Friday, October 13, 2006

Stop Punishing Success

We had a rather lively economic discussion on last night's show. Here's a portion of that exchange between Gary Gensler, former Treasury undersecretary under Bill Clinton; Jim Glassman, senior fellow at the American Enterprise Institute/host of and yours truly.

JIM GLASSMAN: What I was going to say, Larry, is that I agree with Gary. There is a lot of anxiety. But that anxiety is not going to be relieved by politicians. It is the result of globalization which, in general, is very, very good for the United States and for most of the people who live here. People are anxious about their jobs—there's no doubt about that. But really that’s a kind of a personal anxiety which can be relieved by getting better education, really increasing their skills, that sort of thing. It’s not a policy question.

GARY GENSLER: Well they also feel anxious that they haven't they haven't participated fully in these tax cuts. They see health care costs going up...

JIM GLASSMAN: Oh, Gary, come on. Look. Half of Americans pay zippo in taxes, all right? The bottom half of Americans pay nothing in taxes. You know this as well as I do.

GARY GENSLER: But who got the biggest tax cuts? They were people like you and me, Jim.

KUDLOW: So why that is bad? No, no. Wait a second. Wait a second.

GARY GENSLER: Larry, it's good for my kids; it's good for my family.

KUDLOW: Why is that bad? Why is that bad? See, I want to understand this. Look, raising taxes on the most successful in society makes no sense. These are the people who took risks, work harder, made entrepreneurial decisions and succeeded. And now they are paying a record share of taxes. But if you raise their tax rates and punish their hard work and success, how does that help the people who are legitimately concerned in the middle? How does jacking up taxes at the top help people in the middle? That is social policy. That is not economic policy.