Former FDIC chair Sheila Bair writes in the latest issue of Fortune magazine about a potential odd couple to lead the pursuit of federal tax reform.
Somewhere in the halls of Congress, can we find people of divergent backgrounds and political philosophies who can work together to pass historic legislation? I think we can, in the personages of Rep. Jeb Hensarling of Texas, the conservative firebrand who heads the House Financial Services Committee, and Sen. Elizabeth Warren of Massachusetts, the outspoken darling of populist progressives—though the two of them may not realize how much ground they share until they read this column.
I have known Warren and Hensarling for years, and I respect and like them both. I recently had tête-à-têtes with each of them that ran on Fortune.com. … To be sure, they are diametrically opposed in their philosophical approaches to government. She believes in a proactive role for government in helping working families; he thinks the best thing government can do for them is to get out of their way. She wants more regulation of the financial industry; he thinks that pendulum has swung too far. He thinks federal spending is unsustainable; she wants to spend more on education and research. When it comes to labels, even their rhetoric diverges. When speaking of Main Street America, he says “middle income,” while she says “middle class.”
Yet both of these politicians are smart, sincere, and driven by an overriding passion to help the little guy. And in that, I think they reflect a rising populist sentiment on the left and right that average Americans aren’t getting a fair shake—a feeling stoked by inexorably rising income inequality and the bailouts that followed the financial crisis. During our recent conversations, each would always come back to the plight of working families and small businesses. Both decried the uneven nature of the economic recovery and expressed concerns about the system being stacked against the average Jane and Joe. …
… But can this passion for Main Street compel them to action or cooperation? The issue that seemed to tie them most closely together was the need to reform our loophole-ridden corporate tax code. With her characteristic candor, Warren labeled the code “corrosive,” undercutting the idea of a level playing field and doing nothing to create wealth or productivity. Hensarling put corporate tax reform at the top of his priorities, calling for a flatter, fairer, and simpler code, which he believes would ignite economic growth.
To date, the two haven’t worked together on the issue. Neither has yet shown his or her hand by sponsoring a comprehensive proposal (which might make working together on a compromise easier). Still, in conversation, Hensarling and Warren expressed some optimism that corporate tax reform was an area for bipartisan action.
