i will ask president obama's first director of national intelligence, dennis blair, for his take on the controversy and india versus america. the dust up over america's treatment of an indian diplomat. it shows you a side of india worth watching. but first, here's my take. is income inequality the defining challenge of our time? president obama's december 4th speech on the topic provoked a lively debate on this subject. i think part of the confusion some people have is that when we talk about inequality, we often talk about he three different things. first, the astonishing rise of the very rich. second, the stagnant wages and poor prospects of the american middle class. and third, the large number of people at the very bottom of the ladder. these are distinct phenomenon. they may be related. the rise of the rich might be causing the stagnation of the middle class but the research on that is mixed. one thing is sure. the super rich have grown worldwide but america is at the head of the pack. and it appears to be caused by many factors. some are structural. trends that reward superstars a

private sector but there is a problem here because the former director of national intelligence dennis blair, said recently in 2009 they went to the phone companies and ask them to hold the records and that is not what they would do. so it is not just an easy fix on who will house the records is just not the case. >> and what about the spying on foreign or surveillance. >> the surveillance on angela merkel, the intelligence community would ask what is the international interest and the diplomatic irntd but the problem is that why are we going to sort of aggregate or give up the tool in the tool box when we are not necessarily getting the same assurances from those governments as well. >> and there are questions in the recommendations about privacy rights. we are now talking about foreign nationals. >> one of the more interesting recommendations is they take the 1974 privacy rights act and extend it from u.s. citizens to non-u.s. citizens. if there is a crit siex kind of vague it doesn't indicate whether these are people overseas but why would we extend the rights to non-u.s. citizens when th

the former director of national intelligence, dennis blair, speaking at the aspen security conferencee companies to hold all of this data, and they flatly said, no. clearly, there's no simple fix for this question on who should be the repository for all of this data, bill. bill: what could this mean possibly for spying on foreign leaders? >> reporter: well, there was a small briefing for the reporters who cover this beat prior to the release of the recommendations, and away -- what we learned is that up until now it's really an operational question. in other words, will the u.s. government get caught in the act of doing it. and this panel, you know, in light of the controversy over the spying on our allies such as the german chancellor, angela merkel, are now setting a new threshold. is it a national security interest, foreign policy interest, a diplomatic interest? but when fox news asked u.s. government would roll back or set limits or new criteria on foreign surveillance, because that is the mandate of the nsa, we were somewhat rebuked for that question, being told that we should n

americans' phone records to be held by a third party or the phone companies, not the nsa, but dennis blairlligence, told the aspen security conference just last summer that in 2009 the government approached the phone companies to hold the records, and today flatly refused. -- they flatly refused. another recommendation would reduce the use of cyber warfare technology that has never been used before, hence the term zero day. critics say the technology is important because it's able to infiltrate systems before defenses are built and patches are developed. and before the release of the recommendations, the white house spokesman insisted that any reform would not roll back the u.s. government's capabilities. >> he does believe that we can take steps to refind our practices and make sure that we are collecting intelligence, gathering intelligence in a way that serves our security needs in a focused way and not just because we can because we have the capacity to do so. >> reporter: the criticism is that the recommendations are very broad and vague, and in cases they set new requirements, in oth