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The Week In News: A Rough Cycle For N. Korea, China



PRESIDENT BARACK OBAMA: It's simple. If you make more than $1 million every year, you should pay at least the same percentage of your income in taxes as middle-class families do.


RAZ: President Obama from his weekly Saturday video address talking taxes and his proposal for a millionaire's tax, the so-called Buffett Rule. James Fallows of The Atlantic is with me now for more on this story and others we're following. Hello, Jim.

JAMES FALLOWS: Hello, Guy. Nice to talk to you again.

RAZ: You too. Jim, President Obama and Mitt Romney now have something in common, both of them pay taxes at a far lower rate than you, me and probably almost everybody listening. President Obama, 20 percent; Mitt Romney, 15 percent effective tax rate. What's going on here?

FALLOWS: Of course, everything involving taxes is complex, but the main point is the change over the last 15 years where the tax rate on so-called unearned income - capital gains, dividends, things of that sort - has been driven way down compared to the taxes on wages that most people earn. Since Mitt Romney's income is almost all of this sort and Barack Obama has some from his book royalties, that's why they pay less on that income and overall.

RAZ: Obviously, Mitt Romney earned far more money last year than President Obama who did earn about three quarters of a million dollars, but the contrast between the two men was supposedly going to be here's this guy Romney who only pays 15 percent in tax. Now that the we know the president pays 20 percent in tax, this could be a little bit harder for him, don't you think, to make that argument?

FALLOWS: President Obama can make the same case essentially that President Clinton did. When President Clinton would say life has been good to him, especially after the presidency when he was making all this money from speeches and he thinks it's fair that people like himself should pay more than they're paying. So I think that that's the case that President Obama can make.

And, of course, we should remember that there is a quite a significant difference in the financial position of President Obama and Mitt Romney. President Obama has all of the perks that come with being the most powerful man in the world, but Mitt Romney has those that come with having several hundred million dollars worth of assets.

RAZ: Jim, let me turn to news from overseas, to North Korea, because, of course, the country defied the international community this past week by testing a long-range missile, which then failed. Our colleague at ABC News, Martha Raddatz, she tweeted that a military officer she knows says that the only safe place to be during a North Korean missile test is in the path of the missile. The North Koreans actually acknowledged the failure this time, which is something they have never done before. Does that tell us anything about this new regime there?

FALLOWS: I think the fact that they had to admit it tells something about the reality of modern communications where people in South Korea and Japan and the U.S. were watching this so the news would have gotten out. I think what would happen in the next couple of days, the next couple of months will tell us what kind of stuff this young man, Kim Jong Un, is made of and whether he's able to have a hold on power, because this is as big a humiliation as a North Korean regime has had probably in history. And it was scheduled for the 100th anniversary of the birth of the founder of the North Korean regime, Kim Il Sung, this weekend. So to have this big a failure on this big a stage at this big a moment, something will have to happen, and we'll see soon what that is.

RAZ: Does this suggest, though, that they're going to ratchet it up to prove that they can do this?

FALLOWS: The conventional analysis is that what the North Koreans will do next is something that they know they can do, which is to carry out another nuclear test. That would be not good for the world, not good for the prospects for peace nor for anti-proliferation, but it would be a demonstration of the main power that the Kim regime has had in North Korea in recent years, which is showing that it can get the world's attention mainly through military threats.

RAZ: Finally, Jim, to China and the ongoing and now growing scandal that has engulfed this onetime rising star in the Communist Party and his wife and their son, there's shady business dealings, corruption, even murder. How big of a deal is this in China?

FALLOWS: This is certainly the biggest political development there in at least 20 years, at least since the Tiananmen crackdowns of 1989 and probably the most fluid moment anybody can remember in China in quite a while, because Bo Xilai had been, until recently, the most attention-getting and fast on the rise politician in China. He'd been making both supporters and detractors because of his populism/Maoism in the province of Chongqing. And to have this melodramatic story unfolding there makes it something that really does command attention in China and everyplace else.

RAZ: It's an unbelievable story. That's James Fallows. He's the national correspondent with The Atlantic. You can find his blog at Jim, great to hear from you.

FALLOWS: Thank you, Guy. Transcript provided by NPR, Copyright NPR.