Monday, August 13, 2012

Former Fed Official: Targeting Wealthy Not the Answer

Rising income inequality is a problem, but targeting the top 1% is not the answer, according to former Federal Reserve Vice Chairman Donald Kohn.

"It is more about helping those at the bottom rather than knocking off people from the top," he told TheStreet at the sidelines of the SIFMA annual meeting in New York on Monday. The political process of bridging that gap will take time, he added.

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Still, the monetary policy expert and reputed economist understands where the Occupy Wall Street protesters are coming from. In an interview with broadcaster Charlie Rose earlier in the session, Kohn acknowledged the need for more balanced growth. "It is important that people have a chance to rise. If the top is getting richer faster, that is not a problem if the bottom is also getting richer," he said. "The problem is the median has risen very slowly while the top has risen very rapidly." Kohn said he is optimistic about the progress that is being made in reforming the education system, in that it has drawn bipartisan support and the government appears to have made a start.He is less sanguine about the ability of Washington to get its fiscal house in order. Among the reforms he recommends is releasing various deductions under the tax code, which could be viewed as a way of making spending cuts, and lowering the marginal tax rate. >To follow the writer on Twitter, go to http://twitter.com/shavenk.>To submit a news tip, send an email to: tips@thestreet.com.

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