Anxiety among the nation's wealthiest people about Washington's policies are little more than “hyperventilation,” according to one of President Obama’s top economic advisers.
Jason Furman, chairman of the Council of Economic Advisers, said Friday that any wealthy people who feel they are being targeted by the White House or other policymakers are overreacting.
Furman said that far from being persecuted, many of the wealthy are paying a lower effective tax rate than they were in the mid-1990s. While the top rate on the nation’s earners increased as part of the "fiscal cliff" deal, the tax rate on capital gains and dividends is lower than it was then, he said.
Earlier this week, the founder of a venture capital firm, Tom Perkins, wrote a letter to The Wall Street Journal warning of a “rising tide of hatred of the successful one percent.” He compared it to Nazi persecution of the Jews.
His claims rapidly gained attention and ample criticism, and has become the most read letter to the editor in the Journal’s history, according to the paper’s editorial board.
President Obama focused on the growing trend of economic inequality in Tuesday’s State of the Union address, lamenting what he said is the widening gap between rich and poor.
“After four years of economic growth, corporate profits and stock prices have rarely been higher, and those at the top have never done better,” he said in the national address. “But average wages have barely budged. Inequality has deepened. Upward mobility has stalled.”
The president vowed to take several executive steps to help boost lower and middle-income families. On Wednesday, he authorized the creation of a new starter retirement account aimed at workers without access to traditional 401(k) plans.
As the White House looks to boost the lower sectors of the economy, Furman struck an optimistic note on the nation’s overall trajectory.
He noted that Thursday’s report that the economy grew 3.2 percent in the fourth quarter of 2013 came despite fiscal damage from Washington like the sequester and the government shutdown. The private sector “muscled” through those obstacles to post the strong gain, which could have been a percentage point higher without the government drag, he said.
Now that Congress has agreed to a budget and spending package that averts the sequester for the time being, 2014 looks like it could be a good year, Furman said.
“We think the fiscal drag is mostly behind us,” he said. “We could have strong growth, potentially stronger growth in 2014. … We’re not going to have anything of that magnitude in term of deficit reduction.”
However, he said economic gains is also dependent on Congress passing a debt-limit increase on time. The Treasury Department has called on lawmakers to boost the $16.7 trillion borrowing cap by the end of February, but Republicans say they cannot agree to a hike without some policy concession.
Furman reiterated the stance held by White House and Democrats: the debt limit is not up for negotiation.
“There’s absolutely no reason Congress can’t do what it did twice last year and basically without ransom, without hostage-taking, send the president a debt limit increase he can sign,” he said.