WILL: Big government inevitably exacerbates the problem of inequality. Big government inevitably is a servant of the strong. I'll give you two examples. The tax code has been changed 4,500 times in the last decade. Every one of those times at the service of a group strong enough and attentive enough and wealthy enough to hire a Washington lawyer to represent them to game the tax code.
The welfare state exists to transfer wealth basically from the working young and retired elderly -- working young and middle aged to the retired elderly. The elderly are, according to the CBO study, the net worth of a family of a household on average, household headed by someone 65 years old or older is 47 times larger than that of the net worth of a household of someone 35 or younger. That's a record, and has doubled in the last five years. Big government is responsive to big, muscular interest groups.
REICH: Well, I -- let's just be clear about the facts. I mean, right now, the top 1 percent is claiming in terms of their pay, a larger share of total income than has been at any time since before the Great Depression. And their tax rates -- and their tax rates are lower than they have been in 30 years.
You look at that period. I mean, George, you say that, you know, big -- rich people and big corporations have undue influence. Yes, I agree with you. But the answer is not to shrink government and not even to have government attempt to invest in education, in job training and all of the ways in which we traditionally have generated upward mobility. The answer is to get money out of politics, to make sure that those who are at the top reaches, that is both individuals and corporations, don't have the untoward influence they now have.
One final point. In the first three decades after the second world war, we had in this country much more of an equal distribution of the fruits of economic growth. And yet what happened? It turned out that in those days, the economy grew faster than it has grown since. There was, under President Dwight D. Eisenhower, whom nobody accused of being a socialist, a marginal tax rate on the top of 91 percent. I'm not advocating we go back to 91 percent. I'm just saying that for conservatives to say that we cannot tax the wealthy, when all of the nation's wealth and income, virtually speaking, is at the top, to invest in people and education and training and everything else we need to invest, it's absurd on its face.
WILL: You are a pyromaniac in a field of strawmen. No one is arguing against government investing in education. That's not --
FRANK: Wrong. You guys are.
RYAN: No, we're not.
WILL: No, we're not.
FRANK: I'll make the point.
WILL: Look, I'm not attacking the elderly. I am elderly.
WILL: I have -- five years ago when I turned 65, I got my Medicare card. I showed it to my doctor, he said, that's wonderful, George, now we'll send your bills to your children. I find that a regressive transfer of wealth, and the welfare state is full of them.
FRANK: Let me talk about education. In the first place, George, you were simply wrong when you say all of the tax -- I thought you said all of the tax increases help the wealthy. I voted, Paul voted against, a tax increase under Bill Clinton which raised the rate on the top people -- at that point it was above 150,000, I would go higher than that.