Park Avenue - Money, Power and the American Dream Why Poverty?

This stretch of Park Avenue on the Upper East Side of Manhattan

is the wealthiest neighbourhood in New York City.

This is where the people at the top of the ladder live.

The upper crust. The ultra rich.

But this street is about a lot more than money.

It's about political power.

The rich here haven't just used their money to buy fancy cars,

private jets and mansions.

They've also used it to rig the game in their favour.

Over the last 30 years, they've enjoyed unprecedented

prosperity from a system that they increasingly control.

But if you head north for about ten minutes, this Park Avenue

comes to an end at the Harlem River.

On the other side of the water, there is another Park Avenue.

This is the South Bronx,

home to America's poorest congressional district.

There are 700,000 people in this district.

Almost 40% of them live in poverty,

making less than 40 dollars a day.

From here, the last 30 years have looked very different than

the view from Manhattan's Park Avenue.

People here have seen their wages fall

and the cost of almost everything else go through the roof.

They've lost their jobs in the recession

caused by bankers across the river.

They've watched their children struggle in failing schools.

And they've ended up even worse off than they were a generation ago.

But America is still a land of opportunity, isn't it?

A place where anyone can make it to the top

if they are willing to work hard and set their sights high.

That's what makes this country great.

Isn't that what we tell ourselves?

But in today's America, what are the chances that someone who starts

-their life on

-this

-Park Avenue will end up living on

-this

-Park Avenue?

Let's imagine that you're invited to a game of Monopoly.

And you arrive at this game to find out that all of the properties

have been divided up, all of the money has already been handed out,

but you're told,

"Hey, go ahead and sit down.

"Play the game.

"We're going to give you a chance to play just like everyone else."

There are some in society that have a lot of access, a lot of

social mobility, a lot of resources to do the things that they want.

As opposed to other people who are more disadvantaged,

more underprivileged, don't have the same levels of resources.

Paul Piff is a social psychologist at

the University of California, Berkeley,

who studies the psychology of wealth

and the consequences of inequality in our society.

We came upon an experiment he conducted that caught our interest.

Oh, yeah.

Monopoly first became a hit during the Great Depression.

It's a game of ruthless, dog-eat-dog capitalism.

True to the American Dream, everyone has an equal opportunity, starting

with the same amount of money and the same chance to succeed.

Winning is a mix of luck and skill.

For his experiment,

Piff rigged the game by giving one player a huge advantage.

So there are two players, they don't know each other.

You flip a coin to determine your position. So it's random.

Almost like your emergence into the world is random.

Whether you land in this family or this other family.

If you were the rich person you got a lot more money.

You got two times as much money.

When you pass Go, you collect 200, you would get to roll both dice

so you are allowed to move around the board quicker.

Now, if you are on the low end,

we really hit you hard.

You got half the money,

when you passed Go, you collected half the salary,

You only got to roll one die, so you're

moving around the board very, very slowly as the other person is

just whizzing around you, collecting 200 dollars every couple of turns.

Even in a game that's openly rigged,

the rich players inevitably exhibit a sense of entitlement.

They gobble up more of the carefully placed pretzels.

They come to believe that they deserve to win.

And they showed no concern for the misfortune of the poor players,

even though the poor players

don't stand the slightest chance of winning.

The idea of the American dream

is that everyone's got an equal opportunity.

You've just got to decide to play.

But in fact, there are large groups of people

that experience the game as unfair.

The opportunity's not there. All the rules have been decided.

The property's already been bought up

and the money is already in the hands of the other players.

Woo! You rebound. Wo Ho! Oh!

I'm Michael Jordan.

-I'm Kobe.

-I'm Ray Allen!

Almost all families start out with wanting the same things

for their children.

They want them to be safe.

They want them to be happy

and they want them to be successful and healthy.

But even before birth, so many kids start that race behind.

They come into a neighbourhood that's unsafe.

Maybe they are in an overcrowded apartment.

They don't have healthy nutrition.

They might have medical issues that aren't being addressed.

I would say their number one challenge is just

a lack of opportunities in general.

In parts of the South Bronx, unemployment has reached 19%,

and many families struggle just to put food on the table.

Pastor Colin Dunkley

and his wife, April, run a food pantry in the South Bronx.

It feeds about 200 struggling families every week.

I like helping people.

I like serving the people.

I like helping the people.

If there's something we can do to bless them

that's what we're going to do.

You typically get the vegetables in the can, beans in the can,

bags of rice.

Sometimes we get the get the little sippy Capri Sun juices.

We'll put those in the bag for the kids.

But they don't have nearly enough to meet the demand.

When we visited, they ran out of food in 15 minutes.

No more comida! Nada! No more!

There is no more food at this time.

You can come back next Monday at 2 o'clock.

That's it, Mommy, that's it. No, sir, I'm sorry.

No more.

It is very, very hard to pull yourself out of extreme

poverty in the United States.

It almost never happens.

This runs completely counter to what people's notion of America

has been for a very long time.

We think of ourselves as the land of opportunity.

Mobility in the United States

lags most other advanced industrial democracies.

When I was growing up, the image of America, the self-image,

was of a vast, middle class country.

Of course, there was a small rich group and there were some poor,

but America prided itself and understood that its health

was because of a vast middle class.

We're not that kind of society any more.

There's always been a gap between the wealthiest in our society

and everyone else, but in the last 30 years something changed.

That gap became the Grand Canyon.

The incomes of people at the lower end stagnated.

And a disproportionate amount of

the growth in the economy has accrued to those at the upper end.

This is what America's economic pie

looked like in the decades

after World War II.

Income gains shared by everyone,

with big portions

going to average Americans.

But since the late 1970s,

the bottom 90% have seen their share

completely devoured by the top 1%.

The wealthy are getting an enormous percentage of all of the gains

in the entire economy.

When I talk about the wealthy I'm talking about,

like, in the thousands of people.

Thousands might be overstating it.

As of 2010, only 400 of the richest Americans controlled more wealth

than the bottom half of American households.

That's 150 million people.

The question is, what are the people at the top going to do with

all that money?

There is a little, tiny group and it's probably 1% of the 1%.

Those people are concentrated in a very small number of places.

New York has been one of those places since the early 19th century.

It has been a world city with world-class fortunes

and it has been a magnet for people who live in the 1% of the 1%.

I was in a taxi going down Fifth Avenue

looking for the richest apartment building in New York,

and there were about ten buildings that were on the initial list.

740 Park became the epicentre of the people who ruled the world.

Truly the masters of the universe. They all lived at 740 Park.

It was known before my book as the Rockefeller Building but in fact

Rockefeller was not one of the original people in the building.

It was built by Jackie Kennedy's grandfather,

James T Lee, in a consortium with a group of the people who were

considered to be responsible for the market crash of 1929

and the depression that followed.

And then it became kind of the Standard Oil building.

It was the building where lots of Standard Oil executives

and their friends all lived.

It was truly considered the holy grail for a certain kind

of wealthy New Yorker.

Now, the largest category in 740 Park are hedge fund guys,

and they're the people with the most money now.

They are the equivalent of the oil people from the '30s.

These guys rule the world, you know.

They are multi-billionaires of,

CEOs of the major corporations in the world.

This doorman once worked at 740 Park Avenue.

He agreed to be interviewed,

under the condition that we hide his face and alter his voice.

To work at 740 you really need to know somebody within the business.

You know, you're working at the top building in the world.

It's only 31 units, it's not a lot of residents,

but they're high-tempered and, you know,

you have to have a thick skin to work there.

You're going to be dealing with detestable people

and you're going to be dealing with billionaires.

You need to know everything about the residents -

what time they wake up to go down to Wall Street, whose car is which,

who likes to get their own door,

who gets in the passenger seat, who gets in the back seat.

You know, these things don't seem like a big thing to me and you,

but even a minor mishap, and you'll be fired straight away.

Who are some of the key tenants in the building now?

You've got John Thain,

the CEO who presided over the downfall of Merrill Lynch.

Ezra Merkin, who was the feeder to Bernie Madoff.

David Koch, who is the richest person in the building.

And, of course, Steve Schwarzman,

the poster child of capitalistic greed in the last 10 years.

Billionaire Stephen Schwarzman, one of the kings of private equity,

lives in 740 Park's most extravagant apartment.

Schwarzman was a managing director at Lehman Bothers

before co-founding the Blackstone Group.

He is one of the most prominent CEOs

when it comes to lobbying for tax policies that favour the ultra rich.

He was a strange guy, Mr Schwarzman.

Thank you for the opportunity to address

the 66th annual Alfred E Smith Memorial Foundation Dinner.

We call it Occupy Waldorf.

He seemed to be out of the public eye,

but then these little spurts, where he'd have his 60th birthday party,

he had Rod Stewart play and it was all over the papers.

And he had a replica of his apartment built in this hotel

and it was just completely ridiculous.

He'd have his annual Christmas party

and he'd have 25 Christmas trees come in,

these massive Christmas trees.

-25 Christmas trees?

-Yeah.

I mean every room would get a Christmas tree

and be fully decorated.

Steve Schwarzman lives in the apartment that had previously been

owned by John D Rockefeller, Jr.

It's a sprawling apartment. It's 37 rooms.

Lavish beyond your wildest imagining.

20,000 square feet.

Schwarzman paid just under 30 million for this apartment.

Pocket change for a Wall Street tycoon worth over five billion.

If a few people do really well, why is that such a big deal?

Isn't that just proof of the American dream, you work hard,

and you're successful?

We as a society have very complex views about economic inequality.

Americans are not of the view

that all inequalities of wealth or income are unjust.

In fact, they think if you work harder,

if you seize opportunities, then you should be able to get ahead.

Jacob Hacker is a political scientist at Yale, and the co-author

of Winner-Take-All Politics, which argues that this extraordinary

accumulation of wealth at the top isn't just about hard work.

It's about the wealthy interests using the political system to

rig the rules in their favour.

There's been a reinforcing cycle. Those at the top have done well.

They've invested in policies that are favourable to them,

and they've done even better,

and then they've churned a lot of that money back into politics.

We sought out the poster child for political corruption,

former lobbyist Jack Abramoff.

Having pled guilty to charges

including conspiracy to bribe public officials,

Abramoff spent nearly four years in federal prison.

Now released, he is touring the country, trying to promote reform.

I wish I could tell you that in the midst of all of my lobbying

activity I came to an epiphany, but I didn't.

It, unfortunately for me, required my demise.

Jack Abramoff has pled guilty to federal corruption charges.

But eventually,

I decided to look honestly at the past activities I had engaged in.

I also systemically looked at the overall picture.

And realised that the system itself was really badly in disrepair.

The lobbyists will bring in the exact draft of what they want

because they want to make sure it is exactly what they need.

You know, the staff are busy, the congressman busy,

and so they, frequently in the past, and still, avail themselves of

the services, let's call them, of the lobbyists to write these bills.

Now as a lobbyist, what was your leverage in terms of getting

members to sponsor the bills that you had written?

A lobbyist needs to get to the decision maker, the congressman

and the staff, and that involves, unfortunately, financial conveyances.

One of the dirty little secrets in Washington today is how much

time members of the House and Senate spend every week,

not just in the elections season, but all the time, year-round,

on the telephone, asking people for money.

It's begging for money. It's a sad spectacle.

When you have campaigns that are costing tens of millions

of dollars, the people who have the money want something back.

Money is being used to buy results. That is the problem.

That's how I used money. I know what I was doing.

Washington is almost owned

and operated by the US corporate sector at this point.

There are so many billions of dollars of spending on lobbying,

there are so many lobbyists that are in the room, writing the regs,

writing the laws right now,

there is so much financing of political campaigns,

there are so many bought politicians.

Our civics books tell us that

the President is the most powerful person in the world

and that special interests must go to Washington

to petition the government.

But when it comes time to raise money,

our presidents go hat in hand to the people who really have the power.

In 2007, President George W Bush made a pilgrimage

to Steve Schwarzman's apartment

to ask for money for the Republican National Committee.

The secret service were coming for, I would say, three to four months

before the actual visit.

And they would come every week just to check up,

look around the building. They did background checks on us, for sure.

They had the sharp shooters out.

They brought Mr Bush to Mr Schwarzman's apartment.

He spent maybe 15 minutes, out, and that's it.

Why did John Dillinger rob banks? That's where the money is.

Well, 740 Park is where the money is and in this day and age,

any candidate who didn't go to 740 Park would probably be foolish.

I'm Mitt Romney, I believe in America

and I'm running for President of the United States.

-NEWSREADER:

-Romney has a private meeting on Park Avenue

with prominent CEOs eager for change in Washington.

Mitt Romney went to kiss Mr Schwarzman's ring

and meet some of his friends

and no doubt collect a few cheques.

What makes him good for the country?

Mitt, he's a natural leader, and he's accessible.

He listens to what you say.

And what are you telling him about what needs to be done?

Uh, well, we had a nice meeting about three weeks ago for an hour

and what I tell him stays with me, but uh...

OK, fair enough.

..I'm not shy.

They can influence the writing of laws, the implementation

of regulation, the degree to which the tax code tilts towards business

and those at the top versus ordinary working Americans.

A perfect example of the influence that a small group of billionaires

can have on the government is something in the tax code

called the carried interest provision.

It allows hedge fund

and private equity managers like Steve Schwarzman to pay

a 15% tax rate on their income, even though, unlike

normal capital gains, they're not required to risk their own money.

When it's explained to people, they think it's crazy.

The most highly paid financial executives get taxed at a rate

lower than your mom and pop grocery.

It is in the tax code

because of the incredibly effective lobbying of the financial industry.

OK, it was a question about carried interest being

taxed at a lower rate.

We sort of look at this as a, as sort of an issue that's

now in the political world, and it will be solved in that world.

We don't have much of a say in that.

Schwarzman went to Capitol Hill yesterday

and stood outside the Senate chamber lobbying senators.

Schwarzman was there to fight against higher taxes

on so-called carried interest.

From 2006 on, every Democratic leader, and President,

in the case of President Obama,

has said, "We're going to get rid of this."

Let's ask hedge fund managers to stop paying taxes

that are lower on their rates than their secretaries.

And then magically it manages to survive.

Before you know it, the congressional session has ended

and, "Oh my God, we ran out of time.

"We didn't get to it, we'll do it next time."

It appears the Democrats

have completed their takeover of Capitol Hill.

Even when Democrats controlled both houses of Congress,

they couldn't close the carried interest loophole.

The question is why?

It passed the House, twice!

But in the Senate,

the hedge funds had a pal in Charles Schumer of New York.

The senator from Wall Street, as he was known for many years.

Charles Schumer is one of the most powerful senators in the country

and has raised more campaign money from the financial industry

than any other Democrat currently serving in Congress.

Schumer became famous for his ability to gain Wall Street dollars.

That's why he was elevated within the Democratic leadership.

It was because he was such an effective fundraiser.

Schumer in that period was the chairman

of the Senate Democratic campaign committee,

which, you've got to give the guy credit,

he turned this into an absolute money machine.

Schumer helped the Democratic Party

raise record amounts from Wall Street.

And in June 2007, as the Senate was considering legislation to close

the carried interest loophole,

Schumer went on a fundraising frenzy.

In that one month, he raised more than 1 million

from hedge funds and private equity firms like Blackstone.

The carried interest bill never saw the light of day.

Schumer just buried the idea.

It never came up for a vote in a committee

or on the floor of the Senate. It just disappeared.

And that, I think, is a perfect example of the way in which

money talks in American politics today.

And nobody's money talks louder than David Koch's.

This right-wing oil tycoon with a fortune of 25 billion

is the richest resident of 740 Park Avenue.

David and his brother Charles run Koch Industries,

one of the largest privately-owned companies in the world.

They make things like Dixie Cups, Brawny paper towels, Lycra,

and Stainmaster carpet.

But their most profitable business is oil and gas, which helps

Koch Industries bring in over 100 billion in annual revenues.

Together, the Koch brothers may have spent more money to influence

American politics than anyone else in the country.

They basically are unprecedented.

They influence American politics

on a completely different dimension than anybody else.

# The minute you walked in the joint

# I could see you were a man of distinction

# A real big spender... #

Millions of dollars to Republican politicians.

More than 15 million, for example,

to lobby in Washington since 2006.

# Good looking, so refined

# Say wouldn't you like to know what's going on in my mind? #

As much as 200 million of their own money this year to

help defeat President Obama.

# Hey big spender

# Spend a little time with me. #

In 1980, David Koch actually ran for Vice President

on the libertarian ticket.

They count on growing sympathy for their party's single goal -

freedom from government.

He did abysmally.

The libertarian ticket got 1% of the vote in America in 1980.

What they learned from that is that they had to figure out

another way to get their ideas to become influential.

So the Kochs decided to use their money to advance their agenda.

They gave generously to political candidates,

but, more importantly, they invested heavily in groups that could

bring their anti-government ideas into the mainstream.

The brothers gave millions to right-wing think tanks

and Charles even founded one - the libertarian Cato Institute.

Government's too big, and it's getting bigger,

and we don't want to encourage bigger government.

Take the keys to the liquor cabinet away from the alcoholics.

The Kochs also wrote out enormous cheques to universities

to support programmes that would promote deregulation

and free market economics.

Their free-market ideology, they argue, is just about principle.

But there are many,

many areas in which their business interests butt into regulations.

Environmental regulations have been especially bad for the Kochs'

bottom line, and they've been slapped with numerous fines

from the Environmental Protection Agency.

We are talking about millions of gallons of crude oil being

released into the environment.

In 2000, Koch Industries had to pay a 30 million fine

for its role in over 300 oil spills.

At the time,

it was the largest civil penalty in the EPA's history.

When you make businesses less competitive because they are

having to deal with regulations from the Environmental Protection Agency

and other unelected bureaucracies, instead of creating jobs

and instead of being able to compete with our foreign competitors,

we know it kills jobs.

This is Tim Phillips, the head of the Koch brothers' latest venture,

Americans For Prosperity.

We're genuinely fighting to preserve and expand economic freedom,

which we believe is the best way to give folks

from every walk of life prosperity and a shot at a better life.

Through Americans For Prosperity, the Kochs have provided

tremendous financial backing to the Tea Party movement,

by organising rallies and protests, flying in big name guest speakers.

Don't tax us any more.

And flooding the airwaves with advertising.

Wasteful spending must stop.

Go to spendingcrisis.org to make your voice heard.

People were looking at the Tea Party movement

as this sort of spontaneous combustion,

this grassroots thing that just exploded, and what it really was,

was something that was being fed by libertarian billionaires.

We want the maximum freedom to launch businesses,

create opportunity, and expand prosperity.

We desire a tax code that does not punish hard work or crush

the entrepreneurial spirit that makes America unique in the world.

They have this ideology of the free market

and how making money equals freedom and if you listen

to the Tea Party rhetoric, you hear exactly the same phrases.

Our side, the side you're on today, is the side, frankly, of freedom.

CHEERING

They're chanting "Liberty!" and chanting "No more taxes!"

Freedom, liberty, and people waking up to the fact that this

is our country and it's up to us to take it back.

Our rights are being taken away. Little by little.

But what kind of freedom is Americans For Prosperity

talking about?

Is it freedom for everyone?

Or just for billionaires who want freedom from taxes,

the freedom to pollute,

and freedom from any responsibility to the rest of society?

To answer that question, just go to one of their rallies,

where you're likely to see signs promoting a once-discredited

philosopher and novelist who's recently found a new audience.

Here in the United States, perhaps the most challenging

and unusual new philosophy has been forged by a novelist - Ayn Rand.

Ms Rand's point of view is still comparatively unknown in America

but if it ever did take hold, it would revolutionise our lives.

I am opposed to all forms of control.

I am for an absolute, laissez-faire, free, unregulated economy.

Ayn Rand wrote a series of novels that have become

a kind of touchstone for contemporary Republican politicians,

most notably, Atlas Shrugged.

There's Atlas. He holds the world on his shoulders.

What if Atlas shrugged?

Picture this,

an anti-Utopia society that collapses under government controls.

Does this sound familiar? It should.

It's Ayn Rand's story of Atlas Shrugged. And now it's a movie.

One very popular with Tea Party members.

Atlas Shrugged is about an America where businesses are regulated.

The rich pay taxes

and the government tries to help the middle class and the poor.

In other words, a doomsday scenario.

In Rand's world,

anyone who needs a little help in life is a moocher or a parasite.

And anyone who wants to help others is a villain.

Her heroes are proud to be as selfish as possible.

You really don't care about helping

-the underprivileged, do you?

-No, Philip. I don't.

Finally, the CEOs of America get sick and tired

of living under a government that no longer caters to them

and they decide to go on strike.

-What are you selling, pal?

-Nothing.

I'm simply offering a society that cultivates individual achievement.

They head off into the mountains and start a new society,

one where there is no government.

Atlas Shrugged is told as a horror story,

a nightmarish vision of what would happen to our country

if wealthy Americans like David Koch and Steve Schwarzman

just left us to fend for ourselves.

No!

Yeah, we support it. We had screenings around the country.

We like that story to be out there

and we like the ideas to be out there.

We certainly believe and share

many of the principles and values that book was based on,

the inherent morality of capitalism.

You do not like the altruism by which we live?

Well, you see, "I don't like" is too weak a word.

I consider it evil.

The appeal of Ayn Rand is that, um, you know,

it's basically the Gordon Gekko message - greed is good.

That ideology is appealing, I suppose,

if you have a tremendous amount of money. You may feel guilty otherwise.

How does your philosophy translate itself into the world of politics?

We believe that America deserves a choice of two futures.

Paul Ryan receives more money from the Koch Brothers

than any other member of Congress.

He is also the country's most powerful politician

to publicly embrace the philosophy of Ayn Rand.

By running on his anti-government views,

this Republican from Wisconsin became a Tea Party favourite,

a powerful member of Congress, and a candidate for high office.

Join me in welcoming

the next president of the United States, Paul Ryan.

VICE President of the United States!

We will restore the greatness of this country.

It is our duty to save the American dream for our children.

What kind of people do we want to be?

-Free!

-Free!

With his rise to prominence,

Ryan has denied his affection for Ayn Rand.

But history tells a different story.

I just want to speak to you a little bit about Ayn Rand,

and what she meant to me in my life

and the fight we're engaged here in Congress.

The reason I got involved in public service, by and large,

if I had to credit one thinker, one person, it would be Ayn Rand.

You believe that there should be no right by the government to tax.

You believe that there should be no such thing as welfare legislation,

unemployment compensation.

It's inspired me so much that its required reading in my office

for all my interns and my staff, we start with Atlas Shrugged.

How do we build roads? Sanitation facilities, hospitals, schools?

I believe in private roads,

private post offices, private schools.

It's so important that we go back to our roots,

to look at Ayn Rand's vision, her writings,

to see what our girding undergrounding principles are,

we have to go back to Ayn Rand.

Our plan takes power away from Washington

and gives it back to the individual.

While in Congress, Ryan put Ayn Rand's philosophy into practice

through a plan he called "The Path to Prosperity."

It was a budget proposal

that would dramatically cut government programmes for the poor

while handing out an even bigger tax cut for the rich.

I think that The Path to Prosperity

that Chairman Ryan and his committee have put together

is a blueprint for America's Future.

The Path to Prosperity passed the House of Representatives

in March of 2012. It now appears to be at the heart

of the economic philosophy of the Republican Party.

Mitt Romney and I will take the right steps,

in the right time, to get us back on the right track.

What do you think of Ryan's budget framework?

Oh, I think it's ridiculous on the face of it.

He's proposing a 10 trillion tax cut

as part of his deficit reduction plan

and obviously, if you're going to cut taxes by 10 trillion,

you've got to cut spending by even more than 10 trillion.

Every programme you can possibly think of,

from roads to education to energy,

would be more or less abolished

if you're going to take seriously the numbers he has put forward.

The idea that there's legitimate economics behind this is absurd.

Conservatives throughout the ages have never spoken like Paul Ryan.

Milton Friedman talked about a negative income tax

and guaranteed incomes for the poor.

Friedrich Hayek, who was one of the acmes of free market economics,

talked about the need of societies to guarantee minimum standards

and provide health care.

So, there's clearly an ideology involved here.

They actually want to use tax policy to eviscerate government programmes.

If we try to go down the path

where we had put the government in the place

to equalise the results of peoples' lives,

where we try to equalise outcomes, we'll all be more equally miserable.

CHUCKLING

Rather, let's focus on equality of opportunity.

My mom used to say to me, "Son, it don't matter where you begin,

"what matters is where you end.

"You live in the United States of America." And that's something

that I think is an inherently moral thing about America -

it gives you a chance to make it.

Much of what they say is about

providing opportunity to make money to everybody equally,

that's what they would argue about,

and, um, it doesn't seem to accept the possibility

that if you're poor enough and your schooling is bad enough

that you don't really have an opportunity to compete.

Almost everyone agrees

that education is the key to upward mobility.

For people starting at the bottom of the ladder,

a college degree can quadruple their chances of making it to the top.

But college is increasingly out of reach.

The cost has gone up over 500% since 1980.

Meanwhile, without a college degree, it's harder than ever to get a job.

If you only have a high school diploma,

there's a 7/10 chance that you don't have full-time work at all.

It's a cruel irony that the US economy has a desperate need

for skilled labour in manufacturing, hi-tech, and health industries

but there aren't enough qualified workers to fill those jobs.

Even with 12 million Americans unable to find work,

training and education programmes are being slashed by both parties

in favour of tax cuts for the rich.

I find it hard to be an optimist right now,

for people whom I care about,

and people who the Poverty Institute cares about,

people who want to support their families through work, and can't.

Today, one in seven Americans receives food stamps.

More than half of those people are children and elderly.

41% of recipients live in working households.

A job is no longer enough to keep Americans out of poverty.

For the people that think, OK, they don't need anything,

they don't need a handout, they should just go get a job -

yes, as soon as they create jobs for people to get them,

then great, I'm pretty sure they'll be there.

There's nothing. So what do you do when there's nothing?

That's where the safety net comes in.

Yet Paul Ryan's budget proposal

would cut the food stamp programme

by 134 billion dollars over the next ten years,

which could shred the safety net for 8 million people.

-My name's James Salt.

-Hey.

-Oh, great!

-I have a question.

Guys, let me get to my car.

I appreciate it, I've got some Bibles, thank you very much.

In April 2012, the US Conference of Catholic Bishops

urged Congress to protect food stamps.

Bishops suggested that if spending cuts were necessary,

they should be made to government subsidies

for rich agricultural companies,

instead of taking food from hungry children, poor families,

and vulnerable seniors.

Our nation is approaching a tipping point.

We're at a moment

where if government's growth is left unchecked and unchallenged,

America's best century

will be considered our past century.

This is a future in which

we will transform our social safety net into a hammock.

You can hear Paul Ryan talk about his hammock.

This hammock - the average benefit in Wisconsin

was 246 a month last year for two people,

about 350 for four.

Is that enough for you to say,

"Ah! Put my feet up in a hammock, you know, I got these food stamps"?

Feeding people is something that this country can afford to do

and should be able to do. That's not a hammock.

And if you try to raise our taxes

and trample on our liberties,

we're either going to beat you

or make your life miserable!

CHEERING

The government has been starved of funds.

We're at about the lowest tax collection

as a share of national income in our modern history.

We can't even pay for the most basic public services right now.

We can't keep our schools functioning.

We can't keep our roads intact.

Taxes are the price you pay for civilisation.

And if you don't pay taxes, you don't get civilisation,

it's as simple as that.

By that measure, our civilisation is in trouble.

General Electric made 5 billion in US profits last year,

but claimed a 3.3 billion tax credit.

These days, some of the nation's most profitable companies

are paying little or no taxes at all.

Thanks to tax breaks, loopholes,

and clever accounting,

the tax rate corporations actually pay

is at an all-time low.

The same thing is true

for personal income taxes,

especially for the ultra-rich.

Tax rates for millionaires

have dropped more than 25% in the last two decades.

And for a handful of extremely wealthy individuals at the top,

taxes have fallen by almost 50%.

A big part of that dip

is because of the tax cuts signed into law by President George W Bush.

Bush slashed the capital gains rate on investments to 15% -

nearly half what the rate was under Ronald Reagan.

The Republicans made all these arguments back in 2003,

that if we cut taxes on dividends and capital gains

and reduce the top tax rate on the wealthy,

we'll get this explosion

of investment and growth and jobs.

You can look up the data for yourself

but I certainly don't remember any big increase in growth after 2003.

There was essentially no economic impact at all,

except that it increased the deficit.

The Bush tax cuts have added over 2.9 trillion to the national debt.

Paul Ryan's proposed tax cuts

would add another 4.6 trillion

in debt over the next ten years.

What's hard to understand

about this relentless push to cut taxes for the rich

is that they already have so much more than the rest of us.

In 1965, CEOs made about 20 times

as much as the average worker.

Today, by the most conservative estimate,

that number is 231.

So what's going on here?

Are CEOs getting paid more because they deserve it?

Meet another resident of 740 Park,

John Thain, the highest paid CEO in 2007.

Thain's apartment is actually my personal favourite,

for if I could live at 740 Park.

It's a little tiny jewel-box duplex.

Thain had been a senior executive at Goldman Sachs

and served as CEO of the New York Stock Exchange

before becoming the head of the investment bank Merrill Lynch.

In 2008, as losses were soaring and his company's stock was plummeting,

Thain was busy with a 1.2 million office renovation.

You spent more than 1 million renovating your office. Is this true?

It wasn't my office, it was two conference rooms

and it was a reception area.

But it is clear to me, in today's world,

that it was a mistake.

I apologise for spending that money on those things.

While Thain was busy picking chairs, rugs and wastebaskets,

Merrill and the other investment banks

helped bring down the global economy.

Wall Street has been turned upside-down.

The collapse of one investment bank, the takeover of another...

29 billion to help JP Morgan...

85 billion dollars to bail out the insurance giant AIG...

Wall Street was rescued by US taxpayers, not only through bailouts

but also through government loans that carried virtually no interest.

I'm confident that this rescue plan, along with other measures

taken by the Treasury Department and the Federal Reserve,

will begin to restore strength and stability

to America's financial system and overall economy.

Meanwhile, under Presidents Bush and Obama,

millions of middle-class American homeowners facing foreclosure

received only a tiny fraction of the bailouts given to wealthy bankers.

In the end, Merrill Lynch suffered over 27 billion in losses

under Thain's leadership

and was sold to Bank of America,

but that didn't stop Thain from handing out 3.6 billion

in performance bonuses to Merrill executives.

The bonuses were paid

even as Merrill suffered 15 billion in losses.

If you live in a world where everyone you know

is chasing huge sums of money every day,

and their morality is determined

by what it's necessary to do to get richer and richer and richer,

you're not going to have the same moral constructs

affecting your behaviour.

When I started at 740, I was like, "This is great," you know.

"Come around to Christmas time,

"I'm going to get a thousand from each resident,

"you know, because they are multi-billionaires."

But it's not that way.

These guys are businessmen.

They know what the going rate is.

They're not going to give you anything more than that.

The cheapest person overall was David Koch.

We would load up his trucks,

two vans usually, every weekend for the Hamptons.

You know, I mean multiple trips,

multiple guys, in and out, in and out, heavy bags.

We would never get a tip from Mr Koch.

We would never get a smile from Mr Koch. 50 cheque for Christmas.

-A cheque?

-A cheque, too, yeah.

I mean, at least you could give us cash.

Just because you're rich doesn't make you smart.

Just because you're rich doesn't make you cultured,

just because you're rich doesn't make you refined.

Being rich means you're rich.

Some rich people are just dicks.

Steven Schwarzman unleashed a disgusting comparison

over the administration's effort to increase taxes. He said, quote,

In thousands of different people that we've studied across the country,

the more you have, the more entitled

and deserving of those things you feel.

And that might account, in part, for the vitriol

that you see when people feel

like their privileged position is being undermined by others.

Since when, in this country, was it OK to demonise success?

The free enterprise system is under attack.

Back to the old populist "demonise the rich."

The Republicans are always complaining

about the Democrats playing class warfare.

The Democratic party's going to have to stop bashing the rich.

But they do it themselves

by, for example, they're always quick to point out

that something like half of all people

who file individual income tax returns

have either a zero or a negative tax liability.

We have a system today in the United States

where 45% of Americans don't pay any income tax.

You have to have skin in the game.

Over 45% of the people in this country

don't pay income taxes at all,

and we have to question whether that's fair.

Those are people who don't pay INCOME taxes. OK?

It includes all elderly women living alone

who just have enough social security, they don't even declare it.

It includes disabled people who don't have earnings,

but all those people pay payroll taxes, sales taxes, property taxes.

State and local taxes,

gasoline taxes, liquor taxes,

This is ridiculous to say low-income people don't pay taxes.

They do pay taxes and they pay a lot of them.

They've managed to take the resentment of the middle class,

which has actually been quite economically squeezed

over the last couple decades,

and turn their resentment against the people beneath them.

I think we're reaching a tipping point.

We're coming close to a tipping point in America,

where we might have a net majority of takers versus makers in society.

It's really, you know,

like a magician, you know,

trying to point people in a different direction

so they won't notice what's really going on.

If you can take the resentment of the middle class

and point it downward, rather than having it point upward

to the people on the top of the 1%

who are really walking away richer than ever,

then you can succeed politically,

and I think they've been very good at that.

You know, the poor are not very well represented

in our system of government, I'm afraid.

Why is that, do you think?

Well, I think one reason...

I think has a lot to do with the decline of the unions.

Throughout the '30s and '40s and '50s,

the unions were the vanguard in pushing for social legislation

that would help the lower classes in general.

Unions are perhaps the only organisations

with significant financial and political clout

that actually represent the working class.

Since the late '70s,

corporate interests have been extremely successful

at limiting the power of unions.

Only public sector unions have shown signs of growth.

And the Koch brothers have put their financial muscle

behind an effort to destroy them.

Wisconsin is ground zero.

I think it's going to determine, largely, whether or not

the pampered nature of these public employee unions is finally reined in.

If you, like David Koch and Charles Koch,

want to take over American politics, you're going to want to knock out

whatever the organized forces are on the other side.

Discharge the duties...

On January 3rd 2011,

Scott Walker became Governor of Wisconsin.

He had received significant financial support

from the Koch brothers.

Congratulations, Governor.

APPLAUSE

The national conservative movement wanted a Petri dish, and we were that

and he was more than willing to do what they wanted,

and not the people of Wisconsin.

-Good morning.

-Good morning.

Walker quickly introduced a bill to balance the state's budget

but it disguised a much broader agenda.

The Governor said, "Look, you guys got a great deal on your pension,

"you don't pay anything for your pension and it's a good pension

"so you should pay 5%."

Half of what the overall contribution is,

which is about 5.8%.

"OK. Compared to other places that I see? OK."

He said, "You should pay more for your healthcare."

We're asking for a healthcare premium contribution

of just about 12-and-a-half per cent.

"Eh, we got a good deal on healthcare. OK."

We remove healthcare

and pension contributions from collective bargaining.

Then he said, "Now we don't want any more collective bargaining."

We went, "Whoa, wait a minute! Stop! You can't do that!"

Walker's legislation was a surprise attack

on the political power of public sector unions

and their ability to negotiate on behalf of workers.

Take away collective bargaining and what does a person that's making,

let's say, 7-9 an hour

at University of Wisconsin Hospital serving lunch,

what voice will they have in the workplace?

Within days, the largest unions announced that they were willing

to make sacrifices that would help save the state money,

but they wouldn't give up their collective bargaining rights.

The unions and the Democrats have said they're willing

to take the concessions on wage and health benefits.

They're willing to take about an 8% pay cut

but they simply don't want you to take away

their collective bargaining rights.

What we're asking for, realistically,

is something that nearly every other person in this state

and every other person across this country's paying a lot more for

when it comes to retirement.

But they already said they're ready to give that up, Governor,

they already said they're willing to give up on pensions and healthcare.

-They've already made those concessions.

-That's a red herring.

But you can say anything in the midst of the debate.

Then we really knew

it was not about fixing a budget at all.

It was about breaking unions

and breaking the political power that unions have.

Governor Walker's agenda is a national agenda.

I mean, it's seeded and it's well funded by the Koch brothers.

DRUMMING, CHANTING

For more than a year, Wisconsin became a battleground.

Pro-union protesters occupied the state house for more than two weeks.

They gathered over a million signatures

to force a recall election to get Walker removed.

The unions spent millions fighting for their survival,

but wealthy interests outside the state spent far more.

The biggest single source of money was Americans For Prosperity,

which has spent over 10 million to support Scott Walker.

Today we have more activists in our Wisconsin AFP chapter

than there are members of the Wisconsin Teacher's Union.

We have a very strong, vibrant operation there.

Walker has painted teachers

and other public union employees as the haves

and the private sector as the have-nots.

What they're trying to do is really squash you

so that they can have that much more power

and you can have that much less voice.

It's teachers whose pay has been reduced, against the Koch brothers.

It's not a really fair fight.

PHONE RINGS

Hi, this is Scott Walker.

Scott. David Koch, how are you?

David, I'm good, and yourself?

I'm very well.

Little disheartened by the situation there, but what's the latest?

Well, announced Thursday,

and we'll probably get 5,000-6,000 state workers

who'll get at-risk notices for layoffs.

Beautiful, beautiful. We've got to crush that union.

Just got to pass the message on to these guys -

if they think I'm caving, they've been asleep for the last eight years

-cos we don't budge.

-Goddamn right.

But uh, what we're thinking about the crowds

was planting some troublemakers.

You know...

we thought about that.

My only gut reaction to that would be,

let them protest all they want.

Sooner or later, the media stops finding them interesting.

The next question, I talk to Kasich every day,

John's got to stand firm in Ohio.

I think we can do the same thing with Rick Scott in Florida,

I think Snyder, if he got a little more support,

probably could do that in Michigan.

We start going down the list,

a lot of us new governors who got elected could do something big.

You're the first domino.

Yup. This is our moment.

This is our time to change the course of history.

PHONE HANGS UP

In places like Wisconsin,

the doors of opportunity for those on the lower rungs of society

are closing quickly.

We are in very real danger

that the American dream is slipping from the grasp

of the next generation.

This charity event is a moment for wealthy New Yorkers

to give some of their fortunes to the poor.

Over the last decade, Stephen Schwarzman has given over 7 million

to New York's Inner-City Scholarship Fund.

I worry that the social fabric of America

is being ripped purposefully

by people who are taking advantage of individuals who are suffering.

Mr Schwarzman appears to be sympathetic

to those who are living in poverty

but oddly, for one of America's greatest capitalists,

he doesn't seem to understand that unlike Monopoly,

real capitalism is a game that's played for keeps.

For every big winner,

there are lots of losers.

Wealth is created,

but so is poverty.

Without popular democracy,

all the gains of our economy will go to the top.

Show me what democracy looks like!

This is what democracy looks like!

I'm from Michigan. This is where our money is.

People lost their homes in the banking and mortgage crisis,

and it went here.

There's nothing wrong with being rich.

God wants all his children to be rich.

But don't be rich

and at a place where you ain't thinking about anybody else.

They feel they need, not 10 billion,

but 20 billion of wealth.

They get that extra wealth by twisting politics,

buying politicians.

America became a place where money buys everything.

The rich are often held up

as shining examples of what's possible in America,

proof that anyone can make it.

But is there still a bridge to economic opportunity in our country?

When we look at the river that separates the two Park Avenues,

do we see a channel to prosperity for everyone?

Or a barrier that prevents the poor from crossing?

As long as our political leaders

depend on the rich to win elections and stay in office,

they will write laws to protect the castles of wealth and power

on the other side of this river,

a river that has become a deep and forbidding moat.

Find out more about the trend of rising inequality closer to home.

Go to bbc.co.uk/whypoverty

and follow links to the Open University.

Subtitles by Red Bee Media Ltd