This Monday there was a classic Larry Summers story. It started with an editorial in the Washington Post calling for tax reforms that would redress a fraction of the income inequality that has accumulated over the past 30 years in the US. Larry called it the Downton Abbey economy. He also scuttled the argument that President Obama was off base raising the issue of Income and Wealth Inequality in the State of the Union Speech. His quotes from 2 Republican and 4 Democratic Presidents showed the shift from the Republican Progressives of the early 1900’s to the staunchly pro business GOP Presidents of the last 30 years.
However, the most interesting political irony is not that Summer’s tax reforms are doomed in an increasingly intransigent Congress controlled by the GOP; but rather the lateness of the message. In the first term of Obama administration Larry Summers had the economic advisory position and political clout to change the kid glove treatment of the Wall Street and Financial Sector for triggering the Housing Bubble. Even more important he counseled curbing the TARP and other programs instead of going big to turn around the job and income loss situation for millions of middle class American. So the man who cntributed mightily to Income Inequality now offers a “non starter” solution to the problem he made tangibly worse. Thanks Larry.