income gains in the first two years of the recovery. now, how did the 1% get 121% of the income gains? because the 99% of the other incomes fell, they fell even as the economy was recovering, the country was growing again. even as corporate profits were hitting record highs. the people who lost the most power in the economy are the folks at the very bottom of the economic ladder, the folks making minimum wage, the folks without many skills. and that is what the federal government is trying to correct when it raises the minimum wage. it is doing for the least powerful workers what they don t have to power to do for themselves, demand a raise and get it. minimum way increases are not perfect policy. they don t have a big effect on employment in either direction, but if they have any effect it is a little bit negative. some small businesses really can t afford to raise wages, some big businesses, if they
been up to. so the question i really want to ask is about how tough you are. about how much leverage you really have in the settlements and what i would like to know is tell me a little bit about the last few times you have taken the biggest financial institutions on wall street all the way to a trial. when was the last time the federal government took a wall street bank to trial? that is a great mystery of the financial crisis and it has never really been answered to my satisfaction. why have there not been more prosecutions and trials? and yesterday, the federal regulators in attendance had to come up with an answer and do it under oath. here is what happened. the institutions i supervise national banks, we ve actually had a fair number of consent orders, we do not have to bring people to trial or
pre-school teachers. joining me now is the founding director of the budget office, a former member of the president s debt commission, and an excellent harlem shaker, my friend, alice rivlin, how are you? i m fine. this is interesting in terms of what it will do to the private economy, at the moment doesn t seem to be doing all that much. one thing that is happening in the way we spend our money, we seem to be squeezing out a lot of the investments in the future, the investments in kids and research and education. and that actually seems to me like a more pressing problem we need to fix in the budget. oh, i agree, i think the real danger of not getting on top of the rising debt is for young people. it is not just that we won t spend as much on education, for example, but we won t spend as much as we need to spend on the economy, so when they grow up it will be more productive, like
economy has having changed in certain ways, such as a lot of gains are going to keep up with it at the top. and a lot of gains are going to corporate profits. one role for the government to play, that sharing has to come from government policy. they see that as what you need to keep a strong consensus for sort of a pro-growth capitalism. i want to see if you agree with it. one of the things i remember talking about in 2008, when very few people knew who austin goolsby, he would say this is a really wonky thing, one thing very important to senator obama is the refundability of tax credits and cuts, the idea that if you re going to cut taxes you have to make sure you re doing it in a way to help people who are not paying that much in income tax. right, a big issue on the right, right? the 47%.
infrastructure. those will be crowded out, because those, a big portion of the spending is committed to programs for older people. and if those grow on the at the rate that they have been growing it will squeeze out almost everything else. and one of the other dangers about that, too, aside from the automatic programs like medicare is that we can do reduction in a dumb way, instead of cutting tax expenditures and cutting in health care, we cut deep into things like education. and the sequester, which seems more likely to go into effect than i think anybody thought months ago, the sequester hammers education, social security, tax expenditures, a lot of the programs. the sequester is truly dumb policy, from lots of points of view. it would endanger the growth of our economy right now.