Carolina, at a plant that makes heavyduty engines. He picked up where he had left off with his message the night before. Our job as americans is to restore that basic bargain that says if you work hard, if youre willing to meet your responsibilities, you can get ahead. applause you can get ahead. Doesnt matter what you look like, doesnt matter where you come from. Our middle class, when its growing, when its thriving, when there are ladders of opportunity for people to do a little bit better each year and make sure that their kids are doing even better than them, thats the american dream. Thats what we gotta fight for. That has to be the north star that guides everything we do. Woodruff the president served notice last night he plans to fight for raising the federal minimum wage from 7. 25 to 9 an hour over the next three years. Even with the tax relief weve put in place, a family with two kids that earns the minimum wage still lives below the poverty line. Thats wrong. Woodruff but republicans led by House Speaker john boehner today renewed long standing arguments that a hike will actually hurt job creation. Listen, ive been dealing with the minimum wage issue for the last 28 years that ive been in elective office. And when you raise the price of employment, guess what happens . You get less of it. At a time when the American People are still asking the question, where are the jobs . Why would we want to make it harder for small employers to hire people . Woodruff the president s economic todo list also called for improved access to high quality, Early Childhood education; partnerships with the private sector and colleges to help American Manufacturing and expanded job Training Programs for unemployed workers. Today, he expanded on that theme, announcing a goal of training two million americans with skills that lead directly to new jobs. No job in america should go unfilled because somebody doesnt have the right skills to get that job. applause nobody. So, if theres a job open, we should train those folks right away so that they can do the job. Woodruff the battle over the budget and its potential effects on the economy were also very much at the heart of the state of the union message. The president urged lawmakers to prevent 85 billion in automatic, acrosstheboard spending cuts set for march first. And he insisted again that it be done by balancing cuts with tax increases. Now, most of us agree that a plan to reduce the deficit must be part of our agenda. But lets be clear deficit reduction alone is not an economic plan. applause woodruff this morning, republicans insisted they are giving no ground on that issue. Senate Minority Leader Mitch Mcconnell said mr. Obama missed an opportunity in his remarks on the looming spending cuts, known as the sequester. The president had the chance last night to offer a thoughtful alternative to his sequester, one that could reduce spending in a smarter way. Thats what republicans have been calling for all along, and its the kind of thing the house has already voted to do twice. We want to work with him to make that happen. But, instead, we just got gimmicks and tax hikes. Just one more plan from the president thats designed to fail, so he can blame others when it does. Woodruff its unclear how much of the president s plan can get through congress, but the white house says he will keep up the pressure, with stops in atlanta and chicago in the coming days. For a closer look at some of the president s prescriptions and how they fit into the larger questions about inequality in america, we get two views. Kevin hassett is director of Economic Policy studies at the American Enterprise institute, a conservative policy Research Center and katrina vanden heuvel is editor and publisher of the nation, a liberal weekly magazine focusing on politics and culture. Welcome to you both. So the president spent a lot of time last night, kevin hassett, talking about the importance of growing the middleclass, but he also said we must make sure that hard work leads to a decent living. In fact, he said today in asheville, if youre working full time you shouldnt be in poverty. Is that a premise thats widely accepted, do you think . I think we all would wish that would be true. The problem is when theres periods of high unemployment the wage isnt low enough to encourage employers to give people a job. Right now there are about five Million People that have been unemployed for more than 27 weeks and the Unemployment Rate for, say, African American youth, is about 38 . So weve got massive unemployment. Its a big problem. And i agree with speaker baner that increasing the cost of hiring a person right now is not the way to solve that problem. Woodruff katrina vanden huevel, what about this essential point that we shouldnt be in a situation, wrefb w the economy where it is, where if you work full time you can still be in poverty. I think that we havent seen an increase with the minimum wage judy since 2007. Though 19 states across this country have increased theirs. It seems both moral and practical that in the richest in nation in the world that someone working full time should not live in poverty. And studies over the last 20 years in states where weve seen these minimum wage increases showed theres no discernible impact on employment growth. In fact, what it does is line lowwage workers pockets with higher wages. Its a natural thing to increase wages so that demand increases. That leads to recovery. Because at the end of the day, what the president is talking about is building a strong middleclass. And the real job creators in this country are the middleclass. Woodruff kevin hassett, what about her point . That there are all these stud cheese have been done over time that show youre already shaking your head no. That show that if you increase the minimum wage people will take more money home. There are its absolutely true that the people who dont lose their jobs will take more money home. But theres a recent review paper by Federal Reserve economist bill washer and his colleague David Newmark that finds when you look at all of the papers that have been written that the balance of the evidence is that unemployment goes up by not a huge amount but by some if you lift the minimum wage. It makes sense if you lift the cost of something you get less of it. If you apply the average effect that they have in their paper to the president s proposal, it would lift, for example, the teen Unemployment Rate amongst African Americans from 38 to about 43 . I think that that kind of a change is not what we should do. But i agree with katrina that we should be very, very concerned about welfare of people at the bottom. The problem is that lifting the minimum wage is kind of a way too make it look like youre helping them when youre not and its a way to do it without spending taxpayer dollars. I think if you want to give more money to low income people you should fess up and spend the money as a government. But to try to say that were going to require employers to give them more money its not going to work because its basic economics. I think there are a whole wealth of things we could be doing, including the earned income tax credit. But we need to step back for a moment. We were witnessing the greatest concentration of wealth in this country that weve seen in a century, the redistribution of wealth upwards is making this a country where upward mobility is no longer in our sights. Where the investment in our future is being diminished. I think last night the president spoke to a future that millions of americans want to see. There is broad support by the way for minimum wage increases and we are seeing a working class a middleclass, viewed di, which over the last three decades has seen their wages and income stagnate while the very rich have seen their tax burden lighten in ways not seen in three or four decades. Its a face of a country that we need to look at and understand that inequality is perhaps the greatest threat to our economic recovery and democracy and in that context we must take action. Woodruff given what shes pointing out, even if studies show it isnt a perfect solution, why not try raising the minimum wage . Oh, because there are better ways to do it. So if you want to target lowincome workers and try to improve their lives a better try do it would be to provide a subsidy to employers who hire low wage workers. That would increase the demand for those workers, which would drive up their wages. And it wouldnt make anyone lose their job. Reporter that money would come from the government, is what youre saying. Thats the point. So what people are doing is trying to help without spending taxpayer dollars and its not going to work. Its not going to help. Its going to hurt fewer people than you help but those people are going to be hurt very, very badly. Losing your job is a terrible thing to have to suffer. Its a terriblable thing. And the president last night laid out perhaps not at the scale needed for the joblessness that is the real crisis in this country programs like a 21st century Work Projects Administration to repair the deteriorating infrastructure. But so often the republicans are so antigovernment theyre not willing to consider what kevin just spoke of, subsidies to employers. We need to think anew. Part of that, if i might add, is that we need to tax wealth more not work. We need to think harder about how it is that the concentration of wealth has become so high and we can find ways, whether its a financial transaction tax, making sure dividend and Capital Gains tax are taxed at income tax rates, the carried interest tax rate the president spoke of the other day must be repealed. Why should hedge funders and private Equity Managers be getting a loophole, a kind of benefit, that millions of ordinary working americans dont get . Woodruff those are some of the things the president has talked about. What about doing that . Well, no, i mean, the fact is that theres nothing on earth more mobile than capital and capital income. And the u. S. Is a relatively high capital income tax country. We have about the highest Corporate Tax on earth. I think guiana and the congo have higher rates. Other than that, nobody does. So if we try to drive up the amount of revenue we extract from capital the capital flees and there are no jobs in the u. S. So we have to have a more 21st century appreciation for how economies really work. And if we want to create highpaying jobs for people we need to create an environment thats friendly to firms to create jobs. The tax burden i was going to say, the tax burden on corporation is the lowest its been in decades. Because theyre locating the jobs overseas. Thats how the curve works. 11 European Union commissioners, including the conservative finance minister of germany has signed on to the financial transaction tax. I think youre seeing an understanding of a 21st century economy and how it treats capital. Not in this country, not from the republicans. But if i could just say one important thing. Last night, the investment, the call for the investment in universal prek early education. This is an investment woodruff yeah, i wanted to ask you both quickly to respond to that. Any advanced country understands this is a Public Investment in our children, our future, and if we want to see upward mobility restored in a country that prides itself, has prided itself on that, this is one step. And i think this is one place where, refreshingly, we might see some bipartisan action because i think most republicans i talk to absolutely agree that Getting School to kids earlier is a really good idea. I think theres evidence that things like head start in the past have been very effective. The one disagreement i have with the president s proposal is i think that making it universal is a big mistake. That most kids have access to preschool thats really, really great. I know wealthy kids, for example, do. And what we need to do is target preschool in the places that most need it because we have scarce tax dollars. Woodruff so who would be left out . Well, what you would do is provide universal preschool to people that cant afford it but to people who can afford it then we dont need to give a lot of tax dollars to them for something theyre already buying. There are a lot of people in this country, kevin, who cant afford it. Right, and theyre the ones who need the help. If its universal, youre giving hope the my kids who would get prek anyway because im fortunate enough to be able to afford it. Woodruff we hear you both. The debate has only begun. Katrina vanden huevel, kevin hassett, thank you both. Brown online, find reaction to the state of the union from members of congress, Foreign Policy experts, and a panel of voters, journalists and scholars who talked to Christina Bellantoni in a google hangout last night. And still to come on the newshour the dramatic end to the massive manhunt in california; preschool programs to close the achievement gap in chicago and a call for action on immigration. But first, the other news of the day. Heres hari sreenivasan. Sreenivasan the president s nominee to be secretary of the treasury jack lew fended off criticism today of his time at citigroup. He was ceo from january of 2008 until early 2009, when he joined the Obama Administration. During his tenure, he invested in a citi fund that was registered in the cayman islands, well known as an offshore tax haven. Republicans pressed lew on the issue at his Senate Confirmation hearing today. My benefit was really very small in the sense that i took a loss when i sold the investment. I always reported all income. I always paid any taxes that were due. I very strongly believe that we should have tax policies that make it difficult, if not impossible, to shelter income from taxation. Sreenivasan lew is expected to win confirmation in the full senate. That vote could come late this month. The Obama Administration is now calling for congress to close gaps in the nations cyber security. The president signed an executive order on tuesday, increasing government efforts to share information on threats. It also urges voluntary efforts by industry. Congress has struggled to reach consensus on the issue due to legal and privacy questions. This was a mixed day on wall street, as stocks searched for direction. The Dow Jones Industrial average lost more than 35 points to close below 13,983. The nasdaq rose ten points to close near 3,197. The u. S. And the European Union have agreed to begin talks on a transatlantic free trade zone. The announcement today said an agreement would add thousands of jobs on both sides of the atlantic. In brussels, the president of the European CommissionJose Manuel Barroso voiced optimism. A future deal between the worlds two most important economic powers will be a game changer. Together, we will form the largest free trade zone in the world. So this negotiation will set the standard, not only for our future bilateral trade and investment, including regulatory issues, but also for the development of global trade rules. Sreenivasan talks will begin in june. Officials said the goal is to finalize an agreement within two years. In afghanistan, a nato air strike triggered new outrage today, after reports that it killed ten civilians, along with four insurgents. It happened overnight during an operation in kunar province, near the pakistani border. Afghan leaders said the civilians were in a house next door to where taliban leaders were gathering. President hamid karzai condemned the air strike. The International Coalition said only that its investigating. Pope benedict the sixteenth was greeted with cheers today, at his final public mass before stepping down. The 85yearold pontiff celebrated Ash Wednesday services at st. Peters basilica at the vatican, marking the start of lent. We have a report from james mates of independent television news. Reporter it was not quite a rock stars welcome, but was not far short of it as thousands of pilgrims crowded into the audience hall at the vatican for Pope Benedicts first public appearance since announcing his resignation. As he tried to speak, he was drowned out by applause, finally managing to thank them and the wider catholic world for their sympathy and understanding. translated i have decide renounce the gift the lord gave me. I decided to do this after praying far long time and examining my conscience in front of god. Reporter all way dorr shippers have been queues for events in the vatican, culminating with this evenings mass in st. Peters basilica. Ash wednesday the first day of lent is anyway one of the Catholic Churchs holiest days. But events of the last 48 hours have given this evening particular significance. Before lent is out, the vatican tell us we will have a new pope. No longer able to process the length of st. Peters, Pope Benedict is wheeled through the basilica at the head of the college of cardinals from whose number is successor will be chosen. He spoke today of no longer having the physical and Spiritual Force his ministry requires. Sreenivasan the pope will officially resign on february 28. Those are some of the days major stories. Brown the manhunt that kept Southern California on edge for more than a week appeared to be over today. Still, the investigation continued in the Big Bear Lake area after the apparent demise of a former policemanturned killer. It came down to this cabin in the woods, burning furiously as daylight wa