Explaining Southern California's economy

Sen. Dianne Feinstein discusses economy, foreign affairs, taxes, and politics at Town Hall Los Angeles

Sen. Dianne Feinstein

Matt DeBord/KPCC

Sen. Dianne Feinstein, at the Millennium Biltmore Hotel in Downtown Los Angeles, speaks at a Town Hall event.

Sen. Dianne Feinstein sat down with Mark Baldassare, CEO of the Public Policy Institute of California, in front of a packed lunchtime audience today at the Millennium Biltmore Hotel in Downtown Los Angeles. The two discussed economic challenges facing the U.S., the Occupy Wall Street movement, tax reform, and political gridlock in Washington, D.C.

"If you elect people who want to solve problems, you can get something done," Feinstein, who has been representing California for nearly 20 years in Congress, stated. "If you elect people who pound the table, you can't get anything done."

Feinstein, a Democrat, followed this indictment of Republican intractability by pointing out that she considers it unlikely that the remaining aspects of President Obama's jobs bill will pass, including a provision that would establish an national infrastructure bank, still to be voted on. 

In the aftermath of the President's announcement of plans to help homeowners who are underwater on their mortgages, Feinstein suggested that a further step is required.

"There needs to be a program that will take all these mortgages down to a 4-percent [interest rate]," she said. She added that certain provisions would need to be met, such as the borrower being employed. 

Would the banks cooperate with the idea? "We bailed out the banks when the banks needed help," she said, recalling the 2008 financial crisis and the desperate actions of then-Treasury Secretary Henry Paulson. "Now the banks have to help the people."

Feinstein strayed somewhat from the typical targets of Democratic ire when she said that she would support a tax-reform plan along the line of the what emerged from the President's Deficit Commission, co-chaired by Erksine Bowles and Alan Simpson. Bowles-Simpson would replace the current six brackets for federal income tax with three: 12, 20, and 27 percent. 

"I would like to see tax reform," Feinstein said, stressing Bowles-Simpson's simplicity. But during follow-up questions after the Town Hall event, she didn't elaborate on why simplifying the tax code seems to have captivated politicians, including Republican presidential contenders Herman Cain and Texas Gov. Rick Perry, both of whom have proposed variations on a flat tax.

A top bracket of 27 percent in the Bowles-Simpson recommendation, as well as Cain's 9 percent flat tax and Perry's 20 percent flat tax, would all simplify the tax system. It would also cut what the wealthiest Americans pay in taxes, from the current 35 percent top rate.

Economists often argue that flat taxes affect the poor and middle class disproportionately by shifting the burden of taxation to them and away from wealthier earners.

On foreign affairs, Feinstein, a former chair of the Senate Select Committee on Intelligence, confessed "angst" regarding ongoing Arab Spring events in the Middle East.

"Everyone is unsure about what will happen in Egypt," she said. "Egypt's position about Israel's existence as a state is unsure. Under [former president Hosni] Mubarak, it was very sure."

She added that the U.S. leaving Iraq by the end of the year is a positive development. In her view, the biggest threats to U.S. security are Iran and Pakistan. 

 "From what I know, Pakistan walks both sides of the street," she said, alluding to the country's unpredictable loyalties. "But you can't walk both sides of the street, because the walks are so different."

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