print. >> it's fully 30% to 40% of the benefits were going to the very to the income distribution, the top 1% and when you broke it down it was really the top 1/10 of the 1% that did so well because of the estate tax changes and because of changes in the top tax rates and changes to the capital gains taxes, and if you go to 2003, changes in the dividend tax. i mean, theis were all tax breaks that were worth a vast amount to the richest of americans. and worth very little to middle class americans. >> within a few weeks after the legislation was passed, we all get a letter that says congress and the president have given you this tax cut. and that's pretty much it for the middle class. but for higher income groups, the further forward you go in time, the bigger and bigger the benefits get. so it was really designed to front-load the relatively modest benefits for the middle class and to back-load the benefits for the wealthy. >> so why? why do the winners get policies

that make their winnings even larger? you know, this is not a trivial change. if you say from the mid-'90s to 2007, those top 400 taxpayers, they've seen their tax rates decline so much that it's worth about $46 million for every one -- >> for every -- >> -- of one of those 400 taxpayers so it's -- the numbers are staggering. when you start to look within the top 1%, and look at what government has done to help those people out through taxes, through changes in the market, financial deregulation and the like, and through protecting them from the efforts to try to push back. >> right. >> protecting them? >> well, i think this is something that really needs to be understood. you know these large shifts in our economy had been propelled in part, by what government has done. say, deregulating the market, the financial markets, toa lou wealthy people to gamble with their own and other people's money in way fs to put a lot ofs

at risks but allow them to make huge fortunes. there's been a studios effort on the part of political leaders to try to protect against government stepping and in regulating or changing the rules. >> you write, we have a government that's been promoting inequality and at the same time, as you just said, failing to counteract it. this has been going on, you write, 30 years or more. and here's the key sentence, step by step and debate by deba debate, our public officials have rewritten the rules of the economy in ways that favor the few at the expense of the many. >> in some ways the fundamental myth that we're trying to break out of is the idea that there's something natural out there called "the american economy" that is prior to government, prior to politics. and that government, if it's

involved at all is only involved sort of at the end of the day, maybe tidying things up around the edges or redistributing money for some people to another and i think the financial crisis has been a rude awaken for those people who viewed the economic world that way. i think it's now very clear in retrospect that the decisions that leading public officials made over a period of decades helped to get us to a point where a financial crisis could be so devastating to all americans. >> how can this happen? i mean, how could washington turn its back on the broad middle class to favor a relatively few at the top in democracy? >> well, what has relreally changed is the organization of the american politics particularly the organizations that representative the deepest pocketed members of american spoipt what we've seen is an organizational revolution over

the last 30 years that has meant that business and wall street and ideological conservative organizations that are pushing for free market policies have all become much more influential. and at the same time a lot of organizations that once represented the middle class, labor unions, broadbased civic organizations and sort of organizations at the local and the grassroots level, including social movements, have all lost enormous ground. and so it's that imbalance, that shift, that i think this sort of underlying pressure that playless out in our politics today. the way we describe it in the book as as if the ecosystem of american politics has changed. and everyone in american politics and democrats republicans, liberals, conservatives has had to adapt to this new world for money matters much more in our politics and where groups representing business and the wealthy are much, much more powerful in the. >> and you don't beat around the bush. you say "most voters of moderate

means have been organized out of politics, left adrift as the foundations of middle class democracy have washed away." >> yeah, i mean, if you look at history of american democracy it is about a broadening of our understanding of political equality to incorporate african-americans and women and ultimately to also incorporate the idea that large inequalities of property were a threat to democratic equality. so fdr, during the great depression, famously said that political equality was meaningless in the face of economic inequality. so we now, i think, understand that inequality of income and wealth is part of a capitalistic society but it can't overwhelm our democracy. and what we've seen in the last 30 years is a gradual erosion of the firewalls that protect our democracy from the inequalities

that are occurring in the market. money has come into politics much more. and the power that people have in the market is being used more and more in politics as well and that's a concern. because americans have very complexed views about equality but they all agree in this basic idea that as thomas jefferson famously said "all men are created equal." and he meant men probably, but you know, the modern understanding of that phrase, we believe that people whether they're rich or they're poor whether they have lots of property or not, whether they're on wall street or off, they should have equal potential to influence what government does. anybody who looks around at our government today cannot believe that's the case or that we're even close to that. >> well, certainly you just have to looking at the recent headlines to see a washington that seems preoccupied with the economic concerns of those at the top and is resistant in many cases to steps that are clearly favored by a majority of the

elect orate, such as wanting to increase taxes on the very well-to-do, letting the bush tax cuts for the wealthy expire as if you want to do something about the deficit. that's the single most popular proposal for doing something about the deficit would be to let the bush tax cuts for the wealthy expire. and yet that goes nowhere in washington. >> you know, there is an organized, powerful constituency for deregulation, for high-end tax cuts, for policies that are neglecting some of the serious middle class strains. and there just isn't anything of comparable size or power on the other side. and that has pulled washington way, you know, way toward the concerns of the most affluent, most privileged members of our society and led them to often neglect the real struggles that americans are facing during this economic crisis, struggles that are magnified versions of what americans have been going through for 25 years or so.

>> there was a time when we were sure that a strong middle class was the backbone of a democracy. and there was a time, after the ii world war when i was a young man, when incomes actually grew slightly faster at the bottom and the middle than at the top, is that right? do your figures support that. >> yes, they do. we described that period arch world war ii, which lasted about 30 years, as being a country which we labeled broadland. >> broadland. >> broadland. and i think it's most clearly captured by that old idea that a rising tide lifts all boats. everybody's income is going up at roughly the same rate, slightly faster actually towards the bottom of the income distribution than towards the top but everybody's incomes were going up. and it's important to understand, so this wasn't some egalitarian fantasy world. it wasn't sweden. it was the united states,

recognizably the united states with significant inequalities of wealth, but everybody was participating in prosperity and seeing their incomes rise. and after the mid-1970s we start to move towards the distribution of income that looks more like that of a third world oligarchy. it looks more like mexico or brazil or russia. income inequality that statistics on income inequality now suggest that inequality is higher in the united states than it is in egypt. that's quite a journey from where we were when i was growing up. >> right now i think it's where we're seeing the kind of better fruit of winner-take-all politics because the financial crisis was not an act of god or work of nature. it was brought on by poor decisions that were made in washington and on wall street. yes, there's a global dimension of this but a big part of it was

failures of domestic policy. if you look to our northern neighbor, canada, it had nothing like the same definition banking crisis as the united states did and that's partly because it had much more effective regulations of the financial sector. you know over this period that we saw leverage and speculation increasing on wall street, washington, both democrats and republicans, were trying as hard as they could to allow wall street to do even more. >> so winner-take-all politics has produced a winner-take-all economy, right? >> yes. >> yes. >> and the winners are? >> the winners are those who've made out so well in this new economy. the very well off and financial -- and people in the highest reaches of finance and corporate executive suites. >> and the losers? >> well, the losers, i think, almost all of us. i think almost all americans lose from the shift toward a society in which rewards are so narrowly concentrated on a small

segment of the population. i was talking yesterday evening with a friend of mine who spends much of his time in mexico who was describing a society in which a small group of wealthy people are protected by guns mostly from the rest of the population and dart from one protected location to another protected location, completely separate from the rest of society. we're not there yet, but we've moved a long way down a road in which there's just a sharp social, economic, cultural separation from the vast bulk of americans and a small astonishing successful financial elite. and don't think that's -- i think most americans would consider that not to be an improvement. they would consider themselves to be losers from that. >> and there's no sign that the sort of massive constraying of

the gains of the economy at the very top is slowing down. in fact, this downturn has been remarkable in the degree to which those at the very top seem to have weathered it pretty well. profits are still very high. those who are on wall street, have recovered, thanks to a massive government bailout. >> taxpayers putting it up. i mean, they're spending taxpayer money. >> yes. and so we've seen the economy over 30 years very consistently shift in this direction. and what i think has not happened and what concerns us greatly is a kind of real undermining, deep undermining, of the operation of our democratic institutions. i mean, we're describing a massive erosion, but the question is, could we see those democratic political institutions really cease to function effectively in the future if we have a society that continues to tilt so heavily towards winner-take-all. and that's why we wrote the book. because you know walter lippman

back in the early 20th century said the challenge for democratic reform is that democracy has to lift itself up by its own boot straps and we're deep believers in the ability of american democracy to reform itself of the strength of our democratic institutions but they're in very serious disrepair right now and we've seen in recent political fights sort of a paralysis and a broad loss of faith in government and that sort of secession of the wealthy from our economic life that we've already started to see could be matched by a secession of them from our political life and a sort of loss of that braupd democracy that was characteristic of mid-20s century. that's the greatest fear that we have. >> would you say we still have a middle class country? >> that's -- >> now. >> no, no, i wouldn't. i wouldn't. >> you're hesitant. >> if you asked me that point

blank, i mean -- >> point blank, paul, do you sti -- do we still have a middle class country. >> i would say no. obviously there is still something there is still something that we could recognize as a middle class. it's still probably the biggest segment of the population. but in terms of its weight in the society, its ability to produce a society and reproduce a society that is oriented around the needs that concerns and opportunities of the middle class i don't think that we live in that country anymore. >> there was a poll done in 2010 that asked americans whether the federal government had helped a great deal of the following groups. large financial institutions and banks 53% of americans said they'd been helped a great deal. what about the large corporations? 44% of americans said they'd been helped a great deal. then they asked, well, has the federal government helped the middle class a great deal?

do you want to guess what percentage of americans said they'd been helped a great deal? the middle class had been helped a great deal, 2%. >> 2%. >> 2%. >> this is -- >> and it's just a remarkable sense that washington isn't working for the middle class. >> did either of you happen to catch the senate hearings last summer when a procession of ordinary americans came and testified about what was happening? >> we did everything we were always told to do. to have the american dream. we finished high school. we went to college. we got married. we work hard. we pay our bills. we have no credit card debt. we waited to have children until we believed we were ready. we both got graduate degrees to make us better at our jobs and make ourselves marketable. we volunteer. we donate to help those in need. and we vote. we did everything that all of the experts said we should do and yet we're still struggling. you know what i work that hard

and you still feel sometimes like you're scraping you t gets you down really quick. >> when i hear stories like that i think what is wrong with the priorities of our society that we cannot figure out how to translate our great welt, our inge ingenuity, the hard work of our citizens into a better standard of living that is shared broadly across the population. that's a fundamental thing that a well-functioning democracy should do. >> and you say we are way behind in mobility. behind australia, norway finland, germany, france, spain, and canada. we are way down the list in the terms of social mobility. am i reading you right. >> over this period in which those at the very top have done better and better the chance of climbing up the economic ladder hasn't grown at all, it may have actually declined and that is

reflected i think in a sense of pessimism that you see among many middle class americans about whether the american dream still holds true. at the individual level americans are extremely optimistic. we're seeing in surveys for the first time that only about half of americans are agreeing that the american dream still holds true and that's remarkable. >> what's the practical consequences of that? of giving up faith and hope in that dream? >> the fact is that for most middle class and working-class americans, the politics seems increasingly removed from their everyday experience in their life. and there is a current of distrust and anger towards washington, that is so deep right now. >> when we turn on our tvs, our raasor pick up our newspapers we read about what is going on in our federal and state governments and we start to believe that you don't care about us. we hear that corporate welfare continues and that ceos get six-figure bonuses at taxpayer expense, and we wonder who are working for.

and we look across the kitchen table at our families eating ramen noodles for the the third time this week and wonder how that's fair. we read that the wealthy get bigger tax breaks in hopes that their money will "trickle down" to us. then we turn the page and we read about how our school districts are forced to cut staff again. >> that's one of the biggest things that changes in this period. money becomes more important for campaigns and it also becomes much more important in terms of lobbying which in some ways is the more important way that money changed american politics. it's really the development of lobbying over this last 25, 30 years that stands out as the most dramatic role of money in american politics. we tell the story in the book of the tax reform act of 1986. because this was one of these great examples when the lobbyists were overcondition. you know the gucci gulch right outside of the senate chamber where the well-heeled lobbyists attend to members of congress,

well, gucci gulch was a place of, not of celebration, but of despair after 1986 because all of these tax loopholes were closed, rates were brought down in a way that was actually making the tax code more equitable. and that was considered to be a big step forward for the public interest. well, a few years later lobbyists had written a lot of these loopholes back into the tax code. ten years later, you know, you could hardly see any traces of the 1986 tax reform act. almost all of the good government public interest reforms that were put into the tax code in 1986 overcoming the lobbyists have been put back in, you know have been overwhelmed by the day in, day out lobbying to get those tax provisions right back into place. >> quite a cycle. i mean, if you're creating a winner-take-all economy, the winners have more money to contribute to the politicians, who turn it into a winner-take-all politics. i mean it just keeps -- >> right. >> the stories that we try to

tell in this book. that there has been a 30-year war in which the sound of the voice of ordinary americans has been quieter and quieter in american politics, and the voice of business and the wealthy has been louder and louder. many people, i think, read this book and think it's a pessimistic book. that it's grim reading and there are wa ways in which that's true but jacob and i genuinely believe it's an optimistic story compared with the story that we're typically told about what has been happening to the american economy because what we're typically told is, there is nothing that you can do about this. that it's just an economic reality. there's no point in blaming any political party. and i think the main punchline of our story and the optimistic message is that politics got us into this mess and therefore, potentially politics can get us out of it. >> but if both political parties are indebted to the winners,

where do the losers find an army of join? >> when citizens are organized and when they press their claims forcefully, when there are reformist leaders within government and outside of who work on their behalf, then we do see reform. this is the story of the american democratic experiment of wave after wave of reform leading to a much broader franchise, to a much broader understanding of the american idea. you know in the mid-20th cent we we saw aed in which income gains were broadly distributed in which middle class american his voice through labor unions, through sufficientic organizations and through ultimately through their government. we've seen an erosion of that woeshlgsd but just because it's lost ground doesn't mean it can't be saved and so in writing in book we were hoping to sort of tell americans what was valuable in the past could be a part of our future. >> jacob hacker and paul

pierson, thank you. >> thank you so much. >> thank you. >> coincden i first met with jacob hacker and paul pierson on the very day occupy wall street has sprung up in lower manhattan and i wondered if as so many others did, were we seeing the advance guard of a movement by organized people to challenge the power of organized money? well, it's still too soon to know. but in the weeks that followed, every time we went down to the encampment, there was no mistaking the message. >> i don't know thousands of dollars to go buy myself a lobbyist to lobby for my views. but corporations do. >> linnea palmer paton is 23 and an occupy wall street volunteer. >> this is supposed to be a government, for the people, you know, run by the people, and if our voices don't matter because we're not wealthy, that's really

unacceptable and it's dangerous. >> my name is hero vincent, i'm 21 years old. i've been here since day one. my parents were foreclosured on. my father's been unemployed for a couple of years. my mother of the only one taking care of the family for a while. i've been working since i was 14 years old, you know, trying to put food on our table. trying to help out with the bills. so all of these circumstances, my sister's in college and she -- we can barely afford it, you know? and so it brought us here. like the struggle brought us to this occupation, this day, this moment. ♪ ain't hard to occupy if you're set on freedom ♪ >> amin hussein is a former corporate lawyer. he's now an artist who's become one of the many organizers of occupy wall street. >> this connection between government and state regulating money and the flow of money at the expense of 99% of the population is untenable and it's

no longer being accepted. there's been a shift in the way people think of themselves in this political process. that there has been a level of empowerment. but this movement is about transforming society. >> i just need to interrupt one second and saying you're doing a great -- i love you. >> all of us who were sleeping at home were writing letters, we're thinking about you. >> thank you. >> okay? >> thank you. i really appreciate it. >> we're changing our bank accounts. >> thank you, carol seen in my family's home. we're almost foreclosed in hackensack, new jersey. first by providian bank, then by bank of america. then chase. the names changed. and we were almost homeless. >> yesenia barragan is working for her doctorate in latin american history in columbia

university. >> we were able to gather enough resources, enough money within our family to save the house. so we like to say that we were the lucky once. i'm basically here because i don't want to live in a world where there are lucky ones and unlucky ones. >> my name is daniel lynch. i live in manhattan, and in my spare time i try to trade stocks. i might even be a center-right, and i still support this and i want people to know that right now 99% exactly, not have a i've been worried a long time about problems of welt inequality in the country and income inequality and i just wanted to throw my support a little. i don't march. i don't carry a sign. state taxes, income tax es it's capitalism. ers on the of capital are winning so much more than laborers. capital has no roots, right? and to just deny that that's happening and not have a little bit of an activist tax policy about it, i think it's my ev.

it's destructive and it's just absurd. >> my name is nelini stamp. i'm 24 years old. >> nelini stamp is a community organizer. she joined occupy wall street on its first day. >> i've been fed up with having to worry about living from paycheck to paycheck because of corporate greed and because we don't have a very high minimum wage in new york. i really just wanted to take a major leap in fighting back. i think we need to, first of all, have public financing of elections. that is a huge deal. one of the reasons is you know, why corporations -- because there's an unlimited amount of donations that they can girlfriend political campaigns and it's about time that we all stand up and take this back. >> yea! >> i found my voice. i've been very apathetic, very cynical of the system that -- do i matter? do i matter to politicians? do i matter to government when policies are being made. >> tyler combelic is a volunteer

with occupy media's outreach team. >> personally tonight see money out of government. i'm a very big proponent of campaign finance reform of limiting of the role of lobbyist and limiting the role of corporate personhood because i feel right now who has the largest warchest is the determiner of who's going to be elected for a specific office or what kind of laws are going to be passed by congress. >> you have a better chance to be an organ donor than seeing any other retirement money. >> yeah i think this is a perfect, kind of forum, for us all to come and talk about -- >> back and forth. >> yes. i've seen many souls changed in the last three days. >> really. >> yeah. on all sides including the other side of the --. >> i went through the woodstock generation and i thought it's back to business as usual.

and sort of it was a big party. that's what i see this as, a party with no cover. i'm a defender of money. freedom, individual freedom, rich people. because i'm still, even though i've not gray, i'm still trying to be one. because the more money i have the more good i can do. they're all rich people. reverend ike a black minister who used to preach up near new york. he used to say if you curse the rich, you will never be one. >> i mean look at the people out here. do you think they're out here just hanging out? i mean, that blows my mind that you came out here and you said, well, people out here, you know, they have something against wealthy people. you know, wealthy people should be allowed to be wealthy people because while we're wealthy people we'll throw money out and sprinkle them all and make people's lives better. it's not think. wealthy companies are not make the common person's lives better.

they're taking their money. they're moving it abroad. they're doing different things. what's that got to do with anything. >> we've got nice cameras. you've got clothes, you're blessed. >> i just told you that i'm not one of those -- >> i can't be pessimistic about things. >> i'm being realistic i live in a very nice house, my family's blessed. so i'm not going to pretend that, you know, i don't have anything. the situation that we're in now is because of greed. it's not because of what he said, where you let people take their money and they'll do good things with it. not all g people do good things with their money. >> the 1%. >> the 1 horse. have dominant. >> dominant. >> political power. >> political power. >> over both parties? >> over both parties. >> organize iners invited bill black to lead a teach-in at the people's microphone. >> okay, how many think they stole from all of us? >> a senior federal regulator in the 1980s, black cracked down on

banks during the savings and loan cries. he now teaches economics and law at the university of missouri, kansas city. >> what we have is a recurrent, intensifying financial crises driven by elite fraud and now it's done with almost absolute impunity. so the whole idea of noblesse oblige and such and that the rich were supposed have special responsibility, that's all gone, right? they have a god-given right to the lowest conceivable taxes. when you put antiregulators in charge of the agencies who believe that regulation is bad and completely unnecessary and they destroy it. creates a self-fulfilling prophecy that produces massive fraud at the most elite levels, but worse, it all feeds into the politics. so once you get a group that completely dominates the

economy, they're going to completely dominate politics, as well. >> there is no excuse. >> there is no excuse. >> for not prosecuting. >> for not prosecuting. >> it is an obscenity. >> it is an obscenity. >> it's surrend. >> it's surrender. >> to crony capital to crony capitalism. >> what distressed me, and think it's one of the major reasons we get recurrent intensifying crises, is we seem to have lost our capacity for outrage and it's only people getting outraged that produces really positive social change. >> we are the 99%. so are you. >> i've been waiting years for people to get angry enough to do something. we want to just support these

young people and the people who are sacrificing so much comfort for all of us. >> i have a brother who's been out of work for two years. he has a family. i think it's just terrible that they don't care. they're making millions of dollars and mitch mcconnell is a multimillionai multimillionaire. john boehner is a multimillionai multimillionaire. they don't care about the people they really don't and there are districts have many people who are unemployed, foreclosures. our infrastructure or get people back to work. because this is a start. i hope that it makes a dent. but fact that it's not just here but it's all over the country now, means that somebody is waking up. >> waking up is right. waking up to the reality that inequality matters. it matters because what we're talking about is what it takes to live a decent life. if you get sick without health

coverage, inequality matter. if you're the only breadwinner and out of work, inequality matters. if your local public library closes down and you can't afford to buy books on your owner, inequality matters. if budget cuts means your child had to pay on the chorus or the marching band inequality matters. if you lose your job or about to retire inequality matters. i grew up in a working class family. we were among the poorest in town but i was rich in public good. i went to a good public school, played sandlot ball in a good public park. had access to a good public library. drove down a good public highway to a good public college. all made public by people i never met. there was an unwritten bargain month generations. we didn't all get the same deal but we did get civilization. that bargain's being shredded.

the occupiers of wall street understand this. you could tell from their slogans. a fellow young enough to be my grandson wore a t-shirt emblazoned with the words "the system's not broken. it's fixed." that's right. rigged. and that's why so many are so angry. not at wealth itself, but at the crony capitalists who resort to tricks, loopholes and hard, cold cash for politicians to make sure insiders prosper and then pull up the ladder behind them. yes, americans are waking up to how they're being made to pay for wall street's malfeasance and washington's complicity. paying with stagnant wages and lost jobs, with slashing cuts to their benefits and to their social services. and waking up to the grotesque supreme court decision defining a corporation as a person, although it doesn't eat, breathe, make love or sing, or take care of children and aging

parents. waking up to how campaign contributions corrupt our elections -- to the fact that if a speech is money no, money means no speech. so the collective cry's gone up. loud and clear. enough's enough. we won't, as i said, know for a while if this is just a momentary cry of pain or whether it's a movement. that like the abolitionists and suffragettes, the populists and workers of another era or the civil rights movement of our time gathers force until the powers-that-be can no longer sustain the inequality, the injustice and yes the immorality of winner take all politics. first, david stockman a one-time enforcer of the reagan

revolution. >> there was clearly reckless speculative behavior going on for years on the wall street. >> and john reed, a banker's banker who was in when washington loaded the dice and wall street rolled them. >> is t wasn't that there was one or two institutions that you know got carried away or did stupid things, it was we all did. and then the whole system came down. >> and at our new website obillmoyers.com, i interviewed two occupy wall street organizers who give us insight into the movement and what it hopes to accomplish. we'll also link you to our interview with the editors of "mother jones" magazine and their coverage of the "dark money" that has cast a deep shadow across this election year. that's at billmoyers.com. see you there and see you here next time.

got a question for bill, bring it to you at billmoyers.com. send it in and read some recent answers. this episode of "moyers and company" is available on dvd for $19.95. to order call 1-800-336-1917 or write to the address on your screen. funding is provided by --