Fed Chair Unsure If Capitalism or Oligarchy Describes the U.S.

Susan Jones | May 8, 2014 | 7:07am EDT
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Federal Reserve Chair Janet Yellen takes her seat before she testifies about the economy at the Joint Economic Committee of Congress on Capitol Hill in Washington, Wednesday, May 7, 2014.(AP Photo/Charles Dharapak)

(CNSNews.com) - "Are we still a capitalist democracy or have we gone over into an oligarchic form of society in which incredible economic and political power now rests with the billionaire class?" Sen. Bernie Sanders, a Vermont socialist, asked that question of Federal Reserve Chair Janet Yellen at a hearing on Capitol Hill  Wednesday.

Yellen said she'd "prefer not to give labels," but she admitted to being very concerned about income inequality.

"So, all of the statistics on inequality that you've cited are ones that greatly concern me, and I think for the same reason that you're concerned about them. They can shape the -- determine the ability of different groups to participate equally in the democracy and have grave effects on social stability over time.

"And so I don't know what to call our system or how to -- I prefer not to give labels; but there's no question that we've had a trend toward growing inequality and I personally find it very worrisome trend that deserves the attention of policy-makers.

Sanders told Yellen, "There comes a point, where the billionaire class has so much political power -- where the Koch brothers are now, because of Citizens United, able to buy and sell politicians -- they have so much political power  -- at what point is that reversible?" he asked.

Sanders also asked Yellen about repealing the estate tax: "Would it make sense to you to give enormous tax breaks to the families of the top one percent of people in this country?"

Yellen repeated that she shares Sanders' concern with inequality -- but "it's up to the Congress to decide what's appropriate."

Sanders tried again, asking Yellen if giving tax breaks to the Koch brothers, who are worth $80 billion -- "do you think that's going to create a whole lot of jobs in this country?"

"Well, I'd say most of the evidence that we have suggests that transfers to lower income people tend to be spent -- a larger fraction of the dollar is spent than when there's a transfer to a wealthy individual...so that's from the demand side," Yellen said. "Tax policy also has supply side effects that one should take into account."

The business and economic reporting of CNSNews.com is funded in part with a gift made in memory of Dr. Keith C. Wold.

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