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tv   Real Money With Ali Velshi  Al Jazeera  January 21, 2015 1:00am-2:01am EST

1:00 am >> start with one issue tough questions and you'll get... the inside story ray suarez hosts inside story weekdays at 5pm et / 2pm pt only on al jazeera america >> president obama and the state of the union. he's in the home stretch of his presidency and now has to do with a republican controlled congress. how many things can he get done? i'm going to look at his goals versus the reality. plus, the things that that dominated. i'll look at the things that changed, all about the middle class. how is it for president obama and what can he expect in the last two years?
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i'm ali velshi and this is the special report on the state of the union. six years since e-since taking office president obama goes before the congress and the nation to give his state of the union address. no doubt the states of the economy has improved with the economy shedsing 798,000 jobs, this is back in january of 2009, that's the month that president obama took office. well the president came into office during the worst recession since the great depression. 4.3 million jobs were lost during his first year in office. coming off of president bush's last year in office. since 2010 monthly jobs have gone up panned, more than yoaf setting l all the jobs lost
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during the recession. despite this, there is a disconnect with the public. a new al jazeera america-monmouth university poll has asked the american public how much this has upset their lives, they said not much if not at all. carl williams is a math specialist earns more than $100,000 a year to support their blendfamily of six. >> i actually consider myself middle class because of the struggles we go through. >> despite a rebound in home values across the nation the williams like 17% of the are u.s. with a home mortgage still owe more than their house is currently worth one reason the
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white house announced plans earlier this month to slash mortgage insurance premiums on government ensured home loans to more than 1% of the loan amount. estimating the savings will encourage a quarter million first time home buyers into the market. >> the struggles of this bathroom. >> but for the williams, living underwater has already damaged their long term financial health. >> we had to pull in the retirement fund. whole things thing. >> i cried i cried cried. >> two reasons why the wealthy gap between the upper and middle income households that is never been wider. in 2013 the median wealth of the families was nearly seven times
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that of middle class families. it's not just asset wealth, where the middle class is falling behind. just take a look at this chart of median household income in the united states adjusted for inflation. in 2013 it was $51,939. that's nearly 8% lower than it was right before the great recession mit. this is mostly because middle class families get the lion's share of their income from their paycheck and that's been stubbornly stagnant going on three decades now. unless of course you are in the 1%. their wages adjusted for inflation skyrocketed 138% between 1979 and 2013. while the bottom 13% got a meager 15% pay raise. what's more, despite the economy
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adding more and better jobs over the last year. >> with americans seeing this long term trend, that is no longer the bottom third or bottom quarter of the sort of income scale it's moved into high school graduates, it is moved into college graduates. >> poimpresident obama is proposing expanded tax programs aimed at the middle class but given the opposition of tax hikes of any kind relief may be a long way off for the williams. >> are joining me is seth harris. he says the economy is gaining steam but wages are a big worry. he joins me from washington. seth one does not need to be an expert like you to understand that jobs create prosperity. so why is the reality that these
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jobs are not moving wages up? people associate gaining wages with becoming more prosperous, and they're rightfully not seeing that. >> ali we are doing a lot better on jobs, 3 million jobs last year but still not enough jobs for the number of people who want to work and can work. we still have millions and millions of americans who are working part time when they want to be working full time. we have people who have left the labor market who like to come back this. we still have people looking for jobs who are not finding them. with that slack in the labor market wages are not going to rise and workers do not have enough bargain thinging power and force their employers to give them a little bit more in their paychecks. >> one thing that the people have come to understand is the relationship between tighter employment, lower unemployment, more jobs, and wages is not listen yar.
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listen -- linear. at some point the line will start to get tougher and wages will start to get up. are we getting to that point or is there still slack for us to realreel in? >> we have a way to go. the one period in the last 35 years where we saw wages go up over the term, was president clinton's second term. labor force participation rate was a lot higher, you had many fewer involuntary part time workers. you had a plot of tightness in the labor market, many fewer workers for the job. i expect the president will talk about that in the state of the union. he'll talk about jobs particularly in transportation infrastructure and manufacturing because there's a lot more to do. >> and of course the republicans say if you get out of the way of business if you don't talk about this increased minimum wage and you take away some of the
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regulations and taxation on business and you even out the corporate tax rate that will allow jobs to be created. there are people on the other side who say we need a more interventionist way of creating jobs. things like stimulus. things like retraining. things like targeted efforts by government to stimulate growth. where do you rely on this? >> the republican argument, there is no evidence to suggest it's true. the problem is that wealthy corporations aren't wealthy enough, the problem is there's not enough demand for workers and there's not enough demand for products. you know the u.s. is doing extremely well with economic growth but we're swimmingup upstream. china has slowed down, india has slowed down. right now we need more demand in the market and that's something the government can provide with targeted spending on investments
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like helping the economy to grow and creating lots and lots of jobs. >> as you know infrastructure is something this country badly needs whether it's transportation infrastructure or broadband, whatever it is, we're badly graded on every level of infrastructure and this is the lowest level we have seen in decades and yet we have not taken advantage of cheap money to rebuild america because it's become political too. >> that's presaisly precisely true. we spend a lot of time watching the fed. the bureau of labor statistics tells us prices are going down not up, there is no inflation in the economy that's the reason to keep interest rates low yet people are hammering for higher interest rates. it makes no sense. those people are lobbying for their own economic interest not for the national interest.
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we need to be focused on investment and growth, making sure we have shared growth so the americans who are left out of this economy the share go into the pockets of the wealthiest americans they get a chance to share in the growth and they see i.t. in their home economics. . >> seth harris is the former deputy secretary of labor in the united states. up next a series of deadly confront traitions between police and citizens ignites the race relations in america. what difference account president make? and orise of poverty in the suburbs. even as the economy improves. stay with us. ith us. >> we have to change those things in order to make our own lives better. >> entertaining... >> there was a lot of laughter. >> thought provoking... >> it doesn't change the world
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but it does influence the way people think. >> surprising... >> no edits! >> exclusive one on one interviews with the most interesting people of our time. >> you're taking me to a place in this interview i haven't been before. >> conversations you won't find anywhere else. "talk to al jazeera". monday 9:30 eastern. only on al jazeera america.
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>> ♪ ♪ ♪ ♪ >> in 2014 unrest swept the nation's poor minorities in cities and most strikingly in suburbs around the country. in ferguson, missouri, things came to the fore when a white police officer shot and killed a
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black young man, michael brown. deep divide between america's minorities and law enforcement. he needs to address an emerging dynamic, the tale of two americas in its suburbs. fires raged in ferguson. >> we will fall to our knees. don't shoot. ftc. >> fury and violence over the shooting death of an unarmed teen, michael brown by a cop that the grand jury chose not to indict. president obama said it's time bring an end to these kind of tragedies. >> holding the american people accountable. not only were we going to put more funding into the training that prevents this from happening but i'm going to stay on this.
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>> as he addresses congress the protests point to a deeper point, the rapidly increasing poverty, scarce jobs, isolation like public transportation and even political representation. a trend that continues to grow worse. >> the population in suburbs has been growing faster for some time. >> the myth of america's white picket fence suburbs has yet to catch up with the reality of just how much the reality of geography has shifted. suburbs in the nation's largest metro areas have seen their population grow more than 65% since 2000. more than twice pace of growth in cities. that makes the suburbs home to the largest and fastest growing poor population in the country.
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>> long associated with urban poverty see their poor populations in the suburbs grow significantly in recent years. >> and the majority of the suburb poorn are people of color. those who live below the poverty line, more than 50% are african american and latino. case in point 25% of blacks live below the important line, compared to 11% of whites. >> more people in the suburbs across the country slipping down the economic ladder. >> there are many ways they have slipped down the so-called ladder. some of the suburb ann poor are immigrants who bypassed cities and headed strayed to the burbs. african american and latinos who were pushed out of cities, they had federal housing vouchers, a
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hud program formerly formerly known as section 8 to pay rent. majorities left the cities in droves in hopes of finding better jobs. president obama addressed the issue in his state of the union address in 2013. >> america is not the place where the chance of birth or circumstance should decide our destiny. that's why we need to build new opportunities into the middle class for those who are willing to climb them. >> jobs have moved out of the cities and into the suburbs but not the well paying manufacturing jobs that have bolstered the middle class for decades. >> particularly in recent years have been in occupations that often pay low wages things like home health aids, or are childcare providers. that is not going to be enough to get the family above the poverty line. >> this is what democracy looks
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like. >> fueled the unrest in ferguson and around the nation. >> hands up don't is shoot. >> as americans marched by the thousands to protest brutality against unarmed black men. >> constant, constant police abuse that's happening in urban communities. >> police brutality and racial divide may be front and center in this year's state of the union but a glaring omission may be more the issue in growing inequality of the poor of the nation's suburbs. >> the number one reason is housing. that's what roland martin says, he joins us from washington. roland by the way you were with us through many of these protests giving us the remarkable analysis through your interviews over the years. why do you believe housing is the core of this? >> because what we have seen
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over the last ten or more years we have seen cities want to recapture many of those milt class and high income earners who moved out to the suburbs so what they've done is they've built up these inner cities, mixed retail products, big box stores and the cafes and the starbucks and all those kinds of shops tied to condos, tied to high end apartments as well so as a result it has moved a number of people who were poor or on the fringes out of the cities and so where do they have to go? we saw it in chicago. we also have seen a change in housing policy over the last 20 years where they've been bringing down public housing projects and going to mixed homes. when you bring those kind of places down now you have to do dispersal. so people while they're building those new homes they have to move somewhere. in chicago they moved to the suburbs. the black population in chis, chicago
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chicago used to be the number 2 city now atlanta to the suburbs that's the role housing is playing. the problem ali is going further. you go to the suburbs but guess what the suburbs don't want mass transportation because i've talked to suburban mayors that says that brings renters. we want homeowners. >> you also don't have a lot of other amenities that are typical to cities because of the high density so you end up in the suburbs quite possibly underemployed. the rent is cheaper with fewer opportunities that make city life dynamic and bearable. that upward mobile ladder gets taken away. >> you're poor all of a sudden you don't have transportation and you are forced by income to move to the suburbs. what happens is you can't travel
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back and forth. you don't have your own car. at middle east when you were in the city you have a bus system, subway system. that exacerbates the problem because you now can't apply for jobs because you can't get to the job interview. you can't afford to call a cab driver. the fundamental issue how do we deal with the rising poor in this country going to the suburbs is we have to confront housing. we have to have mixed use. i was talking to secretary castro of housing and urban development. one of the things he said at the congressional black cause of action weekend. how they are using tax dollars to build these mixed use developments they are making it clear saying you are going to have to set aside or target people who are not necessarily one class upwards. we are seeing in chicago d.c., houston, dallas, we are building up these gleaming towers to
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attract these young urban -- >> liberal society small l not politically liberal gentrification of our decaying cities is fantastic if you are a property owner. it is devastating if you are a renter. >> exactly. we build them up and then we get these -- ages change, minimallials don't want to live way the -- millennials don't want to live we don't want the poor folks around. we don't want them lfg living in these same areas. that's the problem. developers, city leaders are going to have to get with developers and say look if we are going to give you these house breaks, you are going to have to do affordable housing so that exacerbates the problem.
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>> roland martin, joining us from washington. >> appreciate it. >> how 17,000 miles of appliance, americans insist the keystone xl pipeline, why it became such a symbol for both sides. sides. >> visibility was 3 to 5 nautical miles. >> weathering the storm. >> we want to show people how to replace property against the worst mother nature has to offer. >> experts forecast how to stay safe. >> i'm standing in a tropical windstorm. >> in extreme weather. >> oh my god. >> techknow's team of experts show you how the miracles of science... >> this is my selfie, what can you tell me about my future? >> can affect and surprise us. >> don't try this at home. >> "techknow" where technology meets humanity. saturday at 7:30 eastern. only on al jazeera america.
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>> now available, the new al jazeea america mobile news app. get our exclusive in depth, reporting when you want it.
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a global perspective wherever you are. the major headlines in context. mashable says... you'll never miss the latest news >> they will continue looking for survivors... >> the potential for energy production is huge... >> no noise, no clutter, just real reporting. the new al jazeera america mobile app available for your apple and android mobile device. download it now >> keystone exm xl is a controversial oil pipeline. president obama is held up approval pretty much since the day he came into office but now that republicans control both houses of congress, they moved quickly to try to get it approved. president obama goes before congress with keystone xl as a symbolic flash point between the white house and republicans on
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capitol hill. if it ever gets built republicans say the keystone xl pipeline would produce more production of oil from the tar sands. the keystone would travel over the oglala aquifer farmers have expressed concerns about the effects of a possible oil spill. >> one spill over the aquifer it could spread miles. if our water is contaminated we have no water for the cattle. >> remain santa standstill over the projects despite a mutual pledge to find common ground. republicans are eager to pass a measure that would are problem approve the pipeline. >> our national interests will be served only if this projects
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does not significantly compass abate the problem of carbon pollution. >> if you are from texas and louisiana you're scratching the head what do you mean the pipeline is a problem? we have six million miles of pipeline. >> includes joe manchin of. 3900 workers to build it and just 35 workers to maintain it. >> by their nature pipelines do not require a lot of people to run them. >> yet 5900 americans support the keystone xl, a faculty that president obama is extremely aware of in delivering his state of the union. >> i talked to russ girling last week. i suggested canadian oil
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producers are eager for this pipeline because they will be able to move more oil to the gulf of mexico and export it on ships. i asked him how that benefited americans. here is what he told me. >> the intent of the canadian oil moving to the west coast and the bakken oil, it is for us to refine it in the u.s. if you recall, several years ago, a number of ufers producers were -- u.s. producers were producing heavy oil in venezuela. they had those leases if you will ex appropriated. they wanted to take that oil they are producing in in and refine it for consumption in the u.s. and it's as simple as that. it's a cheap reliable, efficient and safe source of supply. it's the safest that they can get so that's simply the reason for this pipeline and the benefits to the united states. >> i guess the point that you and the canadian government and
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the oil producers up in alberta are making is this oil is still going to be produced. for those people who are concerned about the environmental impact of oil sands it's your argument that one way or the other we're squeezing all the oil we're going to squeeze out of alberta. >> everybody is there because this is a source of energy that the globe wants and it's going to be produced. canada is a very responsible country has a rule of law human rights legislation and environmental legislation that will continue to improve relative to others around the world and as i said from a carbon perspective that is way blown out of proportion. the oil sands as it sits today produces 55 megatons of co2 as the production source, that is about one-fifth of one-tent of 1% of global greenhouse gases. that's going to have a huge
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impact in the united states and other places. you won't have one iota of impact on co2 emissions. >> let me ask you as you and others are discussing a new approach, president obama says he is going to veto this bill, for some time this will be dead, but this will come back or resurface in some fashion, when you go back, the sell has got to be better regardless what the facts are i think we have learned this didn't come across very well not just to activists but to mainstream americans. >> we have to get out there earlier and on the ground talking to land owners before they get intercepted to those that are fundamentally opposed who have created all of these myths around the pipeline and created this negative perception. the vast majority understands that you need this infrastructure and that their only request is it gets built safely and reliably. >> thank you russ gurling are
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ceo of transcanned. under assault from the beginning, now obamacare is facing another tough tests in the courts. now al jazeera america-monmouth university poll, ask when they're voting on important legislation, 42% say a great deal of weight, 15% say some, and 8% said none at all. >> the only way to find out is to see it yourselves. >> which side of the fence are you on? borderland, sunday at 9
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eastern, only on al jazeera america.
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>> it's a chilling and draconian sentence... it simply cannot stand. >> its disgraceful... the only crime they really committed is journalism... >> they are truth seekers... >> all they really wanna do is find out what's happening, so they can tell people... >> governments around the world all united to condemn this... >> as you can see, it's still a very much volatile situation... >> the government is prepared to carry out mass array... >> if you want free press in the new democracy let the journalists live. >> it's been a little over a year since president obama's landmark legislation the affordable care act came into
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place. main goals reducing the number of uninsured americans politically obamacare remains one of the most contested issues today, and it is a case facing the sprortd that may prove to be the law's stiffest challenge yet. june 2012, the supreme court largely uphemmed president obama's signature piece of legislation. the health care law designed to improve insurance access for millions of americans. it was a blow for americans who stood in the way of obamacare every step of the way. >> what the country can't afford to do is refight the political battles of two years ago or go back to the way things were. >> there is a lot of resolve major my colleagues and the american people to stop a law that's hurting our economy.
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>> but the republicans haven't gotten the message. they have tried to defund obamacare over 50 times. critdics say obamacare kills jobs it's bad for business and it's just too expensive. republicans say that health care is better left to the private sector not to some clunky federal bureaucracy. but things have changed for the better under obamacare. this exchanges at the heart of the law have been up and running for more than a year and that has helped 11 million people who didn't have insurance get insurance. bringing down the number of uninsured americans by 25%. still, premiums have jumped for many people who already had insurance. and some state run exchanges are still not running smoothly. an even bigger worry for supporters of the law involves the federal subsidies that help people pay for their new insurance. right now a case before the supreme court could unraveling
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this crucial federal benefit. affordable care act, there are only 13 of those states. in the other 37 states, the federal government runs the exchanges. the supreme court could strip those states of subsidies sending premiums for individuals on the federal exchanges skyrocketing by an average of 47%. that means a 40-year-old nonsmoker would see his premium go up by an average of $1600 per year. obamacare enrollment would also drop by an estimated 70% or 9.6 million people according to a recent rand study. the country's coulds ability of millions of americans to afford health insurance. earlier i talked to michael sparer who heads the spellman
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school of health. could be devastating for obamacare. how big a decision is this? if youer a supporter of obamacare you thought you were out of the woods by now. >> march 4th oral arguments big day. each state in theory was supposed to start their own health insurance exchange. turned out 37 states didn't do so. the federal government did so for them. the argument americans who get their insurance through those exchanges should not be able to get subsidies. if the court holds through the plaintiffs that you can't hold a subsidy through an exchange, you could lose millions. >> would then see i saw some numbers that say a very big increase in their premiums. >> right remember 85% of those folks get subs addition to help pay their premiums. their premiums would go up dramatically odds are they would lose that insurance.
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>> and then you would have this mathematical problem where there's not enough people in obamacare to may it pay. it could affect people elsewhere? >> absolutely. i think odds are that the court will rule that you can get subsidies through the federal exchanges. >> right. >> we have seen changes through the federal court before about. >> sure we have. >> let's see what's going to happen if the court holds and strikes down and says you can't get the subsidies through the exchanges, what's going to happen? will chris christie want to run for president you may see negotiation and some action in congress if the court holds that way. >> could the solution be that those states that do not run their own exchanges then establish them? >> that's one possibility. a state may say listen we don't want to establish our own exchange but let's see if we can
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work with the feds and see if we can get around this. >> i want to ask you a complicated question. since this has happened obamacare and since we've been talking about it it was meant to increase access to heart insurance and reduce cost. the ultimate is outcomes. we don't just want hearing health care, we want healthier people. what is your access? >> 12 million people have access to it that didn't have it before. access has increased for those people. healthcare has risen. not so hard it's hard to attribute. clearly cost. >> costs have substantially risen. >> we've had the slowest rise in health care healthcare costs in
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decades. >> what about outcomes? >> same level of attention as insurance expansions are efforts to say let's change how we pay providers. instead of providing the health care provider based on the quantity of care he or she provides but the quality of care. >> this is experimenting. >> it seemed smarter. others have tried it. it becomes more effective. >> if we could figure out based on outcome rather than quantity that's the way to go. >> thank you for coming as always. up next, congratulations. you've graduated college now the hard part: paying off your student loans. the immense debt burden on young adults is a huge drag on the economy. the president has tried to help but how much of a dent has he
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actually made? made?
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♪ ♪ ♪ ♪ ♪ >> president obama has taken on the nation's student debt crisis with a host of programs in his tenure.
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american's student debt reached $1.1 trillion. tuition free regardless of financial need, community college, an ongoing area of intervention because as patricia sabga explains. not just for students. >> 31-year-old bradmulla graduated with a degree in 2008. jobless she quickly defaulted on her $80,000 student loan bill which brought on penalties and fees ballooning her debt to $92,000. >> oh well i'm just file for bankruptcy like everyone else is doing ha ha ha and then you realize no, the only way to get away from your student loan debt is to die! i know it like the back of my hand. >> roughly 1 in eight americans
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some 40 million people are living with student debt. together over their lifetimes that adds up to a staggering $4 trillion. why? because of saving and investing for their futures they are paying off educations that were supposed to level the playing field to give americans of equal ability an equal shot as prosperity. this is a huge issue in this country because everyone at some point is affected by this. >> that's why viola j j and her fellow students, petitioned lawmakers last year to restore $1.5 billion in cuts from the state's higher education budget. >> i'm angry because it's unfair that it's happening to us and we're even being sort of blamed for the amount of debt that we're putting in. >> it is absolutely cuts in student funding that is the cause of the rise in student debt. >> examined funding trends for
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higher education his findings are sobering. nationwide funding plummeted 27% per student between twrai and 2008 and 2012. while tuitions increased 20%. that has human implications for all of us. consumer spending generates two-thirds of our economic growth and young people are that plankton in that equation. crush them and that reverberates throughout the economy. >> the students who are paying 300 or 500 per month towards reducing their student debt, that is 300 or 500 they could spend on a down payment on a house or influence car or these things that would go and recirculate in the economy. >> about seven of the ten graduates if 2013 left school with student debt. the average bill: $28,400. president obama's new proposal to make community college more
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accessible is aimed in part at bringing down that tab. >> america's college promise will make two years of community college free. >> the plan requires students to maintain a 2.5 gpa attend school at least half time and enroll in programs that lead to a two year professional degree or serve as a stepping-stone to a four year college. the administration estimates its free community college plan could save 9 million students 3400 dollars a year in tuition but congress would have to approve the cost. $60 billion over ten years. as for edmilla she faced down her debt demons, moved holm and as a cocktail waitress to pay that college generation. >> how do i get the 8 to a 7 the 7 to a six. it became a game to me.
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i have no retirement fund no savings. >> thanks oan education that still has her playing catchup with those who graduated debt-free. patricia sabga, al jazeera, new york. >> well student debt is the only type of consumer debt that is virtually impossible to discharge through bankruptcy. our next guest is making student debt a kitchen table discussion. mark ruleman joins us from washington. mark how do you rate president obama's efforts on trying to deal with student debt issues both existing student debt and the potential for accumulation of it for students who are going into school? >> well i think as you've shown the president is faced pretty unrelenting opposition not just from congress but from state governments that have slashed
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higher education funding. throughout the recession and even before that. and that's what's caused rising tuition. i think this administration has credit for understand that and taken.steps for lowering student debt payments and expanding pell grants and up until now up to two years free community college tuition. part of rising debt students shouldn't have to take on. we are talking about three or $4,000 or even more. more than half of community college students have children, work 20 hours a wook or more and four in 10 college students are taking on debt in order to graduate. that was unheard of 20 years ago. and president obama deserves credit for taking on this. >> a lot of this is standard
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stuff it is unclear how we're going to pay for it out of whose budget is this going to come out of william that could be said of any program at all. but whether this really will benefit society in terms of outcomes. in fact one of the criticisms i heard of, this may encourage someone heading for a four-year college program to take the two-year community college alternative. do you buy at a argument? >> i don't know that, two-thirds of the jobs by the end of this decade in this country are going to require some college that means a associate's degree a certificate or a bachelor's degree. on our pace we're not going to meet that. i don't know if anyone disagrees that we made k-12 mandatory and that is what broadened the middle class in this country. but president obama is extending
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that to the modern global economy. >> don't argue with the idea that universal education should be free. that said, there are conservative critics who say why don't we just means test people? we accept that means testing is the bar you have to be above in order to get government assistance. why give this money to people who don't need i.t? >> i think cost of college is really rising up through middle class at this point. it is not just an issue that faces low income families, it is facing middle class families. our research shows that the average dual college educated family stands to lose over $200,000 in lifetime wealth because of student debt. that means they're not able to save for retirement, they may not have ability to save for a
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home, and making community college universal simplifies it. a 9th grader, college is going to be accessible or affordable or at least some form of it is, that may change your behaviors and expectations and i think there's a lot of value in making i.t. universal. >> mark, senior policy analyst at demos. far apart on the details i'll look at what separates them an the dhans of getting the deal done. the al jazeera monmouth university poll, asks americans the biggest concerns facing their families, 16% said job security. 14% college tuition and school cost. we'll be right back. right back. >> i know that i'm being surveilled >> people are not getting the care that they need >> this is a crime against humanity >> hands up!
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>> don't shoot! >> hands up! >> don't shoot! >> what do we want? justice! >> when do we want it? >> now! >> they are running towards base... >>...explosions going off we're not quite sure... >> fault lines al jazeera america's emmy winning, investigative, documentary, series...
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>> protestors are gathering... >> there's an air of tension right now... >> the crowd chanting for democracy... >> this is another significant development... >> we have an exclusive story tonight, and we go live... >> american corporations reportedly have more than $2.1 trillion in untaxed corporate profits sitting in foreign bank accounts. the corporations say they are going to keep their money overseas until the american corporate tax rate is lowered. with all those corporate profits sitting overseas congress and the president agree that
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something needs to be done to bring that money back here and corporate tax reform may be the answer. president obama speaks before a republican controlled congress that's at odds with him on most issues but the one key area that both sides say they might be able to agree on is comprehensive tax reform. >> the key now is for us to work as a team. >> the president's formula is simple: eliminate all or most tax deductions, credits and exemptions in return everyone gets taxed at a lower rate. republicans say they can work on that basis especially to get corporate tax reform going. the united states taxes corporations at 35% of worldwide income. the highest rate in the developed world. for comparison it's only 25% in the netherlands 15% in cafnlgd canada and just 12.5% in ireland. keep something in mind very few u.s. corporations actually pay
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the full 35%. in fact according to the government accountability office most americans pay at a rate of 12.6% because of all the tax breaks loopholes and give aways the corporations take advantage of. >> those loopholes you need to get into the detail of that and you find many of them are very important in terms of the definition of corporate profits. >> keeping those loopholes and tax breaks is why corporate lobbyists will try to sink their teeth into any new legislation with the idea of maintaining as many of them as possible. loopholes aside, there is agreements from almost all sides that the statutory tax rate of 35% is too high and needs to change. >> the u.s. has stood still on the rest of the world as very vigorously competed for corporate investments. many are 20% or lower. there is much competition out there. >> it's why more u.s. companies are using a technique called
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inversion. that's when a u.s. corporation agrees to become a subsidiary and pays a rate at a lower rate to that of the united states. now both sides don't sound that far apart. president obama agreed to cut it to 28% in 2012. republicans wanted to slash it further to 25%. if both sides are willing to come one a compromise, corporate tax return is one of the few bright facets. >> punishes business he investing here and reward companies that keep profits abroad. >> republicans won't support the president for changing the personal tax code. without any movement towards that the president is now proposing a tax like on the
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richest 1%, but that's also a plan that's likely to go nowhere in this congress. bernie becker is a tax reporter for the hill a washington based newspaper that focuses on congress. getting sweeping tax reform through congress this year he thinks is a long shot. bernie i guess we could have recorded this interview three four six eight years ago because everyone goes into a new congress saying we both want corporate tax reform we both want comprehensive tax reform why don't we do it and then nobody ever does it. >> that's true. one of the things to realize is this is really hard. we've had an income tax for more than 100 years now and we've only overhauled it comprehensively a handful of times. they are on the same page on principles on philosophies, getting into the details is the hard part and that's why i think
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it's a long shot over the next year. >> how far are we from agreement? last time we reformed the tax code it was a real thinky process. you had to agree on broad principles and smaller principles and smaller principles and tactics and strategy. we're nowhere close to the bottom of that. >> yeah and then sort of one thing to remember here is that we're talking about the corporate side right now where they're really close. >> right. >> where you're talking about obama and the gop being close on the rates. that doesn't get into the smaller businesses who don't pay that rate, or the individuals. they're closer on avery small part of it and they're going to have to decide whether to drive down into that part or broaden it out. there are a lot of details that they have to really consider before we can say they're actually really, really close. >> many people would agree if you ultimately overhaul this country's taxation system on several levels we'd all be
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better and more prosperous from it. if you have to break through on corporate taxes that might lead down the road to a break through on larger parts of the taxation system? >> that is certainly one argument out there. the one thing i was mentioning earlier you only get so many contraction on this right? the way washington has worked the last few years it is hard to imagine the a way if they do a sort of smaller tax reform now they would have at it larger later. you might as well do it all now. that's sort of one of the ways we have to look at in the next few months here. >> the corporations who would be affected by this have the u.s. chamber of commerce they've got lobbying efforts they've got lobbyist, individuals who would like to see their personal taxes reformed they don't have all that. what role do corporate lobbyists play in the way decisions would
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be made? >> that is sort of the interesting part here. if you talk to any lobbyist, they will say i love tax reform, tax reform is great. but when you're talking about integral tax rates that would have to be lopped off to pay for a higher rate, that will be difficult. on paper you see in any tax reform deal some industries are going to win some are going to lose. those that are going to lose will be fighting hard to keep things the way they are. once you get into the actual horse trading if we get to this we can bring the rate here, that is where you will hear from downtown lobbyists. >> bernie is a reporter for the hill and i'm ali velshi. that's our show for today. thank you for joining us. us.
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