WSJ Endorses Gramm, Schwab for Treasury Secy.
Citing tax-cuts as the first economic priority, the Wall Street Journal has endorsed Phil Gramm as the next Secretary of the Treasury. A close second, with his tax-cutting bias, pro-investor stance, and distance from recent Wall Street shenanigans, is the founder of the discount brokerage bearing his name, Charles Schwab. Schwab, because of his lack of political experience, would certainly appear to be the bolder choice. He would also be more interesting.
It is not clear how Wall St. would respond to Schwab who has been something of a thorn in its side recently with his company's edgy ads highlighting the conflicts inherent in conducting investment banking and brokerage activities under the same roof. But Schwab impressed Bush at the economic summit over the summer in Texas with his arguments for tax relief, especially reform of taxation on dividends. Schwab is right: dividend taxation reform would naturally cause shareholders to demand more dividends, making it more difficult for companies to fudge their balance sheets. Besides, it seems unfair that corporate profits are taxed a second time as they are passed to shareholders in the form of dividends.
Democrats will undoubtedly cry that Schwab suffers from too many conflicts of interest. But they may want to be careful about holding up a confirmation. If they balk too strenuously at the nomination, should it occur, the GOP might be as quick to blame any market gyrations on them as they blamed on the GOP for staying with O'Neill so long.
Ironically, the increased chance of getting dividend tax reform with Schwab may make the Democrats long for O'Neill. They should be more careful about what they wish for. Whoever the nominee is, rest assured he, unlike O'Neill, will be "on board" regarding Bush's propensity to cut taxes. Again Bush seems to be following Reagan's successful strategies. The failure thus far of Fed easing or monetarism indicates that tax cuts or another walk on the supply side might just be what the economy needs.
Citing tax-cuts as the first economic priority, the Wall Street Journal has endorsed Phil Gramm as the next Secretary of the Treasury. A close second, with his tax-cutting bias, pro-investor stance, and distance from recent Wall Street shenanigans, is the founder of the discount brokerage bearing his name, Charles Schwab. Schwab, because of his lack of political experience, would certainly appear to be the bolder choice. He would also be more interesting.
It is not clear how Wall St. would respond to Schwab who has been something of a thorn in its side recently with his company's edgy ads highlighting the conflicts inherent in conducting investment banking and brokerage activities under the same roof. But Schwab impressed Bush at the economic summit over the summer in Texas with his arguments for tax relief, especially reform of taxation on dividends. Schwab is right: dividend taxation reform would naturally cause shareholders to demand more dividends, making it more difficult for companies to fudge their balance sheets. Besides, it seems unfair that corporate profits are taxed a second time as they are passed to shareholders in the form of dividends.
Democrats will undoubtedly cry that Schwab suffers from too many conflicts of interest. But they may want to be careful about holding up a confirmation. If they balk too strenuously at the nomination, should it occur, the GOP might be as quick to blame any market gyrations on them as they blamed on the GOP for staying with O'Neill so long.
Ironically, the increased chance of getting dividend tax reform with Schwab may make the Democrats long for O'Neill. They should be more careful about what they wish for. Whoever the nominee is, rest assured he, unlike O'Neill, will be "on board" regarding Bush's propensity to cut taxes. Again Bush seems to be following Reagan's successful strategies. The failure thus far of Fed easing or monetarism indicates that tax cuts or another walk on the supply side might just be what the economy needs.
posted by John Coumarianos at 12/09/2002 12:44:00 AM
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