captioning sponsored by macneil/lehrer productions >> ifill: the u.s. military has joined the search for those abducted nigerian schoolgirls, sending out a plane to scan for any sign of them or their captors. good evening, i'm gwen ifill. >> woodruff: and i'm judy woodruff. also ahead, from the bulk collection of phone records, to spying on heads of state, to the leaks that ignited the firestorm over government surveillance. my conversation with the former head of the national security agency, general keith alexander. >> ifill: plus, how a jet fuel leak at a new mexico military base dumped a cocktail of toxic chemicals in the ground, and raised concerns about nearby water supplies.

>> it will take decades before the spill is cleaned up. as for the cost, the air force has already spent $50 million, and believes that figure will double at least. >> ifill: those are just some of the stories we're covering on tonight's pbs newshour. >> major funding for the pbs newshour has been provided by: >> at bae systems, our pride and dedication show in everything we do; from electronics systems to intelligence analysis and cyber- operations; from combat vehicles and weapons to the maintenance and modernization of ships, aircraft, and critical infrastructure. knowing our work makes a difference inspires us everyday. that's bae systems. that's inspired work. >> i've been around long enough to recognize the people who are out there owning it. the ones getting involved,

staying engaged. they are not afraid to question the path they're on. because the one question they never want to ask is, "how did i end up here?" i started schwab with those people. people who want to take ownership of their investments, like they do in every other aspect of their lives. >> and the william and flora hewlett foundation, helping people build immeasurably better lives. >> and with the ongoing support of these institutions and foundations. and... >> this program was made possible by the corporation for public broadcasting. and by contributions to your pbs station from viewers like you. thank you.

>> woodruff: an explosion and fire tore through a coal mine in turkey today. the country's disaster agency reported 70 miners were killed. the local mayor reported 157 were dead. an undetermined number were still trapped in the mine. firefighters and rescue workers rushed to the scene after an underground power unit blew up during a shift change. it happened about 150 miles south of istanbul. as word broke, relatives and friends of the miners swarmed a nearby hospital, hoping to find their loved ones among the injured. and in this country, two coal miners were killed in west virginia last night when the mine floor collapsed. >> ifill: fresh violence broke out today in eastern ukraine, as seven government soldiers were killed by pro-russian gunmen. the defense ministry said it happened when an armored column was ambushed near kramatorsk, in donetsk region. separatists declared that region independent after a referendum on sunday. but today, the official

governor, who answers to kiev, dismissed the results. >> ( translated ): the donetsk republic does not legally exist, nor is it a registered political organization. it is not a civic organization. it is just a made-up name and nothing more will come of it. that is how it should be regarded. >> ifill: meanwhile, germany's foreign minister arrived in ukraine to help jump-start talks between the government and the separatists. and russia announced new retaliation for u.s. sanctions. it refused to accept a u.s. proposal to keep the international space station going beyond 2020. and it barred using russian-made rocket engines to launch u.s. military satellites. >> woodruff: a string of car bombings across baghdad killed at least 34 people during the morning rush hour. dozens more were wounded. most of the attacks targeted shiite districts in the capital. they coincided with the birthday of shiite islam's most sacred martyr. the al-qaeda offshoot in iraq claimed responsibility.

>> ifill: in vietnam, demonstrations against chinese- owned factories turned destructive, as workers vandalized facilities that refused to shut down. the protest grew out of anger over china's deployment of an oil rig in disputed waters of the south china sea. vietnam initially sanctioned protests over the weekend, but they appear to be spreading. >> woodruff: an israeli judge sentenced former prime minister ehud olmert to six years in prison today. he was convicted in march of taking bribes to promote a real estate project while he was mayor of jerusalem and national trade minister. that was before he became prime minister in 2006. >> ifill: europe's highest court has issued a ruling that could shake up the search-engine industry. the court said that in some cases, google must remove personal information from search results linked to someone's name, if the person requests it. a spanish man had found his name still linked to debts from 1998. one of the judges said privacy is paramount.

>> ( translated ): as the data subject may, in the light of his fundamental rights request that the information in question no longer be made available to the general public. it should be held that those rights override, as a rule, not only the economic interest of the operator of the search engine but also the interest of the general public in finding that information. >> ifill: the ruling is not subject to appeal. in the u.s., some limited search deletions are already required, especially regarding crimes by minors. but it's up to the site that published the information, not the search engine, to remove the link. john conyers was thrown off the primary ballot today. the wayne county clerk ruled the detroit democrat failed to muster the required 1,000 signatures of supporters. more than 600 signatures were disqualified after a challenge which conyers' primary opponent.

conyers is 84, first elected to the house in 1964. he has three days to appeal the ruling. >> woodruff: in economic news, retail sales barely rose in april, raising questions about just how strong growth will be in the second quarter. they were up just a tenth of one percent. and the regulator overseeing mortgage giants fannie mae and freddie mac announced policies that could make it easier for many americans to obtain home loans. >> ifill: wall street had a relatively quiet day, but still managed to reach new records. the dow jones industrial average gained nearly 20 points to close at 16,715, an all-time high. the s-and-p 500 added less than a point, but finished at 1,897, also a new high. and the nasdaq fell 13 points to close at 4130. >> woodruff: still to come on the newshour: the u.s. joins the search for the missing girls in nigeria; a close look at u.s. spying with the former head of the n.s.a.; new worries about an underground fuel leak stopped long ago;

a debate over one economist's controversial take on inequality; and a medal of honor for saving lives in afghanistan. >> ifill: in nigeria, the u.s. is lending air power to help find the abducted schoolgirls, as the nigerian government indicated it's open to talks with the militants holding the students. >> ifill: it's a remote, dusty village in northeastern nigeria that's hard to get to. now, chibok is known around the world as the place where hundreds of schoolgirls were abducted last month by the islamist group boko haram. this video of them surfaced yesterday, and some parents confirmed today they spotted their daughters in it. in that same video, the leader of boko haram proposed a swap.

>> ( translated ): by allah, these girls will not leave our hands until you release our brothers in your prison. >> ifill: nigeria's government confirmed today that a window of negotiation is open. at the same time, the u.s. started manned surveillance flights over the region. authorities think boko haram might be holding the captives in the sambisa forest, near the border with cameroon. back in chibok, the girls' dorms lie empty and burned out, while authorities try to piece together what happened, and how. >> ifill: in all, about 50 girls managed to escape, despite being locked in by their teachers, as one father told a reporter.

>> ifill: the principal of the school says she was away when the attacks occurred. >> ifill: nigerian authorities have come under fire for their response to the abductions, and to combating boko haram. but foreign affairs minister aminu wali says the criticism is unfair. >> ifill: meanwhile, protests

over the girls' plight continued today, from abuja to paris, where a group of high-profile women, including two former french first ladies, called for the students' speedy release. >> ( translated ): we must all, men and women, be together for these young girls but beyond that it must be a symbol for all women who are oppressed in the world. >> ifill: france will host to a summit this weekend focusing on security and boko haram. >> woodruff: now to a close look at the u.s. government's surveillance programs. it's the subject of tonight's frontline on p.b.s., the first of a two part series titled the united states of secrets. their reporting focuses on inside accounts of the controversial spying operations put in place after the attacks of september 11th, 2001. here you'll see former national security agency employees

affiliated with a program called thin-thread, a tool which could capture and sort massive amounts of phone and email data, but had an encryption function to protect the privacy of individual americans. they and others describe the moment they found out the technology was being used without the privacy protection. >> narrator: it didn't take long for clues to emerge that something much bigger was going on. >> they started seeing stacks of servers piled in corners and so forth. >> so we had to walk way around all this hardware that was piling up out there. and so we knew, you know, something was happening. >> all of a sudden, people who normally would communicate with each other were keeping secret this new operation of some sort. >> narrator: dozens of n.s.a. employees were sworn to secrecy, but before long, details were leaked to drake.

>> i have people coming to me with grave concerns about, "what are we doing, tom? i thought we're supposed to have a warrant. i'm being directed to deploy what's normally foreign intelligence, outward-facing equipment, i'm being now directed to place it on internal networks." >> narrator: at the same time, bill binney and the thinthread team heard that "the program" was using thin thread but stripping out the privacy protections. >> what they're hearing is that the program they designed is in some form being put into use, but without the protections that they had designed in. >> what they did was they got rid of the section of the code that encrypted any of the attributes of u.s. citizens.

>> narrator: even ed loomis, who had wanted a more robust approach, was surprised at how far the agency was willing to go. >> i just refused to believe, after all i had been through for 37 years, that all of a sudden things would change and they'd go back to the old ways, back to the early '70s. i didn't believe that they could possibly have just flip-flopped and gone 180 degrees the other way. i just didn't believe it. >> narrator: to the thin thread team, collecting data without a warrant seemed like a direct violation of the rules they had followed for years. >> all these years having grown up, you never spy on americans. we had suddenly become criminals by association. the agency had gone down a path that we had been preached to you never do. we were very, very, very concerned.

>> narrator: and the fact that their thin thread system had been incorporated into the program was the last straw. >> we said, "we can't stick around and be a party to this. we can't be an accessory to all these crimes, so we have to get out." >> narrator: at the end of october 2001, bill binney, kirk wiebe and ed loomis all quietly retired. >> woodruff: the film goes on to explain the government's rationale for its new controversial programs during the bush and obama administrations. and it looks at the major revelations by former government n.s.a. contractor edward snowden. that's where we pick up tonight's newsmaker interview. general keith alexander was director of the n.s.a. from 2005 until he retired at the end of march this year. he also headed the u.s. cyber command. welcome to the "newshour". >> thank you. >> woodruff: so given all the news, all the a stories that have been out there over the last year since the snowden

revelations, i think there are some people out there watching who think the n.s.a. must collect whatever it wants to on anybody it wants to at anytime. what do you want the american people to know about what the n.s.a. does? >> well, i think you bring out a great point. first, they have to have the facts because the facts are largely incorrect that's being put out there, that the n.s.a. would be collecting all the u.s. persons information, the content, their e-mails and their phone calls. i think this is where the courts really play a key part, and what the judges have found and asked and allowed us to do actually comports with the constitution. when we make a mistake, they correct it. i think a key thing we see in a lot of these discussions and the ones we just saw is people looking at things and jumping to conclusions -- they're collecting everything, they're doing all this -- when the programs, the 215 and the 702

are tailored to address problems that were found after 9/11. if you remember where our nation was after 9/11 and what we now have to swing to do, and it brought in all three branches of the government -- congress, the courts and is the administration. >> woodruff: to sign off? ell, to sign off, but also to oversee that we're doing it right. and you know the review groups that have looked at this, in every days they found n.s.a. is doing it exactly right. >> woodruff: without getting into the numbers, general alexander, of the different programs, just to look at the excerpt we watched, you had three long-time veterans of the n.s.a. who suddenly realized that american citizens were being tracked, that their data, their phone calls were being tracked, and you heard them say, this violated everything they had ever known to be the rules at the n.s.a. weren't they right to be alarmed

about that? >> this happened five years before i got there. >> woodruff: right. but let me tell you my time there, and i know gen. mike hayden as well, i've not seen people doing what they say they're doing. so i don't see that, and every review group that's looked at it has not seen that. >> woodruff: but you know what's been going on at the agency. they're saying the encryption went away and it was possible to not only collect but listen in on data of american citizens and their phone calls. >> let's delve into that. it's metadata on the 215 program. it has nothing to do -- >> woodruff: without using the word "215". >> okay, so the metadata program only has the two phone numbers, the date and time of the call. you can encrypt it but there's no other information other than the number and n.s.a. doesn't know who the number is. >> woodruff: seems to me you talked to people in the agency

and out. there's this fundamental divide between those who say what's going on, what you just described, this non-personal sweep of collection of so-called metadata. >> right. >> woodruff: and on the other hand there are those who say, yes, they do that and they listen, they have the ability to listen in on the contents of phone conversations. >> you bring out a great point. you see where the confusion arises. they have the ability and could be doing this, but what every review group, congress and the courts found out, is they're not doing it, and if we do find it out, we hold them accountable. the is it cases is important to point that out. the church pike commission in the '70s said we don't want n.s.a. collecting inside the united states and actually, we don't want n.s.a. collecting. so why is n.s.a. involved? when you look at it, n.s.a.'s

expertise is overseas, foreign intelligence terrorists. that's what we found in 9/11 is what we knew overseas wasn't connected to the dot the f.b.i. had. so it has nothing to do with us going after the content of u.s. persons. that's the part we have to help the american people understand. >> woodruff: can you flatly declare that american phone calls are never listened to unless there's been a court order? >> not in exactly those terms, and i don't want to walk away from this because i do thi think this is important. n.s.a. goes after a foreign targeters and why people equivocate is, if a foreign target is talking to a u.s. person, then it's going to be covered. and what we don't want to do is say, okay, well, we didn't mean that one. as soon as you say that, people say, oh, but you lied. so what you want to say is under fisa, n.s.a. is not authorized to target the content of u.s.

persons' email or phone, period. we are authorized to go after other targets, and there will be things like incidental collection, and the courts say, if you do that, here's the process and procedures you must comply with and we will check it, and they do. >> woodruff: and you're saying the procedures are always followed. >> i believe they are. now, people make mistakes. if they make a mistake, we hold them accountable, we retrain them. go ahead. >> woodruff: i want to turn to a couple of other questions that are out there. president obama, when he ran for president, among other things, in so many words he pledged no more illegal wiretapping and no more letters that would allow spying on citizens. were you surprised when he got in office that president obama was prepared to accept someo these things that he had said he would not? >> well, i didn't track the

elections closely. i was actually working overseas, but i actually sat down with him in a group in the white house not long after he came in to review these programs. we'd had some compliance issues, we'd worked through the court how we were going to fix those. we had a chance to sit down with them. on both presidents, their article 2 authority to defend this country is paramount. what i say was good people, both sides, doing their job to protect our nation and our allies, and president obama is a better lawyer than me, constitutional law, saw that what the courts and the congress was doing and what we were doing is exactly right. now, he did say, okay, how are we going to address these compliance issues in the future? how do you work that with the court? we set up better procedures that were more technical. we worked with congress. it was a long six months. not because of him but because of things we needed to fix.

so when i look at that, what it tells me is there's a lot more going on here than the american people get insights to, and it has nothing to do with us listening to n.s.a. trolling through u.s. persons' data. look at the terrorist attacks between 2012 and 2013, you saw the data. the number of people killed from 11,000 in 2012 to over 20,000 in 2013. now why is this that we and europe have been so secure? and it's these tools that help you. so this is an issue that we -- you and others -- are going to have to help us face. how do we do this? >> woodruff: and many people listen to that and say, well, can you give us an example? can you give us an example of a terrorist incident that was prevented because of this kind of work? >> absolutely. 2009, rizazi, the prison program

or the one that allows us to actually track bad guys that could be communicating with people in the u.s., informed, tracking the bad guy, but now they will talk to somebody in the u.s. and talk about bombs. that was found by this program. it was not found any other way. that case is out there. the other program came in and helped, when the f.b.i. said, this is his phone number, it gave us even greater legs. >> woodruff: something else that got a lot of attention -- >> one thing on that, that was the new york city subway bomb. that's the one people said would have been the biggest attack on our soil since 2001, 9/11. and if you didn't have that program, we believe we wouldn't have stopped it. >> woodruff: something else that got a lot of attention was the one known through edward snowden's revelations that the u.s. was spying on other heads of state including german chancellor angela merkel. did president obama know about

this procedure, the fact other heads of state, including chancellor merkel, were being spied open, listened to? >> i don't know what president obama knows and doesn't know. i do know that there's a national intelligence priority framework that plays out what -- lays out what we're supposed to do and how we do it. >> woodruff: so that would explain it. >> it would. it wouldn't necessarily go through all this. i know he's given guidance and i think the way he looks at this -- i'm giving my impression, and he said it publicly in his january 17 speech -- in dealing with allies, i'll ask them, i won't need intelligence support. that's a policy decision and that's one he's comfortable with, he's getting the information he needs and that's great. we have other things we should go on and do like terrorism, cyber and other things. >> woodruff: edward snowden, you've argued time and again he's done great damage to u.s. national security.

how do you quantify that? >> well, it goes back to the terrorist numbers i gave you. terrorists and others are adjusting how they operate. we have been very good because we have great tools, great people in the military and the intelligence community helping to defend this country and in law enforcement, and we take those tools away, it's analogous to the wheel of fortune when you can guess vowels and they say, well, you can't guess o and a, but you have to figure out the puzzle. what we're doing is taking away some of the tools that our intelligence analysts use to stop terrorist attacks, and i believe, given the fact that terrorist attacks are increasing and that our tools are being publicly revealed that we put our nation and our allies in greater harm, and i believe that's why we have said people are going to pay for this with their lives, and that's what

cause med concern. that really gets us to where do we need to be going? you don't want me thinking about snowden, you want me and the rest of n.s.a. saying, okay, what's the next step, what can we do to protect the nation? we'll follow the laws. you tell us what tools we can use, we'll tell you what gaps there are, but that's what the nation needs us to look at, the future. >> woodruff: what do you worry the most about now? i know congress is looking at laws, there's no indication that they're going to pass a law but are looking at laws that would restrict some of what the n.s.a. is doing. >> well, that's our constitution. you want the congress, courts and the administration. what our job would be is to say here's what we can do and don't be surprised if you take away tools that these types of things happen. this is where it has to be based on facts, and it's not today, you brought that out, and that is if the american people

believe n.s.a. is spying on them when we are fully employed going out after bad guys, then we've got this in the wrong place. we have led them to the wrong place because that's factually not what's going on. it's interesting, look at the jeff stone article, on the board of the aclu and on the board of the presidential review group, he said, as judge pauley, n.s.a. is doing what we asked them to do. >> woodruff: the articles that appeared on that. >> that's right. from my perspective, here's the case we'll have, you will be here in a few months and somebody will say, how did you let this go through? and the answer is because we lost some of those tools. so this is a time where i believe our politicians need to step back and carefully consider how we protect our nation and our civil liberties and a privacy. >> woodruff: you're worried that might not be happening? >> i'm worried people jump too quickly, rush to a conclusion

instead of standing back and saying, what's good for this country? i was in n.s.a. eight and a half years, i never saw anyone trying to do something against our civil liabilities and privacy and if they did, we punished them, and that was the 12. think of that, in eight-plus years, 12 people. >> woodruff: gen. keith alexander, former head of the national security agency. thank you for talking with us. >> thank you for the time. >> ifill: next, the story of a massive spill of jet fuel at a military base. officials have known about it for at least 15 years, but there's still a debate about its size, where it's going, and what to do about it. special correspondent kathleen mccleery reports from new mexico. >> reporter: the trouble started here at kirtland air force base more than six decades ago. the sprawling base, about the size of washington, d.c., sits on the southeast border of albuquerque, the state's largest

city. it's home to the air force's nuclear weapons center as well as a special operations wing. colonel jeff lanning is commander of the mission support group at the base. >> in this general area, we found fuel coming to the surface and we knew we had a problem at that point. >> reporter: that problem was a leak dating to the 1950's, when rail cars and trucks delivered fuel to pipelines, powering planes at the growing base. >> we found a hole in the pipe. i have a piece of the pipe here, which is where, the hole that we actually discovered. as fuel would sit in this pipe it was able to escape the pipe and drain into the soil and migrate 500 feet down, eventually reaching the water bed. >> reporter: some fuel is mixed with soil near the surface, and much more has headed down where it rests on top of the ground water. tom blaine at new mexico's environment department uses an ant farm to explain. >> so i'm going to inject some dye that will represent the

fuel. so you can see the migration of that fuel, how it spreads out and really the uncertainty of where it's going and how it's going to get to the ground water table. >> reporter: the oozing fuel wasn't detected for more than four decades. at first the size was put at about 157,000 gallons. over the years though, that number ticked up as high as 24 million gallons, the latest estimate: about six million gallons. dave mccoy, an attorney and director of citizen action, an advocacy group worries about where the fuel is headed, northeast toward municipal drinking wells. >> the boundary of the base is down here, you can see 80% of the plume has gone off the base now. >> reporter: even more worrisome: the fuel contained a cocktail of toxic chemicals. among the compounds found was ethylene dibromide or e.d.b. a

no-knock agent once added to aviation gas. the environmental protection agency calls the chemical extremely toxic, because it can cause liver and kidney problems, damage sperm cells, and increase the risk of cancer. >> it's toxic if it touches your skin, it's toxic if you breathe it, you're going to breathe it, you're going to get it on your skin if you're taking a shower with this stuff, if you're drinking it it's toxic that way. >> reporter: the e.p.a. has ceded regulatory authority to new mexico's environment department, which has set a limit of 50 parts per trillion for e.d.b. in drinking water. but the city water authority is adamant about keeping any e.d.b. out of the water. chief operating officer john stomp. it's no e.d.b., because that's what our customers are

accustomed to, is no e.d.b. in the water. >> reporter: concern in the city is on the rise. more than 100 residents crowded into a community center recently and gave colonel lanning a grilling. >> they can't characterize how far, how wide, how deep, how fast this plume is moving. lanning said the city water isn't in immediate danger, and cited recent studies showing there's time to for a fix, as long as 30 years before e.d.b. reaches city wells. but mccoy and others dispute that estimate, and charge the air force with not being truthful and dragging its boots on the clean-up, charges lanning denies. >> i represent the government, a lot of people are holding up signs even before i even start saying anything, they're telling me i'm lying, but i'm not. i am dedicated to keeping the water for the people of albuquerque clean, and the air force is dedicated to that.

>> reporter: at the meeting was retired sociology professor beverly burris. she and her husband live a mile and a half from the base. they drink mostly bottled water these days and are considering moving after 25 years in the city. >> this is the largest ever to threaten a municipal water supply in the whole history of the country, so by anyone's standards this is an enormous spill, it is an exceptionally large spill. >> reporter: more than 100 monitoring wells dot the landscape on and off the base at a cost of about a quarter million dollars each, paid for by the air force. they sample soil and ground water for contaminants. activists want more of them, and want them placed closer to city wells. less than a mile from the spill site are two municipal wells. the water authority's contingency plan is to shut them down if they show contamination. but john stomp doesn't want to do that because the wells are among the most productive, and

the lowest in naturally occurring arsenic. >> those wells provide ten million gallons a day. so if our average daily use is about 100 million, that's about 10% of our supply. this is what we call the sweet spot of the aquifer. because the water quality is so good and we get good yield on the wells. >> reporter: stomp and others say a prolonged drought in this arid state makes cleaning up the toxic leak even more urgent. meanwhile, the air force has put interim measures in place, first attacking the problem closest to the surface. this machine, much like the catalytic converter in cars, extracts fuel vapors from the soil. corneal lanning says the method has removed about a half million gallons so far. >> as we pull the soil vapor out of the soil, anywhere where the fuel is sitting on top of the water table, it's able to off gas if you will into the soil above it.

sort of like hooking up a large shop vac to where you put the gas in your car. you're not actually going to pull any liquid fuel out, but you could pull enough fuel vapor out that at some point the gas tank would be empty. >> reporter: getting e.d.b. out of the ground water is harder, because e.d.b dissolves in water. one option, pump the toxic water out and treat it. that's worked for smaller leaks like this one dating back to the 80's at the site of an electrical generating plant in santa fe. >> you drop the water down through a column in a tube, and you blow air past it to strip the e.d.b. out of the water with the air molecules, and then you pass that water through that charcoal bed, which removes the rest of the e.d.b. from the ground water, from the drinking water. >> reporter: this is not so much different from what i might do to filter my water at home? >> oh, absolutely. you have a brita filter on your tap, same thing, it's an activated granulated charcoal. >> reporter: but the kirtland spill is far larger than the one in santa fe, which makes treatment much more difficult.

>> pump and treat is generally not very efficient. you have to pump millions of gallons of water in order to scrub out very small amounts of a contaminant. and the issue that we have is that you then have to do something with those millions of gallons of water. and in the west, what you do with water is very, very important. >> reporter: the leaks have long stopped, and trucks now deliver to a spanking new facility, built last year with above ground pipes and high tech monitoring of the fuel. but tom criticized the air force's efforts in cleaning up theroundwater and threatened to impose fines of up to $10,000 per day if a june 30t june 30th deadline for implementation of a new work plan isn't met. beverly burris believes it will take decades before the spill is cleaned up. and officials at the base, the

environment department and the water authority concur. as for the cost, the air force has already spent $50 million and believes that figure will double at least. >> woodruff: you can continue to track this story online. we will post links to both the kirtland air force base project and the advocacy group citizen action along with the transcript from this report. >> ifill: next, the second of a two-part look at a best-seller that's provoking discussion and debate about inequality and growth in america. the book is called "capital in the 21st century" by the french economist, thomas piketty. last night, economics correspondent paul solman, laid out a key part of his thesis: wealth, and the income derived from it, magnifies the problems of inequality over time. paul talked to piketty, and explained the heart of his argument. >> everybody knew what the rate of return was and that it was four or five, and not two or

three or six or seven. these numbers were important. >> reporter: they're of particular importance to piketty because his book's new contribution to economics is said to be this very simple and, to him, ominous equation: r is greater than g. r is for the return on capital, historically 4 to 5% a year. and g stands for economic growth, for most of human history, less than 0.1 percent a year, almost zero, because population grew slowly and agricultural productivity more slowly still. so, if r is growing at 4-5% a year in economies that are barely growing at all, it's pretty obvious that those who have the capital, the rich, will keep getting richer, and inequality will grow. >> and this is, i believe, the force that explains the very large concentration of wealth that we had up until world war i.

>> reporter: now, early in the 20th century, things did begin to change. inequality fell, for so many decades that economists imagined a new law: after a certain stage of development, increasing equality would become the norm. but piketty has a different explanation of what's called the great compression in wages and wealth: it was a fluke of history. he thinks we're back to r, return, being greater than g, growth. and with capital returns growing and growth slowing, inequality will just get worse and worse. >> ifill: now we get two takes on piketty's thesis. heather boushey is executive director and chief economist at the washington center for equitable growth, a liberal research center. and kevin hassett is resident scholar and director of economic policy studies at the american enterprise institute, a conservative think tank. thank you both for joining us. heather boushey, what is it about this pretty dense economic

theory that has caught fire? >> well, i think first and foremost, it's the intensity of his data. thomas piketty with a bunch of other people put together all this data on income, especially high incomes and wealth looking at a bunch of countries over a long period of time and, from that, he developed this idea that r is greater than g, that if the return on capital, the return on stocks of wealth and assets that people have is greater than what the economy is actually producing, greater than growth, well, then, those piles of money will just get bigger and bigger. he didn't develop that because it's some theory he was just coming up with in his office, he developed that because actually looking at the data and what that data told him. so it's very, very powerful and in some ways very different than a lot of the way economics work is done because it's not starting in theory, it's really starting from what we see, and what he saw was that high income lead to high piles of money,

high concentrations of capital and, once you have that money, it becomes much easier just to accumulate and accumulate and that gets us to where we are today. >> ifill: kevin hassett, what's wrong about his approach and conclusions? >> well, sure. i think that thomas, if he named his book "inequality," he would have a classic that would stand the test of time because his data on inequality is very good. he's worked with co-authors, tax data from around the world and it's authoritative as a measure of inequality. but he called it "capital," and he's really, really confused about capital. and all of this discussion about capital is, i think, in the end going to go down as an his torque blunder. i discussed it in a conference in washington when he was there a couple of weeks ago and i don't think he defended the capital part of the book well. but to be fair, i think it's a courageous book and i love when people shoot for the fences and

try to take a controversial topic and make it accessible to the populous. but the topic is fundamentally flawed and we could go into why. >> ifill: sticking with the inequality part, do you agree, kevin hassett, that the argument he makes, that the real problem is people at the top are earning more and people at the bottom are flat, is that correct? is that the reason for the gap we see? >> well, that part of what he documents is correct. even that part is very incomplete because what he analyzes is pre-tax and pre-transfer income. the fact is, since 1970, the share of income going to the people at the top has skyrocketed in the u.s. but, at the same time, transfer programs to the poor has skyrocketed as well, even more as a share of gdp, and he completely ignores those. are we going to ask is society as just or less just than it used to be, we need to look at everything and he looks at

government intervention before it exists. >> ifill: heather boushey. think there are a couple of things to bear in mind. first, the united states does a far worst job than other countries in redistributing income from the top to bottom, so we haven't seen the kinds of social programs that kevin talked about making the kind of difference we would like to see. importantly, i think one of the things that really comes career in thomas' -- clear in thomas' book is as you see the capital concentrating in the hands of a small number of individuals or families, that has really deep and important implication force economic mobility and economic opportunity. if you're seeing high incomes calcifying into tomorrow's stock of capital, that means that today's children who aren't in those high-income families don't have the same opportunities and we're seeing economic evidence that shows mobility is a problem in the united states, the united states is less economically mobile than other countries and what thomas' book does is gives us a lot of data to dig into that and understand it.

>> ifill: what the book seems also to do, kevin hassett, is say there is really not a way out of it that's doable. >> right and that's the part of the book that's fundamentally flawed. basically, if you look at what capital lists -- what do you think of as capital, a blast furnace, an industrial robot or machine, and if you look at his data, the share of income going to capital in the united states has gone up over time and he gives a theory for why that's going to continue and eventually capital will have everything unless we have 80% tax rates and so on. but the problem he has is his story for why capital will ultimately get all the income is we'll substitute capital for workers, so have robots making hamburgers and so on, which it could be true that that's something we need to think about, but the problem is the uptrend in the capital share in this data is 100% attributable to increase in rate of return on

housing, it's basically measured by a housing bubble. he's built this art phis to explain why capital is substituting for labor and lake-income share will go to zero but the trend he is trying to explain is all housing and there's no way to substitute a house for a worker. so his theory is fundamentally flawed because of that. >> ifill: kevin hassett says he goes off the rails whiz theory. >> i don't think so. we've seen income and equality rise -- income inequality rising for virtually my entire life. that is the economy we have. kevin is bidding on economic models assuming that the reality we have been experiencing for these decades is not normal, that our economy doesn't automatically create more inequality and is not calcifying into greater wealth and inequality, that's what the data is showing. we have to dig deep and understand what that means. how we solve that and what we do about it, that seems very

challenging. thomas talks about taxing wealth. you know, we already taxed wealth all across america. we tax houses. we have property taxes so we do do that. we do tax inheritances to a lesser degree now than we used to. so there are models that we can look to and the united states first introduced an income tax and a wealth tax at the dawn of the 20th century because we didn't want to be a country dependent on old money. we wanted a vibrant economy where somebody could come in and make their fortune with a good innovative idea. what we are risking if we don't act is those good ideas won't see the light of day because a small number of people have the capital and we don't have that kind of vibrancy. >> ifill: kevin? you have to say just because our nation has problems, that doesn't mean piketty is right. the fact is he is right, income inequality, pre-tax, pre-transfer has been going up, but he ignores transfers and it can't be defensible independent

ledge chiewlly to do an analysis on the inequality side and not introduce taxes. on the capital side, if you think you can substitute a house for a worker you're with piketty and if not, you're not. all of his policy prescriptions come from this flawed analysis. with we could talk about what optimal tax policy should be but i don't think the motivation to have that discussion should be his flawed analysis. >> ifill: sounds serious people on both sides of the air a argument. we could agree among them, two people we're talking to, kevin hassett and heather boushey. thank you very much. >> thank you. s, gwen. >> woodruff: at the white house today, former army sergeant kyle white was awarded the medal of honor, the nation's highest honor for valor. president obama recalled white's bravery in a 2007 battle in afghanistan when his platoon came under surprise attack.

>> woodruff: the scene was the white house east room, as the commander in chief pinned the medal of honor on sergeant white, now retired. the president recounted white's gallantry after his platoon was ambushed in afghanistan's nuristan province, in november 2007. >> earlier that afternoon, kyle and the 13 members of his team, along with a squad of afghan soldiers, left an afghan village after meeting with elders. the americans made their way back up a steep hill, single file along a narrow path, a cliff rising to the right and a slope of rocky shale dropping on their left. they knew not to stop, that they had to keep moving. they were headed into an area know as ambush alley.

and that's when a single shot rang out. then another. and then an entire canyon erupted with bullets coming from what seemed like every direction. it was as if, kyle said, the whole valley lit up. the platoon returned fire. kyle quickly emptied a full magazine. but as he went to load a second, an enemy grenade exploded and knocked him unconscious. he came to with his face pressed against a rock. and as he moved to get up, enemy rounds hit a rock just inches from his head, sending shrapnel and rock shards across his face. most of the unit had been forced to slide down the cliff to the valley below. but kyle saw a teammate, specialist kain shilling, trying to treat his own shattered arm using a tree as cover, what kain later called the smallest tree on earth. i'm sure that's how it felt. kyle sprinted through enemy fire to kain's side and began applying a tourniquet, shielding kain with his own body as

gunfire shredded that tree. >> woodruff: white also ducked bullets to get to his platoon leader, first lieutenant matthew ferrara, and marine sergeant phillip bocks. both men ultimately died of their wounds. and even after the shooting stopped, white kept going. >> kyle stayed with specialist schilling as night fell. kain was too badly to move. kyle was starting to feel the fog on his own concussion set in. but he knew that he was kain's best chance to get out alive, so kyle took charge and ordered the afghan soldiers to form a security perimeter. he called in a medevac and made sure kain and the other injured were safely onboard. and only then did kyle finally allow himself to be lifted out. as the helicopter pulled away, kyle looked out the window, watching the darkness as they pulled away from that single tree on the cliff. when you're deployed, he later said, those people become your family.

what you really care about is, i want to get this guy to the left and to the right home. >> woodruff: afterward, white spoke briefly outside the white house. >> battles are not won by men. if that was true the taliban would have won on that trail in afghanistan because they had every tactical advantage including the numbers. battles are won by spirit. and spirit is present in the relationships built from trust and sacrifice we share with one another in times of hardship and by that definition cannot be possessed by one person. without the team there could be no medal of honor. that is why i wear this for the team. >> woodruff: white retired from the army in 2011. he now works as an investment analyst at a bank in charlotte, north carolina.

>> ifill: again, the major developments of the day. an explosion and fire tore through a coal mine in turkey. the national disaster agency reported 70 miners were killed. the local mayor said it was 157. an undetermined number were trapped. u.s. aircraft began surveillance flights in nigeria as the government there opened the door to talks with islamist militants holding more than 270 kidnapped school girls. the longest-serving black member of congress, michigan's john conyers, was thrown off the democratic primary ballot. hundreds of his supporters' signatures had been disqualified. and the top court in the european union ruled google must censor search results, in some cases, if they turn up old or out-of-date personal information. >> woodruff: on the newshour online right now, when it comes to raising kids, what values are most important to teach them: hard work, imagination, self- expression, faith?

rate what you feel tops the list and see what country your parenting skills most align with. find that on our "parenting now" page. and, meet a 21st century super- hero: the cynja, or cyber-ninja, who introduces children to the world of cyber-security. we interviewed the authors of the new comic book. watch that on our "nation" page. all that and more is on our web site, newshour.pbs.org. >> ifill: and that's the newshour for tonight. on wednesday, my conversation with former president bill clinton on how to close the country's economic gaps and spur growth. i'm gwen ifill. >> woodruff: and i'm judy woodruff. we'll see you on-line, and again here tomorrow evening. for all of us here at the pbs newshour, thank you and good night. >> major funding for the pbs newshour has been provided by:

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