Yesterday, we posted a video of conservative icon Ronald Reagan saying that it’s “crazy” that tax loopholes would allow a millionaire to pay lower taxes than a bus driver, using the same sort of language that President Obama has employed when describing the “Buffett rule” (which would ensure that millionaires can’t pay lower taxes than middle-class families). During a speech today in Texas, Obama used Reagan’s quote to slam Republicans who have been deriding the Buffett rule as “class warfare.” “Last time I checked, Republicans all thought Reagan made some sense,” he said:

Now, when I point this out, some of the Republicans in Congress say, ‘oh you’re engaging in class warfare.’ Let me tell you something. Years ago, one great American had a different view. I’m going to get the quote, just so you know I’m not making this up. A great American said that he thought it was ‘crazy’ that certain tax loopholes made it possible for millionaires to pay nothing, while a bus driver was paying ten percent of his salary.

Alright. You know who this guy was? It wasn’t a Democrat. It wasn’t some crazy socialist. It was Ronald Reagan. It was Ronald Reagan. Last time I checked, Republicans all thought Reagan made some sense. So next time you hear one of those Republicans in Congress accusing you of class warfare, you just tell them I’m with Ronald Reagan. I agree with Ronald Reagan that it’s crazy that a bus driver pays a higher tax rate than some millionaire because of a loophole in the tax code. And by the way, I don’t mind being called a warrior for the working class. You guys need someone working for you.

Watch it:

Ongoing protests on Wall Street (which have inspired similar efforts around the country) are now in their third week, with no sign of slowing down. One of the issues galvanizing the protesters is the country’s growing income inequality, which is currently the worst its been since the Great Depression.

There are several factors driving this income inequality — including preferential treatment of investment income, weak estate taxes, and stagnant middle-class wages — but one of the problems is that executive pay has jumped by leaps and bounds, far outstripping the income made by workers. CEOs at America’s largest companies now earn 343 times more than the typical worker. In 1970, the average CEO earned 28 times as much as the typical worker. As the Washington Post noted today, this increase occurred at the same time that worker pay was actually falling, in inflation adjusted dollars:

The gap between what workers and top executives make helps explain why income inequality in the United States is reaching levels unseen since the Great Depression.

Since the 1970s, median pay for executives at the nation’s largest companies has more than quadrupled, even after adjusting for inflation, according to researchers. Over the same period, pay for a typical non-supervisory worker has dropped more than 10 percent, according to Bureau of Labor statistics.

And much of the increase was driven by nothing more than companies simply trying to ensure that their CEO’s pay was above the median for their industry, regardless of that CEO’s performance:

Companies have long hid the way they set executive pay, but in late 2006, the Securities and Exchange Commission began compelling companies to disclose the specifics of how they use peer groups to determine executive pay.

Since then, researchers have found that about 90 percent of major U.S. companies expressly set their executive pay targets at or above the median of their peer group. This creates just the kinds of circumstances that drive pay upward.

For those keeping score, the median CEO pay in 2010 was $9 million. For “top executives,” the median pay package comes in at about $4.9 million. This cuts across industries, while companies tend to target their pay within their respective industry, but it gives you a sense for the scale of the pay packages these companies are looking at when deciding what to pay their own people.

The nation’s biggest banks could be the poster children for this sort of corporate excess, as their CEOs received huge salaries and bonuses, even as their firms were blowing up themselves (and the global economy) on toxic mortgages. The Post noted that Countrywide CEO Angelo Mozillo “earned more than $180 million as he led the company to the brink of ruin during the five years before the housing bust. At times, his pay had been set at the 90th percentile of peers.” For those looking to address income inequality, it seems that reining in executive pay is a good place to start.