Rosenfield: Better regulation needed to preserve American Dream

Arrested Monday, handed over to Immigrations and Customs officials Tuesday and dead Sunday. Anibal Ramirez was a 37-year-old illegal immigrant from El Salvador. He died of liver failure Sunday, Sept. 2 in U.S. custody, and nobody noticed.

Nobody may care, but Ramirez's death cuts to the core of what is wrong with America. Our indifference signals our malaise — the story hardly made the news. Immigration is just another forgotten problem suffocating the American dream.

Americans realize something has gone terribly wrong. When George Gilder, the author of "Wealth and Poverty," wrote about his decision to explore American understandings of wealth creation in Success Magazine, he was discouraged by his finding that Harvard professors and prison inmates alike believe that wealth is not created but stolen in America; they don't believe in the American dream.

Just ask the bankers for confirmation. In New York Magazine, Frank Rich explored the fundamental failure of Obama's presidency: his reluctance to "demand a reckoning from the moneyed interests who brought the economy down." Three years after Obama's election, the banking and financial sectors have largely paid back their loans, but their misdeeds have gone unpunished.

Obama's regulatory and punitive push, the Dodd-Frank Wall Street Reform and Consumer Protection Act, failed to hold Wall Street accountable. According to The New York Times, only a quarter of the 400 regulations are written, much less approved. With Republican control of the House and increased lobbying, the law will have little effect. The inmates and Harvard professors were right: the American dream is dead.

With his jobs bill speech, Obama appeared to enter the ring to reawaken the dream. Inexplicably, he has since withdrawn, letting Senate Democratic Leader Harry Reid propose a 5.6 percent surtax on income over $1 million to fund the bill.

Taxing the rich is appealing, at least according to 66 percent of respondents to a recent Gallup poll who supported increasing taxes on individuals earning at least $200,000 per year.

Obama needs to channel that energy, and the jobs bill may be his last good opportunity. However, a 5.6 percent surtax is no solution. The money should come directly from the financial sector. Imposing a 5.6 percent surtax on the super rich is like deploying tactical nuclear weapons against the wrong guys. They're simply going to shelter their money, and it's going to have some nasty results.

As two University of Texas researchers wrote in a 2006 paper "Income Distribution and the Information Technology Bubble," income disparity rose in the 1990s — but only in specific geographic areas related to the information technology boom. The policy implication: change the rules and compensation for this field (through taxation, possibly).

If the jobs bill cannot pass in the Obama-proposed form, it should not be scrapped or funded by a massive surtax. The solution lies in the University of Texas study. Increased regulation and taxation in the financial field — industries directly responsible for the current recession — should pay. Along with the sensible tax breaks and modest hikes proposed in the original bill, it would make for a very effective punitive and stimulatory measure and actually increase economic equality.

There is an American dream even if Anibal Ramirez didn't get to see it. In fact, Gilder was motived to research it after striking a conversation with an immigrant hot dog vendor. Gilder asked him how wealth is created in America, and he liked the hot dog vendor's answer: economic freedom. Any immigrant or hardworking person who's not a Harvard professor or prison inmate knows this.

Now is the time for Obama to fight for this dream. It's time to bring the moneyed interests to justice and to return a semblance of income equality to America.

Scott Rosenfield is a Medill junior.

He can be reached at ScottRosenfield2012@u.northwestern.edu.