Paul Volcker on Greedy Bankers, the Ryan Plan, and the Fed

[DonViejo]

Source: TDB/Newsweek

When Paul Volcker speaks, Republicans and Democrats, labor and business, listen. The former Federal Reserve chair consented to a rare and exclusive interview with Leslie H. Gelb, a frequent columnist for Newsweek and The Daily Beast. The 6-foot-7, 85-year-old, gruff, plain-spoken yet very careful Volcker had some blunt and important messages for government and banking leaders—and for all Americans.

-snip-

So what would you do on taxes?

To put it bluntly, we have to move more toward a consumption tax. There are different ways you could do that, but that’s what we ought to be doing.

Would you get rid of the Bush tax cuts?

In the short run, you’ve got to deal with your income taxes. You can do that either by repealing the Bush tax cuts, at least for some people, or by rearranging the exemptions and loopholes, all those things people talk about adopting, something along the lines of Simpson-Bowles.

How has Obama done in handling the economic recovery?

Everybody thinks it would be nice if the administration were more effective in promoting a balanced package on taxes and spending. The problem is that the political system has been so ideologically divided, and the congressional situation is such that it’s been hard to get any degree of consensus on any sensible program.
Did Obama do enough to promote a bigger stimulus package?

He took about as much stimulus package as he thought he could get away with at the time, and it was very substantial. And when Congress got on it, they did a lot of things to meet political desires rather than economic efficiency and speed of disbursement. I don’t have any big criticism of the administration not pushing hard enough on the overall volume. They did what they could.

Has Treasury Secretary Tim Geithner done enough to deal with the housing mess?

Housing was less susceptible to a quick emergency fix than the banking area. You have too many mortgages out there at values not supported by the value of the house itself. Ultimately you can say forgive a lot of the mortgages, but to write off and make a choice on which mortgages are bad is extremely difficult. I haven’t seen any convincing answer for how to clear it up more rapidly.

What do you think of the Ryan plan?

I am no budget expert, but what I sense is that it’s left a lot of things open and kind of a wing and a prayer. I don’t think it answers all the questions; let me put it that way. If it’s not going to raise taxes anyplace, it doesn’t seem to me it can be adequate.

-snip-

Read more: http://www.thedailybeast.com/newsweek/2012/09/16/paul-volcker-on-greedy-bankers-the-ryan-plan-and-the-fed.html

[Bernardo de La Paz]

1. Wanna-be-Emperor Ryan has no clothes. nt

[andym]

2. The man Carter appointed who made Reagan successful.

Reagan and the GOP should have been thanking Carter every night for initially appointing Volcker.
Ending stagflation is the Fed's greatest accomplishment.

Volcker's opinions should be listened to closely.

[GulleyJimson]

5. Hear hear!

The majority of peoples believe that Reagan appointed Paul Volcker which, in essence is true. But Carter initially appointed Volcker and Reagan re-appointed him in 1983. Volcker raised the Fed rate from 11% to 20% and killed inflation which went from 13% annually down to 3%. I bought a house during that time... my mortgage was 17%. Thankfully, the property was undervalued and was able to sell it a couple of years later at a profit.

Lots of businesses went under when Volcker was Fed chairman as they couldn't afford the interest on money they needed. I remember the senate hearings when small business owners testified about their upcoming bankruptcies.

[JDPriestly]

3. When I hear the words "Social Security reform," I get a chill that turns to fury.

How dare these fat-cats talk so flippantly about cutting Social Security.

In one breath, Volcker acknowledged that the current compensation system for Wall Street traders and bankers distorts the markets and our economy. In the next he wants to cut the pittances provided to seniors subsisting on Social Security.

Doesn't the man have a sense of compassion?

The answer is to tax those big banker salaries and bonuses and supplement the Social Security Trust Fund with a part of the revenue gained.

Ordinary working people struggled through life on what was left of their relatively small paychecks after Social Security and Medicare taxes were deducted. That they would receive Social Security once they were 65 was an important part of the incentive for all those years of working and contributing to the well being and strength of America.

And now, now that these people are elderly, some of them helpless, many of them suffering the ordinary or even the horrible ailments and pain of age, rich people like Volcker who live their lives in relative comfort and security want to deprive the ordinary folks and the poor of their peace of mind in their final years of life.

No, Mr. Volcker. Visit some of the senior citizens centers in middle class and poor American communities. Go to some nursing homes. Do you think that the conditions in which so many of our elderly live will serve as an incentive to the youth in our society? Is it something to look forward to?

Social Security does not provide much to live on. The payments are quite meager.

Social Security, that big fat number in the budget, has to be divided by the number of recipients. Until you do that simple arithmetic, you don't realize that there is nothing to cut from Social Security. As for the rich who receive Social Security they pay most of it back in taxes under current law. So it is already means-tested to a great extent.

Reforming Social Security means cutting it.

We have enough homeless people over 65 here in Los Angeles as it is. Mr. Volcker, please retract your flippant comment on Social Security.

[cr8tvlde]

4. This disproportionately affects women... first,

because in earlier generations, being a stay-at-home mother was considered "a full-time job". So, unless she had a part-time job or started up a major career later in life that provided a pension, she's only got Social Security to live on.

Second, women typically make/made about 2/3 of what males make.

Third, women live longer than men statistically. At best, they are left with a family home to live in...until they become ill or too old.