Senator Kent Conrad (D-ND) gave his subcommittee report to Deficit Commission co-chair Erskine Bowles, who previously acknowledged his need to "build another fortune." Conrad's words must have been soothing to Bowles. Kent stated:
My own conclusion from this is that we really have a tax system that is badly outdated. It no longer relates to the world we are in today. This tax system was constructed at a time we did not have to worry about America's competitive position, because America was dominant in the world.
Now we face determined competition, and we really need to think about how the tax system effects the competitive position of the United States, because of the role that plays in future economic growth, and the economic strength of the nation and the economic opportunities that all our citizens will enjoy. So, my conclusion is we have a tax system that really does not fit the circumstances we confront today, either in terms of generating the revenue that's necessary, or in contributing to the competitive position that's absolutely critical for the country going forward.
Bowles reinforced Conrad's position, giving a shout out to his private equity peers:
I think the other point you made, Senator Conrad, at the same time was that the current tax system was put in before capital was as mobile as it is now, and that has an enormous effect on where revenue goes.
Conrad pandered further:
It's a very different world we live in today, and that has to be kept in mind.
Kent's framing doesn't hold up well, given that America faced tremendous competitive challenges in the 1980's. Taxes are nothing like the 1950's and 60's, when the U.S. stood alone as the world's manufacturer. The top tax rate by the end of WWII was 94%. Oddly, Congress reformed taxes in 1986, when Conrad was first elected to the Senate.
Change accelerated the last decade. It was brought on by the Erskine Bowles of the world, corporate executives, directors and private equity underwriters (PEU's). American branded businesses shifted production to "low cost" portions of the globe. PEU's pooled investment from the global have's, promising 30% annual returns. Those profits came on workers' and taxpayers' backs.
Red & Blue Corporacrats stack Obama's Deficit Commission. Erskine and Kent sound like Republicans of yesterday. That means the Red team must move further right for differentiation. Given that politics is already painted into the "mean & greedy" corner, elected officials must find citizens to stand on to avoid splatter.
Struggling Americans will have to take solace in Erskine's new fortune, Peter Orszag's future Wall Street job and Evan Bayh's coming cash machine. Kent Conrad and Max Baucus can rest assured that their time at the private-sector payback terminal will be most profitable. Robber barons reward their tax lackeys.
Update 2-7-11: The esteemed Senator Conrad offered, "The current state of the tax code is simply indefensible. It is hemorrhaging revenue." Specifically to the Kent's mobile capitalists.
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