Cameras before a a Senate Judiciary subcommittee. Live on cspan 3. Theres been a lot of talk lready already on the 2016 campaign trail of the gap between the richest americans and everyone else. Welln be talking about that topic here in this special roundtable on the washington journal. Were joined by scott of d mich manhattanae institute and michael ent console of the roosevelt 2013 institute. C ineq michael, first, president obama in 2013 called this issue economic inequality issue woagu defining challenge of our time. Would you agree with that . Yes, i think inequality is the doubling of top shares that are going to run away a real ce median class. Median incomes are down 8 since 2000 in particular areas. Aus e lot of unemployment. An and scott, runaway incomes, talk about the growth of guest inequality. Are we hearing so much because t this is an issue that is running be away . Ca i think we have heard a lot odged aboutan it since the financial cry crisis because we dodged another great depression. There was a lot of economic anxiety for pretty good reasons. Tended but inequality is high before ccupy the financial crisis and tend to not hear that much about it. There was no occupy wall street, people werent talking about it as a defining challenge of our time. I do think if the economy continues to expand that were going to see inequality as an issue. Al michael talk about the Roosevelt Institute and some of the policy precipitations that your group has put out on this ea issue. Absolutely. We just released a big report and when people talk about economic reform in the past 35 years, they tend to emphasize globalization. They tend to talk about Tech Technology and skills and talk about sociology and Family Structures d and individual choices choices. We wanted to emphasize decision, the rules of the economy, how laws are set f up, labor markets are set up, just as much of a role, maybe even a greater role. Theres a lot of research in the past 15 years. A lot of these changes have not made the economy strongeratio and some cases may have weakened it. and we think within our capacity viewers to show broader prosperity. You can check out the report at rooseveltinstitute. Org. Were doing our phone lines differently as we talk about income inequality. Income under 25,000, we have a line for you. 20000 between 26,000 and 50,000 80 2027488001. Between 51,000 and 100,000, we have a number for you. That line for those over 100,000, 2027488003. Scott, your philosophy on policy prescriptions for this issue. I tend to think that income as a inequality has been greatly overstated as a problem. Hlight i tend to worry about opportunity and search that i not ma have done and tried to highlight that others have done doesnt make a very strong case in my view that if you care about inequality of opportunity that income inequality ought to be i the thing you target. M the bo im more concerned about mobility from the bottom. I think the way to do that is to at do a lot of experimentation at the federal level with programs that try to increase the skills of kids, change the behavior of progra parents. I think we have federal safety net problemsou that have bad incentives where people are discouraged from working saving marrying i think we e area need to have som oe reforms in the area of Higher Education financing as well, but i wouldnt tend to put forth an agenda that specifically is trying to reduce income inequality. A chart from Business Insider on this to try to illustrate what were talking about. The income inequality in this t country, this is the percent in change to 2012. Red the blue line is the one running on the top is the top. 01 l of earners in this country. The red line is the bottom 90 in this country. You can see thestay percent change in real income since 1980 staying flat for the bottom 90 and going generally upwards for the top. 01 . Op michael, is it just a matter of getting people more ability to break into that top. 01 . No, e we dont believe so. There are symptoms of our economic ways. Its incredibly important to treat the symptoms. G you want to make sure people at the bottom have decent opportunities, Young Children arellne a investing. Ules tha but you need to tackle the underlying illness that there are a lot of rules that are channelling a lot of wealth upward. They are maredefining finance, gether corporations, labor markets and intellectual property that are all taken together create this divergence. If you look at the recovery, if it was a child, it would be in first grade. But through 2013 median incomes were falling while the top were going up. Certainly its not a recovery thats t broad based. Its a recovery that the 1 look looks like its coming back to 2007 levels. That should worry us because these trends areor likely to xes on continue t Going Forward if we. Keep the policy regime in lace. Is it a matter of heavy taxes on that. 01 to move money back down . Theres also things calledpr market conditioning or predistribution. Theres subtle ways from financial regulations to labor market regulations to the minimum wage that set up the market to benefit some people versus others. We have tilted that to the top 1 and now its time we tilt ittt, ee back. I imagine you dont agree. Lots to disagree with. I think mike is right, the story they want to tell in the report is that the rise in income inequality begin ngt early 1980suences facilitated by the rule changes have had these negative ming of consequences. A big problem for the report is the timing of the story doesnt work out. So the growth in incomes in 1970s predating the run up of co income con concentration by a decade. Productivity slowed in developed countries around the world. Countries that had a lot of inequality, countries that didnt have that much inequality. There are a number of instances whereome the Financial Sector has become. Increasingly a bigger share of the economy going back to the 1940s. This isnt something where financialization since 1980 because of rule changes has has a produced any of the changes thatho we see. I also hopefully we can have a discussion about trends and Living Standards as well. Refer the chart you referenced visually down plays how much there has been Income Growth for the middle class. Its been a 40 incident crease since 1979. Not a whole lot of change since eghs for 2000 for sure. But were basically almost back to the levels that were inship essentially all time highs for Living Standards in the United States. Should note scotts website for the Manhattan Institute is manhattan. Institute. Org. You can see that report. But we also want to hear from our viewers this morning. We have divided the lines different differently by income last year. Well start with peter from Valley Cottage, new york on the line for those who made between 51,000 and 100,000 last year. Caller good morning guys. I want to talk about the gorilla in the room. The Congressional ResearchService Report studied tion immigration and middle class income to 2013. 0 and found that as immigration slowed between 1945 and 1970 american incomes increased. But when immigration imm expanded, the incomes of the bottom 90 of america went flat and then drop dropped beginning in 2000. In the report to the Senate Judiciary u committee it was reported that the foreign born population searched 325 from 9 million to 41 million. And as that happened, incomes of the bottom 90 dropped 7. 9 in o 30,980 2013 from an average of 33,000 to 30,000. Fact nowor naturally theres other contributing factors globalization, outsourcing, inflation, declining unionization, trade deals that are bad, advances in robotics k ec and technology, but when you have a glut of labor and you not be have a weak economy or slowly 1 growing economy, youre not going to be able to absorb all these people. We bring in immigrants legally compet who are competing with American Workers and with this legalization effort that was being pushed a year ago they k. Wanted to double that. Peter is in Valley Cottage new york. Michael, in your report, talked a little bit about this issue of immigration. Yeah, i think certainly having a large part of the labor force essentially be in the shadows of labor law and not having basic rights, basic protections, the ability to go to law enforcements or other a kinds of public agencies because who of undocumented status is a detriment to other workers who have to compete. Ryone we feel that you can make the labor floor much better for s everyone by incorporating people formally. Theres a lot t ofha different ways to measure this, but my understanding is that immigration has fallen quite o not dramatically since these Great Recession. We dont really see this renaissance of working class wages since then. Theres a lot of other factors in play. A lot of people look at this and say its a contributing at margins, but not a big contributor. I think i would agree with what mike said. The Research Literature is kind of all over then. Place on this question. The i do think the call r brings up an important point, which is that a lot of the bcoul policies in the report could have benefits, but a lot of them could have costs as well thatn th are not necessarily discussed in the report, whether thats intervening in the economy at the risk of slowing economic wspen w growth, whether thats more way. Spending on federal policies that would increase deficits has no potentially hurt Economic Growth that way, but i agree with mike about overall how important immigration ha ts or hasnt been for wage trends over time. In terms of more federal der spending henry kolb on twitter wants me to ask you specifically what youstru do about underinvestment in american infrastructure and american his gi workers. I think the infrastructure in the u. S. , this is a bad time tovest cite the literature on this given that we just had this horrible amtrak accident, but i think evan soltis made a strong case. Hes a researcher that has been on a blog. I think he makes a strong case that the infrastructure crisis as folks like to describe it has really been overstated. We want to maintain our Infrastructure Spending for r w sure. I think what thehen recovery showed is that even when we boost e very spending on infrastructure it imp doesnt have very strong, so i especially shortterm impacts on employment, on the Income Distribution. So i think infrastructure has been oversold as a way of boost s ing the middle class. Income inequality, the Income Distribution in the u. S. , our topic for the next 45 minutes or so here on the washington journal. Two experts, one from the Roosevelt Institute, the other from theki Manhattan Institute to join us. Kitty hawk, North Carolina, on that line for those who made under 25,000 last year. Jim, good morning. One caller good morning, how are you . R go ahead. Caller one of the problems i think we have in this country isthe the low savings rate. Without money in the bank, its very difficult to negotiate any kind of Union Contract or just discuss those possibilities with your management. Inet and i can recall my grandmother my grandfather was a cabinet maker and my grandmother had this jar in the pantry and she saved a dollar or two dollarsi she a s week and when she said what is that money for and she said itsi thin for a time when we go on strike so i can pay the mortgage and feedms the family. And i think thats one of the major problems in this country. Earlier on another network i heard that people between 55 and 65, 67 of them have no retirement fund. Year whats going to happen to those people in the next 10 to 20 to0 ye 30 years living to the tune of 80 or 90 years old . Michael . Yeah, theres been a big experiment with 401 k s and a lot of people say its nowhere near delivered on the promise it had. People havent ever saved that way. Its difficult to save individually out of yourself. People normally retire off their children or now retire off government pension or private pensions. I think thethe gap there is pretty big and pretty startling. It seems we have seen experiments where a lot of these private savingtu vehicles nt of essentially make good experiment out of the danish Pension System that showed most people dont save on tax credits. The rich do because they can shuffle money. We call for bolstering Social Security. We think thats a timetested solution. I think the reason for the decline of the strike, which happens much earlier, it happens in the 40s after a lot of changes in labor law so it brings down the strike level. I think indi theres a lot we dont want to blame it on individuals and the idea that individualst workers arent saving enough and thats why theres not strikes. I its a function of labor law ses, t thathe cause edd that kind of change. I think that, again, this is one of these crises, the Retirement Savings crisis that has been overstated. That andrew bigs has some really Good Research showingent that our much official data that people use to gauge theed a question si of savings and how much income retireosse have understated older americans. Its a misreading o of those statistics that lead you to conclude we ought to t spend more on Social Security, which is really going to eat the rest of the budget along with medicare as things currently stand, even if we dont expand it. This is another area there are real tradeoffs to some of the policies in the moreport. Income inequality is our topic of the roundtable this morning. Heres another chart from d Business Insider showing the wealth share in the United States from 1913 to 2012 of those in the top. 1 . You can see once it was passed. About 2010 or so, that number over 20 of the wealth share in the United States is held by. Those in the top. 1 . Were talking about income inequality. Calvin is up next from North Carolina on the line for those who made over 100,000 last year. Calvin, good morning. Caller good morning and kudos to cspan for the continuous excellent job you and your team do. The n a couple of things i want to quickly mention. N income one, the nature of a capital system is to have builtin income inequality. Going back to europe which was the predecessor for our current system, theres always going to be those who have the capital and theres going to be those who are going to seek to work using their capital. So income inequality is built in. Second thing i would like to k mention is a book called the the millionaire next door by a couple of doctors. It was published back in 1996. And and in this book, it points out tl a couple things. It piggy backs off what the mill gentleman from North Carolina mentioned, which is millionairesof their live next door and they are incon speckous because a lot of their saving habits spending habits, the values that they have in terms of emphasizing education, deferring immediate satisfaction in order to look at the longterm benefits of a decision, thats what really to makes people wealthy and prosperous. I dont think its a total government thing, nor do i think its a total take regulations away and just let the Free Enterprise solve the situation. N. Its going to have to really scott start with us as individuals. I think the caller makes an interesting point that there are folks out therese who w are millionaires who might not expect or identify as such on the street. That said, as somebody who tends to worry lessss a about inequality than a lot of people its really hard to overstate how tes. Much inequality there is in the United States. Ary i have written before the amount of inequality between larry ellison, who is often on the nd m charts as the richest person in america, the inequality between him and say mitt romney on the other hand is as great as the inequality between thedd top 1 and the average middle class family. Uality so it is a astonishing how high se inequality levels are but you have to make a case for why thats a problem or why folks dont e deserve to make that much. As i said earlier, when you look at whats happening, you want to include sociology. Errate we think those tend to be ompared overrated relative to the normal conversations. E we want to bring in other d things. As for the kind of general tendency of inequality, rse, w absolutely. We have always hade ys h inequality in this country. Large ones because you have bosses, capital, people who invest in companies and own them in people who workot o for them. One thing we have noticed is that a lot of those things change rapidly. Ceo salaries are flat or te certainly doesnt have the explosive characteristics it does. Finances, sharer of gdp, the rate of growth doubles in the 1980s. You see wages are linked to deregulation in the time period. There are different ways to set up with some people call the varieties of capitalism. Ones more inclusive andd work better for more people and then theres other ways where it does tind to channel and come to the top. John is on that line for those who made between 51,000 and 100,000 last year. Ears ago good morning, john. Caller good morning, about 100 yearuns Something Like if itssalary difficult for a person to understand something if their take salary depends upon them not understanding it. You can take the Manhattan Institute, American Enterprise institute, club for growth and