Why Hillary Needs to Feel More Burn

Let's assume that Hillary Clinton becomes the Democratic Presidential nominee. This primary season has been called the season of angry voters. Correct. Hillary's prescriptions: celebrate the past eight years and propose many, many small steps to improve people's lives. Not good enough for the general election. Incrementalism does not capture people's attention or passion. "More of the same" is a poor foundation for the Presidency.

The anger we all write about stems from two vastly different sources. The first is the anger of Republicans who have been encouraged by their leaders to hate the government, and to hate "others," for many decades. The second is the anger of those who played by the rules and lost their homes and investments in the crashes of 2000 and 2008. They watched as the financial industry was bailed out, but the people were left to lose it all. These two groups of angry voters have an overlapping interest in fairness and the restoration of some dignity.

Hillary can and needs to respond directly to both groups. She needs to accept many of Bernie's proposals and go further to make them concrete and easy to understand. Examples include:

1. Making college free for everyone: go further by extending this to medical school as well, all conditioned upon minimum grades and a commitment to a year of public service for each year of education. This public service could include rebuilding our cities, providing medical care for the underserved, installing wind and solar energy systems, teaching in underfunded schools, and so on. Tangible benefits for students and tangible benefits for the country.

2. Improving upon Obamacare: the dirty secret behind much anger over the Affordable Care Act is that the insurance often is not affordable. First, eliminating the loopholes which helped the insurance companies deny benefits to many obviously had to cost more than past practice. Second, many "affordable" policies have large upfront deductibles which make them more like catastrophic insurance than daily health insurance. (1) This hole swallows up millions who cannot afford the deductibles, let alone the premiums. Going further means going simple: extend Medicare to all, as it is today, while promising to improve it in coming years. Simplicity is attractive.

3. Really helping those who lost their homes and down payments: reparations from the responsible financial institutions to give people back what they lost. For example, two trillion dollars upfront for the people, from the industry. This could be repaid as a 40-year loan -- providing immediate stimulus to the economy without bankrupting the industry. (2) Fairness for the people at last.

4. Financial reform: there is no single fix, but agreeing with Bernie on restoring the separation between banks and investment firms would be a good start. Reenact Glass-Steagall. Second, institute a financial transaction tax to discourage high-speed trading, which hurts individual investors. Third, address the issue of too-big-to-fail: no bank, mortgage, or investment company should control more than 5% of the market. Break up the big firms and encourage local competition.

5. Reclaiming a progressive income tax: paying for these big ideas can be handled while lowering taxes for many with a truly progressive income tax. For example, 5% on adjusted gross income under $50,000. Gradually increase this to 10% up to $100,000, 15% up to $200,000, 20% up to $500,000, 25% up to $1,000,000, 35% up to $5,000,000, and 45% over that. Applying this formula to IRS 2013 tax data yields about $1.44 trillion from individual returns, or a little more than was collected in 2014. (3) Plus, Hillary needs to campaign to eliminate tax breaks like the preference for investment income, which benefits only the wealthy.

6. One more tax issue: for much of the 20th century, the share of paid income tax was about 60% from the individual income tax, and 40% from corporations. After the past thirty or so years of tax cuts and tax breaks for business, the shares now are over 80% from individuals and under 20% for corporations. (4) Everyone can see that this has been unfair. Corporations need to pay more of their share, not less, and even doubling corporate income tax receipts would not get all the way back to 40%. We need to restore tax fairness again.

A small number of big ideas, simple rather than complex, and focused on people first, is the way. Dealing with people's anger by helping them with big steps, not small ones. Again, assuming that Hillary is the nominee, she needs to lead with such ideas, if she wants to win in November.

(1) http://obamacarefacts.com/health-insurance/deductible/ The maximum allowed policy deductibles for 2016 are $6,380 for individuals and $13,700 for families. The New York Times' Robert Pear recently noted that "In many states, more than half the plans offered for sale through HealthCare.gov, the federal online marketplace, have a deductible of $3,000 or more..."

(2) Details are in my Huffington Post blog on reparations for the 99% here.

(3) The basic data can be found here. On this page, under "All Returns: Selected Income and Tax Items," if one clicks on the year 2013 the underlying income according to adjusted gross income bracket is available. Applying the proposed progressive tax rates to each bracket, and adding them up, gives the total of $1.44 trillion.

(4) See my Huffington Post blog on "The Myth of High Corporate Taxes" here.