof I've got audiences for a number of years on this topic and I kept trying to prove that the world today is different than the past because the word deficits as well they have we always had profligate legislatures and and executives and aren't they just being profligate again is that the problem the difference between that world where your profligate year after year in the current world is that that if you want to call it proflicacy is built in and that's unique in all of our history so this little graph is nothing more than the extent to which revenues are taken up by what we call mandatory programs or commitments from the past it's already in the law that doesn't require any new appropriation by the Congress so basically this is the percent of revenues that are left after you've taken into account these mandatory sometimes called entitlement programs in interest on the debt and as you can see for the first time in US history in 2009 every dollar revenue had been committed before Congress even walked in the door now this has is a discussion in this book has enormous economic and political implications but among the political implications are to do anything with appropriations Congress has to raise the deficit to do anything new they've got to either raise the deficit or renege and this is crucial renege on a past promise to to the public so say the disease as before us is that basically these attempts to control the future set in motion a whole series of economic and political problems only one of which is is the level of say some some some current deficit and I should say that that attempt to control the future and I go through a long history in the book comes about both because of the automatic growth particularly in health and retirement programs but there's also automatic growth on many of the tax expenditures that Bill talked about such as the home markets interest deduction most of us live in housing that's 50% say larger than that say our parents live then we automatically got 50% higher tax break so it extends throughout throughout throughout the tax system we automatically basically have this growing and of course we also have and I go through this long history the Republicans basically came in around the about the around the late 70s early 80s and argued for what Jude Wyninski a Wall Street Journal editorial writer wrote called the two Santa theory his argument was this is that we Democrat we Republicans have never won the House of Representatives in 40 years or we had and when it I think there was I think it was 57 of 61 years they didn't have it the presidency from Franklin Roosevelt to 1968 was held by Democrats except for a short tenure with Dwight Eisenhower and they weren't sure they wanted to count them as a Republican and he said you know that's because they got to be Santa Claus they got to operate on the giveaway side of the budget we were always screwed we need to be Santa Claus too we need to have tax cuts we don't pay for and so as we move to the modern era we actually got the two Santas we had both spending increases that we didn't finance tax cuts we didn't finance in that automatic growth and spending on one side in tax cuts we didn't pay for on the other side basically created this together created this this situation as I say this led to four economic problems one of which everybody in this room knows the the threat of an unsustainable debt I'm not even going to discuss that because I think it's well understood what's a little less understood by the public but well understood by this audience is that we have decreased flexibility to respond to new emergencies that new emergency might be another recession look what's going on in Europe they didn't have the fiscal flexibility to handle their back-to-back recession you might argue they had more flexibility than they thought they had but at some level they have reduced flexibility whether you think that's a political constraint or an economic constraint it's still playing through we have less flexibility to respond to some new need like autism or Alzheimer's disease you know why do our elderly programs if Alzheimer's is growing problem why do we keep devoting more and more of the benefits earlier and earlier in in our lifetimes relative to expected death right the fact we don't adjust for retirement age means a larger larger percentage of benefits go to us when we're younger and yet we've got this problem coming on when we're older I'd like to argue we have a budget for a declining nation one example I give here's the growth in Social Security Medicare defense I've assumed some cutback and interest on the debt and you can see that anything else basically has to be has to be paid for out of deficits and that's crimping basically on those programs we might think of and there's a debate on how you organize them and design them but that we might think of as investment programs certainly we've really had a huge impact on children we've done a study now for six, seven years of the Urban Institute which we call Kids Share we examine the percent of the budget that's going to children and basically as you move forward towards the future nothing of economic growth is going to children so this budget is if you want to upside down it's more and more as financing consumption and less and less as financing investment and this doesn't even have to do with the tax issues the bill talked about them which add to them because our design attention policy which by the way doesn't subsidize savings it subsidizes deposits which is one of the reasons it doesn't work so you have a budget ever more financing consumption which discourages work particularly among those approaching older ages producing if you want to for the economy a negative rate of return and the things we might think might produce a positive rate of return infrastructure, investment children, education is going into a tailspin which I call a budget for a declining nation and I don't think by the way is built into any of the econometric models they don't really deal with that impact on growth in the three political problems I sort of already mentioned one of them basically we put politicians as position were to do anything new they've got to renege on a past promise so think about the last presidential debate when President Obama and Governor Romney were debating Medicare so Governor Romney accuses President Obama of cutting back on Medicare for the elderly which he did partly because that's partly how he paid far through a little more price controls that's how he paid for more healthcare for the non-elderly so he did cut back on Medicare for the elderly a little bit because it's unsustainable Governor Romney in turn proposed a voucher system which would have cut back if you want to on Medicare for the elderly and the president accused him of cutting back and so as soon as either one said I'm going to renege on some unsustainable promise the other immediately attacked them for what they do and politics plays on if you want to identifying winners it's not a good position to be in to identify losers and actually at least to a classic prisoner's dilemma which I think the politicians really are in if they lead they lose their Democrats felt but in 93 they did deficit reduction they exaggerate what they did by themselves but but they did some of this they lost the Congress for the first time they feel like they financed George W. Bush's tax cuts in 2000 the Republicans in turn believe when they were fiscal hawks back in the 50s and 60s they never won they never won elections I think there's truth to it there's it is a prisoner's dilemma and as you know for a prisoner's dilemma you've got to figure out some way of getting the parties to cooperate up front to be able to be able to solve it so here's just a tiny little bit more proof that the world is different today than the past here's the traditional budget scenario that we had for over 200 years our history by the way the same thing plays out in all the development nations of the world so you're running a deficit in the current period right but what's happening to revenues they rise with the economy I don't care if you have a tariff or an income tax revenues rise with the economy over a period of 20 or 30 years you probably have twice as many revenues a period of an eight year presidency you probably have 30% more revenues by the time the president's in his eighth year than the first year and what's happened to spending under current law not where spending will be in the future this is what current law requires well discretionary spending would decline the post office was built the highway was built yes you'd probably maintain it so it doesn't decline this way to zero but discretionary spending under current law declines and so what do you have in the future well you have these massive surpluses coming and those of us who are a little bit older in the room remember we used to pick up our textbooks and read about fiscal drag and how we had to solve fiscal drag so the politicians their job is to deal with this fiscal drag and give away money they've got to have tax cuts or spending increases to offset what current law would do by itself now move forward to sort of the current scenario where spending is not only built in and automatic but mainly in the health and retirement programs for reasons I'm not going to go into here it's actually scheduled to grow ever faster than the economy wage indexing health is a superior good there's all sorts of reasons why it will grow faster than the economy so spending is scheduled to grow faster in the economy now you're in this situation where if all you do is short run deficit reduction you never solve the problem so whether it's the master agreement in 93 it's let's try to get deficits to 3% GDP or even what we succeeded in doing in the 90s in the United States you never get out of the soup if you don't deal with this fundamental issue you can't promise so much in the future that you're trying to solve the problem if you want to deficit reductions it's sort of like you it's like we've got this house and the doors and the windows are wide open in the front and the varmints and the creatures are coming in and through deficit reduction we're going to set traps and try to shove them out the back door but we never shut the front door so they keep coming in and that's exactly what we do with trying to solve this problem with short run deficit reduction agreement after deficit reduction agreement you've got to get at this extent to which we try to control the future I've got some slides here I'm not going to go through you don't solve the problem with economic growth either economic growth does raise revenues but it turns out these programs are also scheduled to grow faster when the economy grows faster so it doesn't get you out of the problem in terms of the macro economy it's actually interesting to think about what our fiscal history say so there's this little more of the popular history but both the Keynes and the supply setters keep looking back to periods like the 60s and they talk about how these tax cuts actually eventually paid for themselves they both made the argument for different reasons one was demand side and one was supply side if you think about it if they were wrong it didn't matter because given my earlier slides if they were wrong we went back into balance in four years if they were right we went back into balance in three years that's a very different world than if you're running a macro study and you say well I can project from the past what some tax cut did to what some tax cuts gonna do in the future because you've got to build into that model what these automatic programs these automatic programs are doing so just to give you an idea of the extent to which commitments from the past are dominating us this is sort of a projection taking some CBO and other figures on what current law requires about 10 years from now we'll have another trillion dollars of revenues to spend that's not by the way an issue of austerity another trillion dollars is basically about this is just the federal spending by the way this doesn't include tax subsidies which also will grow it doesn't include state and local spending it's about $8,000 a household or something like that that we'll have more in about 10 years to spend but guess what we've already decided how to spend it we're gonna have 500 billion more in healthcare about 400 billion more in social security another 500 billion in net interest on the debt so we already have sort of overspent it and again squeezing everything else including those things we might think of as investment in the future so I've got a bunch of other issues here with respect to just how this plays out for instance this commitment back to this question of whether we're promoting investment or promoting consumption you know this commitment to evermore money for elderly programs we often look at it on the spending side but if you look at Congressional Budget Office or Fed Reserve or anybody else's other projections of what's happened to labor force we're also doing it in a way we're adding to this pressure downward pressure on the labor force which also affects GDP, personal income, income tax collections the biggest effect of the early retirement age in the study we did by the way wasn't on social security it was on income tax collections if you're worried about what it does to the federal policy here's just a little connection with the discussion on income distribution and this is partly federal led it's not entirely led is if you look at income growth for 20 year period from 1990 to 2010 and you ask what happened to per capita income 33% of all income growth basically went in the farm of healthcare so when we do a lot of these distributional studies we don't take into account the extent to which that healthcare is added or not added into the measure of the income of individuals that's 33% on average for lower and moderate income workers it's probably even more it's probably over 50% of their income growth comes in the form of health benefits we provide I'm gonna go on and try to end here on a positive note so this is again I know this times often sounds like it's a negative lesson but basically I didn't wanna convince you this is a straight jacket we tie around ourselves so here's just some numbers projected in the future let's hope that they come true these are basically again CBO projections about 10 years from now they say that basically GDP will probably grow by about $27,000 per household these are numbers per household not for the economies of whole direct spending would grow by about $9,000 mainly because of discretionary spending growing quite substantially tax expenditures would grow by another 3,000 so whether you're counting growth in GDP or growth in the spending that we are going to do are can do by the way that's true whether you're under a Republican agenda or a Democratic agenda economic growth is probably going to make possible a much higher level of spending and so the real question just the real question before us is how do we again regain control of our future how do we allocate these monies I'm not even talking about cutting back on what we do now but how do we allocate that reallocate that growth so that we can put it more towards what we hope would be more of an investment agenda and in my view we should start thinking about things like making the 21st century a century for children the same way we made the 20th century a century for improving programs for the elderly I think it's entirely possible if we set our minds to do it you know there are Antoine the exopery who wrote something called the little prince once said that our job is not to is not to control the future but to enable it and I think that's the task we have at hand thank you thank you very much Jean and thank you particularly for ending on this optimistic note I can't help taking away the business schools are always asking about what is the takeaway from all three of you despite the fact that two of you I think might deny it that in a way you all do share Ned's optimism in the following sense and I will simply give you two quotes one is from Shakespeare's Julius Caesar the fault dear Brutus is not on our stars but in ourselves and the other one coming from Pogo we have met the enemy and he is us so and it seems to me you know if it's us by golly we ought to be able to fix it before we go on to questions from the audience let me ask the speakers if there's anything any or all of them would like to say in response to their fellow speakers I'm even more depressed than when I started because Bill if there's general agreement that tax reform should be distributionally neutral and we're at this all-time high and income and wealth inequality and the same thing with your point I mean I don't see how you get any change in growth in income for the bottom forty percent unless you have progressive taxation so obviously uh... I I would think I'm not going to go to the piquetti and say as seventy percent marginal tax rates but another ten percent on the top tax rate now I don't see how you reduce poverty and inequality unless you do that anybody else uh... I was going to make the totally different point which is the the reason I put up the cbo market income relative to piquetti say as was the cbo market income includes health insurance uh... I realize I forgot to mention that when gene emphasized how important health insurance is uh... but the main the main difference between piquetti say as in cbo is that cbo uh... in their marketing commensurate ads in uh... uh... a variety of non uh... non-cash forms of compensation the most prominent one of which is is health care but also retirement contributions there's also increasing inequality I think in death rates uh... gym house michigan has a book coming out on that so I think when you attribute the average spending that they're not doing distributional analyses in that so yes health insurance has increased dramatically but I think inequality and access to health insurance or the benefits of uh... the increased spending has also become more unequal over this period so so so i'm not opposed to agenda my problem generally is only applied to one or two percent of the population doesn't really give us all that much soft some of these fundamental problems at the bottom and i'd suggest that that another direction written on this as well but another direction that we really need to go is trying to think about how we refocus our social welfare programs so the very fact that there's so oriented towards consumption these days means that they do have we can argue about how large it is but they do have a negative impact upon work and they have a negative impact on market incomes that's particularly true for the elderly and their elderly uh... so people now today retire for about eleven years more than they did uh... in nineteen forty when the program was first created that's about i think it's about seven years of six seven years of living longer about three or four years of of retiring earlier in nominal age uh... those six or seven extra years of of living longer by the way mainly benefit you and me so it ought to for couples you know we might be getting say fifty thousand social security benefits here we get three hundred thousand dollars of extra security benefits here and the argument is what we need to do that because we care about the guy who might die at sixty two sixty three we're gonna get him twenty thousand so we totally reallocate allocate the money spend huge amounts in ways that encourage us to retire early and and actually among lower income people discourage work uh... in fact the income distribution of the elders getting worse because the higher income are now working longer lower income aren't it so by the time they're seventy what might be a two to one ratio becomes a four to one ratio uh... so to me the and you can i say you've written on it is is moving that social welfare agenda not because i'm opposed to the consumption agenda i don't think it didn't succeed in doing tremendous things in reducing poverty we can argue about how well-allocated is but i think roaring it back towards an investment agenda back towards education things like training which you've talked a lot about you know uh... apprenticeships on and on if we start taking some of that growth in allocating it there to me that's as crucial and maybe provides even more money then even just say taxing the rich to try to try to do to do some of the some of the same things you want to do let me ask one question and then we'll start in um... and that is one of the things that's come out of these discussions is that the ideological differences between democrat stylized democrats and stylized republicans is not absolutely crucial to what happens therefore leaving aside these the current ideological standoff uh... how would reach into this gordian knot and which string would you pull first to try to uh... move things back to a better world which all of you say we are capable of doing i mean capable in the sense of our resources broadly construed well i'm reminded of neds uh... social security task force where net proposed a reasonable series of small uh... benefit cuts and small tax increases to be implemented over a long period of time and as i recall there were five votes for uh... five votes on the left that were against it because it was uh... gonna uh... uh... cut benefits and votes against it because it was going to raise taxes and net maybe he got one other vote but i think that was the early indication of what went wrong the greenspan commission on social security was in eighty three and i think net came along a dozen years later and thought okay we can do the same thing and that i think is the early indicator of what went wrong i think for jeans issues presumably i haven't gone back and looked at it but i suspect if we go back to that social security reform you would say okay that would this unsustainable increase uh... and spending on the elderly you know net talked about all these issues all the time either of you as a response quick because we need to give the audience say i agree i mean i'd get to the slides but uh... in this perfectly line with what that was saying i'm the big compromise that i talk about is is and it's hard politically but economically make sense is the democrats need to give up on the automatic growth in spending doesn't mean you don't have the growth but you need to decide it on a on a level playing field so education compete with health and retirement uh... that republicans need to give up on automatic growth in tax subsidies and they have to agree to pay our bills we go along to having a tax cut you don't pay for is just shifting a tax to future generations and that type of compromise it seems to me gives us the flexibility to do a lot of the things that i think all of us this table would like to do i'll just have one quick thing i don't think we can get where we need to go without added revenues and uh... and that's why i talked about the carbon tax and that uh... i don't think we're gonna get that much more income revenue out of the income or the corporate tax uh... but but i mean i'm not saying just text the hell out of everything and then we can spend on whatever we want i am saying that a solution under current revenue restrictions uh... it's gonna be very difficult to achieve uh... basically genius presented a very eloquent case for why we should massively cut social security medicare benefits and that's just not gonna happen and so on the ideas to me is generating revenues uh... in a way that is uh... fair and uh... efficient and then using it to fund government spending that is fair and efficient it was a question i know in the back i'm not an economist vena trehan i'm not an economist i'm a policy writer and activist so i wanted to say a few different things first of all you know there's a oxfam study that said i think it was eighty five people but it's not uh... as many people as would fit on a double-decker bus essentially have as much wealth as three and a half billion people on this planet and so i think for a lot of us when we look at things like walmarts um... the six areas of walmart have basically as much money as the gdp of bungalow age or forty two percent of the country it's very difficult morally to see a case where we don't have highly progressive taxation on income and wealth and obviously what's happening in terms of hedge funds and private equity is just i i think purely morally indefensible excuse me but is there a question in there yes okay thank you very much so that's one question and this is not an economic question this is a question dealing with the morality but to be really honest i think that needs to be part of it number two and you can defer this if you like but my number two question was um is it part of um is it part of what we should consider the whole sort of discussion of reparations in the sense that there's institutionalized predatory practices occurring against people so even if we give the poor more money you know if that's taken away from them in terms of foreclosures in terms of so many other things it doesn't matter and then my final point would be um what was my final point if you don't mind i'm going to go on while you think about it yeah actually i kind of do mind and i just do want to say one more thing if it's a question yes exactly it is a question i recently gave a talk on the garment industry but my third point would be i think for many of us the lack of transparency in the current globalized system is a problem so for example when my daughter buys a t-shirt she's often buying a t-shirt made from essentially cotton that was produced under slave labor so if we do not have true visibility into um how things are produced and what the external costs are in terms of carbon costs etc can we truly reform the system or what's the role for that i'm going to uh since we are very short of time i'm going to ask if there are other questions and then ask our our speakers to respond to collectively to whatever um they're asked hi vick miller uh working economist not retired uh the question is you've been talking about the changes in income and wealth distribution in the country over time in terms of revenues and expenditures of government uh how much of that is also should we discuss in terms of monetary policy banking policy the the changes in wealth that have that have accrued in the stock market and such uh that have very little to some extent some relative relatively little to do with the government expenditures and revenues you're talking about i find it hard to see so um okay if there are no more questions unless i've missed somebody's hand somewhere uh and why don't we go in the same order that people spoke um well to be brief certainly the issue about private equity carried interest is certainly something that i think nobody on this panel would say should be anything other than taxed at ordinary income i don't know how much revenue that raises but i think both of the points were made there have been lots of changes in labor market regulations banking regulations tax uh policies etc i think that have all contributed to rising income and wealth inequality after taxes and transfers uh okay uh i want to focus on the morality question and i thank you for raising the issue uh i i share what i gather are your concerns about uh the distribution of income the poverty of of of a large chunk of the world's population uh but there's a difference between sharing that concern and being convinced that you know high punitive tax rates are the right answer i mean ask yourself would all these people be better off if walmart had never existed and uh i think the answer is no i think walmart makes a heck of a lot of money because it provides a heck of a lot of valuable services to a heck of a lot of people and if we feel if if there's some way in which they abuse the system or committed criminal acts or you know did something that was not you know uh uh legally appropriate then sure they should be penalized for it but i i don't get i have never understood uh in the absence of something like that the notion of blaming the failure of some or the lack of progress that some uh you know failed to experience on the success of others and uh so that's one point the morality point the other is just the sheer efficacy of really high tax rates i mean piquetti uh almost as an afterthought or a logical implication of what he's saying it seems propose a global wealth tax uh i don't get the sense that his his heart is really in that and i don't know any uh economist or anyone who's thought up seriously about how a global wealth tax would work whose heart is really in a global wealth tax and so so even if we want to shift the distribution of burdens in a more progressive manner which i would not be opposed to we got to think real carefully about what actually works and uh i don't think especially in today's society where money can be moved around so easily uh that that it's so obvious that we should just boost rates to the you know seventy percent rate that that is sometimes talked about i think even if we share the goal that you're discussing and uh even if we think the distribution should be shifted there's a there's a real question about how you actually do that and and it's not obvious the final word so i i have testified on increasing taxes on private equity owners and and uh and very much of favor that i've also in times you know favored higher tax rates again i just want to point out just taxing the super rich at a higher rate just doesn't necessarily raise that much revenues most revenues of government are paid far by the middle class and most of the benefits are received by the middle class and if we can't address that issue you know if we if the left we only attack the really wealthy and the right we only attack welfare recipients you just never are going to get at these problems and on the wealth issue and i'm going to try to tie these together too there's there's a couple other things we we actually have to worry about it's not just the question of what's happened to the wealthy uh where we want to change policies and there and i don't know the answer here but i think we need a modern form of antitrust policy too that it's not just a question of trying to tax our way out of out of what's going on in in these broader economic problems but there's also the issue of how we increase the wealth of of the non-wealthy because there's two things going on it's not just the wealthier getting wealthier but even as we get richer as a society uh the non-wealthy have in many cases not been saving very much they have very inadequate money in their retirement accounts uh we've also done this thing related to this question partly monetary policy but probably more regulatory policy we've we've gotten the number we've gotten some younger generations and some particular people of color in this situation where we really encouraged you to buy housing when the market was bubbling up and then when the market was was fell out quite rapidly we've sort of cut them out of the market and now that the market started a little bit back in a bubble at least by the federal reserve numbers i look at wealth income ratios now we're saying well maybe we'll let you back in so so for the for the low income people we've got them in this buy high sell low uh type of policy so there are a lot of things i think we have to work on if we care about these income and wealth distributions and they go beyond just the question of of of taxing wealthy and it would go to what we want to do with what with uh i think with monetary and regulatory policy and antitrust policy as well we should thank our speakers and i leave to paul and dan saw to solve the problem of the fact that we have eaten up the break so we will just eat into our lunch a little and push everything back 10 minutes thanks