Does Helping the 1% Help the Other 99%?

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Jan. 29 (Bloomberg) –- Former Mitt Romney Adviser Lanhee Chen and Bloomberg’s Al Hunt and Nela Richardson discuss the State of the Union and the theme of income inequality. They speak with Erik Schatzker and Stephanie Ruhle on Bloomberg Television’s “Market Makers.” (Source: Bloomberg)

And lady, i want to begin by presenting two views that could not be further apart.

On one hand, tom perkin.

This has been viral all week long.

One of the most legendary venture capitalist firms in silicon valley.

And of course the president of united states and the state of the union last night.

Have a look.

It is absurd to demonize the rich for being rich and doing what the rich do, which is get richer by creating opportunities for others.

Today after four years of economic growth, corporate prices and stock prices have rarely been higher and those of the top have never done better.

But average wages have barely dodged.

-- budged.

Inequality has deepened.

Upward mobility has stalled.

So, al, let me begin with you.

Is that the contrast in america right now?

Is that the state of the union?

Oh, my god, obama would cheer for that if he could have tom perkins as a foil every day.

He should go back and listen to some fdr speeches.

He did not gimp -- not the -- demogogue the rich last night.

What the president could have done last night is what perkins accuses people off, so-called class warfare.

He really did not.

He laid out the facts.

I do not think he attacked the rich.

All right, what do you think?

I think the president has a tough task, because under his watch, some of these problems have gotten worse.

At think what he was trying to do was to lay out his solutions.

Unfortunately, it was groundhog day a few days early.

It was the same speech he gave last year.

It will not fix the problems of upward mobility we have right now.

All right, small solutions will not fix anything big, but what we're talking about here is this notion that tom perkins introduced, the idea that so many people cling to that helping the rich get richer, the rising tide lifts all boats.

Is there anything to trickle down economics that was so in fashion 25 years ago?

I think there are few supporters of trickle down economics in its current form.

If you look at the median household incomes during the great recession, you will see they were declining or stagnating.

This at a time when the average tax rates were falling.

Yes, maybe 20 years ago we could cut taxes and see growth across all income spectrums.

The middle class was growing.

The top one percent, the top 20%. we do not find that situation now.

What we see instead is middle- class incomes are stagnating at the time that the top one percent are growing leaps and bounds, and in fact the majority of their income growth is post great resource -- great recession.

That is a problem in a country with this in mobility.

We do not have the tools to increase mobility to the entire rungs on the ladder.

One thing that is fascinating is a study from harvard-berkeley and the last couple of months.

It said that mobility is better in some areas of the united states than others.

San jose, for example.

We should have a discussion, and debate, a dialogue.

Why is that?

Is it the industries?

I think that is part of it.

I think some of it is education.

I think some of it is racial integration.

I think there are a whole lot of things.

That is the dialogue we are to begin.

You are absolutely right.

You will not your income inequality over the next couple of months.

That is why we should have a discussion.

To al's point, lonnie, if the evidence suggests that cutting the tax rate does not make the average american better off, first of all, what do you say?

As a republican, i suppose, how do you respond?

I think tax reform is part of the puzzle.

It is one piece of it.

We have to get beyond inking about what we can do with the tax code, although that is important.

We need to think about how we can enhance our global trade.

These opportunities are crucial in creating the kinds of jobs that will get people into a situation where they can rise up.

And you cannot forget the education system.

We really have not addressed that since president bush's overall in the early 2000's. in order to address education, al, you have to spend money, and who wants to do that?

You do have to spend money.

I do not agree with my friend.

I think the obama administration has actually made some strides on this very difficult education issue.

Semple hold on.

In order to create education standards -- now you have raised the bar.

How can political officials elected if they are telling to their constituents, you have got to spend?

If you are spending on unpopular -- on popular measures, people are all for it.


Stephanie, i think the issue is that companies are not doing the same things that they did 20 years ago.

Companies used to train workers.

Now president obama has laid out a plan to train workers for the jobs of tomorrow.

We are not seeing the same great deal policies.

We have to figure out what policies will lead to mobility.

I think the key issue here is our trade, our tax system does not support income mobility.

This is not a partisan issue.

This is an economic issue.

An issue larry summers talked about when he talked about secular stagnation.

How do we increase growth?

Then how do we distribute the pie?

We had some fascinating statistics last week that in some respects, this proved that inequality is worsening.

However it is predicated on one notion, there are -- that there is redistribution going on.

Food stamps or whatever to soften the blow of inequality.

Yes, the rich are getting richer, but people on the bottom are not doing so bad.

Is that something that republicans in general are scared to maintain?

Here is the problem.

These government programs -- we're talking about the extension of unemployment insurance -- these programs mask the reality of what is going on in our economy.

You have incredible polarization.

We are not making the durable changes to create an economy that, in the president's words, is "built to last." when you talk about raising the minimum-wage, 30%, 40%, you are using government action to mask the reality of what the economy is doing.

What is it doing?

If we do not get the economy right, we will not have mobility.

I would say instead of masking the problems, what we are actually doing is treading water.

Things like minimum wage, extending the earned income tax credit, they are useful.

They could help people, that they do not do enough to kickstart an economic growth regime.

So, we are treading water right now instead of growing, and i think that is the significant serious issue i would agree with.


this is not one problem, erik.

Economic mobility is one issue.

Wage stagnation is another issue.

Education, which stephanie mentioned earlier some it is clearly important.

I think the extension of the earned income tax credit, a republican idea, is a good idea.

It would be hard to pull

This text has been automatically generated. It may not be 100% accurate.


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