BILL MOYERS: This week on Moyers & Company.

BRUCE BARTLETT: You see members of both parties now going hat in hand to the exact same group of people on Wall Street. And it's naïve to think that they're not getting something for their contributions.

BILL MOYERS: And…

HEATHER McGHEE: In order for us as Americans, who want to see public solutions to our common problems, to really achieve what we want to achieve, we are going to have to clean up Washington first.

BILL MOYERS: Welcome. While Republicans are still fighting the culture wars primary by primary, and caucus by caucus, President Obama is campaigning rather feverishly to win back the votes of the Millennials. Who are they? Well, the Millennials are the generation of young Americans born roughly between the years of 1978 and 2000. They are coming now to political maturity.

Two-thirds of Millennials voted for Obama in 2008, but a new Harvard study shows that in the last two years his approval rating among them has dropped 12 points. That's enough to decide a close election in November. And that may be why the President recently threatened to cut federal aid to schools that, quote, “jack up tuition.” Many of the Millennials are coming out of college with big loans to repay.

Yet another study describes their enthusiasm for him as “substantially depleted” so his reelection campaign has been wooing them recently through what Obama himself calls this “new fangled” thing, social media.

This week, we’re going to talk with one the Millennials’ most thoughtful advocates. Her name is Heather McGhee. Listen.

HEATHER McGHEE: I turned 30 last year which puts me at the very start of the Millennial generation. And we are known for our sense of entrepreneurship, our volunteerism our tolerance of diversity and for being the first generation in American history to not do better than their parents. And that was clear before the Wall Street banks crashed the economy and left our generation to graduate into the worst job market since the Great Depression.

BILL MOYERS: As we’ve been reporting in our series on winner-take-all politics, the Millennials grew up in the years when crony capitalists and powerful officials in Washington rewrote the rules of the economic game to favor the relative few at the top over everyone else. That collusion brought devastating results, from the financial crash four years ago, to the greatest inequality in America since the great depression of the 1930’s. Our economy stopped working for everyday Americans.

So this generation of young people faces a stacked deck. They will find it tough to make their way to the middle class. And as you heard Heather McGhee say, Millennials are the first generation not-likely to do better than the one that came before them.

There are 80 plus million of them, 60 percent are white, 14 percent black, 19 percent Latino, five percent Asian, and a smattering of others. Here is something of what they’re up against:

Unemployment among our youngest adults is almost twice the national average. 25 to 34 year-old male high school graduates are earning 25 percent less than they earned in 1980. Almost 40 percent of young adults say their personal debt increased in the last four years, a lot of that directly related to student loans.

Back in 1980, college tuition averaged three thousand dollars, adjusted for inflation. Today that average has almost tripled.

Back then, pell grants covered more than two-thirds of the cost for low income students. Today it’s down to just over one-third. And those who graduate are in debt an average of 25 thousand dollars.

And yet, despite the dire statistics, almost 80 percent of young people say they still believe in the American dream. That’s true across race and ethnicity. Hope, fortunately, springs eternal.

Heather McGhee graduated from Yale and the law school of the University of California at Berkeley. She now runs the Washington office of the research and advocacy group Dēmos. She was active in fighting for financial reform in Congress after the crash of '08 and for new measures to protect consumers.

Heather McGhee, welcome.

HEATHER McGHEE: Thank you.

BILL MOYERS: You know, the facts and figures paint a very dismal picture of your generation. But let me ask you this. Is it something of a myth, this upward mobility in American life? Because I could take you to the hollows of West Virginia, to the back streets of our big cities, to small towns throughout the country, where poor kids never got up and out.

HEATHER McGHEE: Absolutely. I mean, I think it's a myth that every kid is going to have that opportunity. And that's one of the great myths that's been quite destructive, actually, to our willingness as a country to make sure that there are those ladders of opportunity in place, through policies like universal education, child care, and early child care and development.

But the truth has been that over the course of our history, every generation as a whole has done better financially. And in fact, up until a few generations ago, has been able to do better financially by working even less, by being more productive and having more time for home life and for civic life.

BILL MOYERS You know, other generations have faced severe problems. They've experienced depression, recession, war. What makes this different?

HEATHER McGHEE: I think what's different about this generation is that all of the external changes that happened, globalization, technological change, the information age. All of that happened, and yet it happened at a time when we lost our social contract. So America could have weathered all of the economic storms that happened over the course of our lifetimes in a much better way that did not decimate the middle class, if we had a social contract in this country. If we had not, at the same time, decided that, in fact, the economy would work better if everybody was on their own. So that's what's different.

BILL MOYERS: Well, do you and your peers get together and say, 'What hit us?'

HEATHER McGHEE: Most of my friends, who are not political and don't have an economics background, who are starting out their lives right now, having children, getting a house don’t even think about the fact that these are common problems that could have public solutions. They don't think there could be financial aid for childcare. They don't think that health care could be portable and go with them and be guaranteed.

They don't think that there could be a pension that is more solid and durable than a 401(k). That's actually been sort of the most pernicious effect of the Reagan revolution is to take the horizon of public policy solutions that could really help people sort of off the radar entirely.

BILL MOYERS: But if your peers, don't think they have a problem, do they have a problem?

HEATHER McGHEE: They know that they have the problems. They just don't know that there could be public solutions.

I think that's one of the major projects that we have to do is really to create a generational comparison. Where we say, for example, 'My generation-- my grandparents were able to go to college, go to higher education, have a middle class life, save for the future, retire comfortably because of public investments that were made, like the G.I. Bill, because of the federal highway system, because of the retirement system that labor and union jobs were able to provide.'

BILL MOYERS: How did you get a start? What were your-- who were your parents? What did they do?

HEATHER McGHEE: I'm the descendent of American slaves. I'm from the South -- Mississippi, Georgia, Louisiana. My grandparents and great-grandparents moved up to work in the steel mills of Chicago.

My grandmother and grandfather both had public sector jobs at a time when there was rampant discrimination in the private sector. They became, you know, leaders in the police force in Chicago, a social worker in the Chicago public schools. And they were able to retire comfortably. And they were able to help my parents out. And my parents were able, in turn, to help me out. But the idea that I'm going to be able to do that for my children, given the amount of debt that I have is something that I think I've just had to let go of.

BILL MOYERS: Well, that's what can happen in the public sector. That the public sector over the last 50 years has created a very large middle class for people who would otherwise never have gotten into it. And now with the assault on public unions and public sector, that ladder's being taken down, right?

HEATHER McGHEE: Absolutely. It's been so shocking to see the demonization of public servants. It's really part of this 40-year attack on the public. And I think the fact that we're seeing right now that teachers, public janitors, school workers, bus drivers, cops, firefighters are the new welfare queens in our public life.

I mean, really they are. I mean, if you think about the stereotype that's being trafficked right now. They're talking about these lazy, you know, bloated pensions that are just, you know, cheating the system. I mean, that's the welfare queens of the 1980s. And what has been-- what's the same between the welfare queen and this image of the postal worker who doesn't really deserve the benefits they're getting? These old shop worn stereotypes of race and gender.

BILL MOYERS: Does it seem to you that inequality is sort of the bequest your generation has been handed.

HEATHER McGHEE: Absolutely. I mean, our generation is, you know, the most diverse generation in American history. Half of young people under 18 are children of color. But we are also the generation that is experiencing this record inequality, inequality in our economy and inequality in our democracy.

BILL MOYERS: What do you mean inequality in democracy?

HEATHER McGHEE: Well, let's take, for example, the fact that since I was born, there's an entirely new industry that didn't used to exist. That of corporate lobbyists, for which there are now 24 for every member of congress.

I mean, if you think about who people in congress spend their time with, who they listen to, who they spend one out of every three minutes that they're in office fundraising around, it is people in the top one percent. It is their lobbyists. It is the corporate CEOs. And so much of the policy decisions, whether they are the decision to keep the minimum wage low.

I mean, if we-- the minimum wage was at its peak in 1968 and has lost nearly half of its purchasing power. I mean, just think of that one policy decision that is a number one target for the Chamber of Commerce, year after year, to make sure that the minimum wage stays low. That absolutely benefits people who are invested in big corporations and the executives of big corporations. But the American worker has seen their buying power erode and erode.

BILL MOYERS: So is this what you meant in that speech when you said that what has happened to your generation was the consequence of a social experiment? Is that what you mean?

HEATHER McGHEE: Yeah, it's been a really grand experiment that has-- in, sort of, neo-liberal economics, the trickle-down experiment. The experiment that said that, in fact, the best way that we can shape our economy is to make sure that the most gains are amassed and kept at the very top. And then that somehow those would trickle down.

That's been an experiment. It's been-- it was a theory that was tested. My generation were the guinea pigs. And that experiment has absolutely failed if the aim was to produce greater prosperity for America. That means American people. If the aim was to actually stop at the top and just create greater corporate profits and greater G.D.P. growth, then it's been a success. But I think most Americans would not have bought in to that kind of experiment.

BILL MOYERS: I read just the other day that only 29 percent of Americans have college degrees. Is college still a way up and out?

HEATHER McGHEE: It is. And you would think-- I mean, this is one of those great ironies. At the same time that we had the globalization, the transfer from the industrial age to the information age, and so the premium on higher education became so high. At the same time that we decided to reorder our economy so that those with information and with knowledge would be able to gallop ahead, we also made it less affordable and more difficult for people to get that new golden ticket to a middle class life.

It doesn't make any sense. At around that same time, around when I was born, we shifted our federal support for higher education. It used to be the majority of it was grants, grants like the G.I. Bill that put my grandparents to college, grants like my parents had, to loans, which is what the majority of my generation is now taking on in order to basically pay government and the banks for the privilege of having a middle class life.

BILL MOYERS: Yeah, what does it say that many of you have to pay Wall Street to go to college today?

HEATHER McGHEE: It's amazing, isn't it? And not only do we have to do that, but particularly with these private loans, which are just galloping, galloping away, in terms of how quickly they're becoming a share of the market, it's like 18 percent interest on some of these private loans. It's like putting your $10,000 tuition on a high-interest credit card.

And if you think about that, if you think about the fact that the next generation has to pay an 18 percent interest rate to get a college education, whereas the very banks and financial companies that they're paying that interest to are getting basically a zero interest loan from the government every day, it's shocking.

BILL MOYERS: We have a video clip of a young man who's speaking at a rally objecting to tuition increases. Let's take a look at it.

PROTESTER: Me myself, I’m in debt $70,000 and when do I expect to be free of this? Possibly never. I actually got a letter from Sallie Mae, saying that if I don’t start paying today, $900 a month, they are going to have more aggressive attempts at collecting my debt […] And so I refuse to pay this student debt, for this ball and chain that will follow me the rest of my life. And so I’m going to burn this right here and now.

BILL MOYERS: How do you respond to that?

HEATHER McGHEE: Honestly, it really does breaks my heart, Bill. If you think about what young people are facing when they know that they have to play by the rules, go to college, get a good education. And yet, they know that the price of that is going to be tens of thousands of dollars of debt on the other end, what options are young people supposed to have? I really don't think that we can say as a country that we are a middle class nation, that we care about recreating a middle class for the future generation, and have an entire generation indebted. And have so much money diverted from more productive uses in the economy simply to pay off loans from a really flawed financial aid system.

BILL MOYERS: He quoted a letter from Sallie Mae. For the benefit of my audience, who's Sallie Mae?

HEATHER McGHEE: Sallie Mae, other than being one of the most profligate contributors to Washington and one of the biggest lobbies, is a massive financial company that is, their entire business model is on student loans, private and federally subsidized.

BILL MOYERS: As you know, the Obama Administration tried to do something to clean up that student loan business, and got a piece of legislation through that was promising. But then lobbyists from the industry, including many who belong to the Democratic Party swarmed all over it, and have, in effect, throttled it. What does that say to you?

HEATHER McGHEE: It says that the financial industry is an equal opportunity employer of Congress people, unfortunately. We've really seen an incredible explosion in the amount of financial contributions from the financial sector, including Sallie Mae, Wall Street banks, real estate, insurance over just the period of my lifetime. And the result has been that any time there are any kinds of steps forward, there's always a desire to sort of erode the progress.

BILL MOYERS: Yeah, you're sympathetic to that young man and to all of them like him. But do you think refusing to pay is a solution?

HEATHER McGHEE: You know, I think the right solution would be for us to undo what Sallie Mae and other lenders got slipped into that terrible 2005 bankruptcy bill. Which is that private student loans and student loans are not dischargeable in bankruptcy. I mean, think about it, bankruptcy, which, you know, huge, multi-billion dollar corporations are-- seem to be filing every day and move on, just as if nothing happened.

And yet, regular, middle class families, the average American family, the two most important loans in their life, the two most onerous loans in their life, for education and for their primary residence, they can't be relieved of in bankruptcy. Our bankruptcy code says to the American people, "You don't have any second chance when it comes to those two major primary loans." We're just making people give up so early on, because it's impossible to get out from under debt like that.

BILL MOYERS: What's the answer to the high cost of college and the loans that kids have to take out?

HEATHER McGHEE: Yeah. We need to fundamentally shift back to a system of grants, not loans. I mean, we cannot indenture a generation just to pay for the ticket to the middle-- to a middle class life. But we also need to do something for people who are not going to get bachelor's degrees, which are still-- it's not the majority of young people who have a college degree.

So I think we need to raise the wage floor. We absolutely have to get back to a place of embracing unions in this country. And we have--

BILL MOYERS: Why?

HEATHER McGHEE: Because unions created the middle class in this country. Because the jobs that were the steelworker jobs that so many of the people in my family had weren't good jobs. They were made into good jobs, because the people who were working those jobs had a voice on the shop floor, and had some power when it came to setting their wages. Which makes all of the sense in the world. That the people baking the pie should be the ones who get to have a decent slice of it.

BILL MOYERS: What are the racial dimensions of this? I just read the other day that 30 percent of all young African Americans below 24 are out of work?

HEATHER McGHEE: Yeah. Yeah. I mean, I think that this is what I think is, in a way, the great unspoken disaster of our lifetime. When we saw the rapid de-industrialization of our cities, where we saw the jobs that used to be able to create decent working and middle class lifestyles for people who went to work every day, but didn't have a college degree. When we had that deindustrialization from the inner cities, who greatly, greatly was damaged by that economic policy, essentially, were particularly people who were trapped in inner cities.

And that generally speaking throughout our history, people as economic flows have changed, people have been free to move and follow jobs. But because race is so pernicious, because segregation is still very real, because of the redlining by the F.H.A. that went straight in through the 1980s, we did not see that flow. And then we haven't seen the kind of commitment to evening out the pockets of privation in our country. That we need to see in order for us to have a strong middle class that's diverse and that looks like America.

BILL MOYERS: How do you have a new social contract if we don't have a sense of community?

HEATHER McGHEE: I think that is the great question of our time. Because if you look at this sort of hostility and anxiety around public solutions, at its root, it's anxiety around who the public is. And I think that that's happened, because of the real explosion in diversity.

But I think it's something that there is an answer to. It takes leadership. I mean, you have to think about the same system that allows people based on their physical appearance to be valued so differently, to create this hierarchy, is at its root, in terms of cognitively, the same system that allows, for example, the CEO of Walmart, who makes about $16,000 an hour. Whereas his coworker, the associate on the shop floor, makes about seven dollars an hour. And then the woman or man in Malaysia or India, who actually is making the product on the shelves makes pennies an hour.

And yet, they're all in the same enterprise. You have to think about what that says to us as people, when we value the labor of three people who are in the same enterprise, essentially, so differently. I mean, when you and I walk into a store and we see a phone on the shelves. And one is $30 and one is $300, what do we decide about the more expensive one? That it's better.

BILL MOYERS: Yeah, automatically, right?

HEATHER McGHEE: Automatically.

BILL MOYERS: Something about it.

HEATHER McGHEE: Exactly. If it's more expensive, it's better. And the logic of applying that same logic to human beings, which we do all the time in this free market with no fundamental values of human dignity is really dangerous. But it's the same kind of logic that leads us to have racial hierarchies and gender hierarchies, as well.

BILL MOYERS: Which leads me to a political question. In 2008, millennial, your generation, voted for Obama by a 34 point margin compared to a nine-point margin, four years earlier, for John Kerry. I mean, they came out -- you came out, your generation, and were a decisive, if not the decisive factor in Obama's margin. Will your generation come out for Obama again?

HEATHER McGHEE: I think it's a really difficult question. I think the Millennial generation still is showing preferences for Democratic policies for Democratic values and ideals and for Democratic candidates over Republican candidates. But you have to realize that just like with all other kinds of voters, young voters are voting on the economy.

And as the Dēmos report "The State of Young America" has shown, this generation, my generation is really feeling the brunt of the recession that capped off 30 years of widening economic inequality and insecurity. And so young people can't say that they're better off financially than they were four years ago. I really believe that given the levels of unemployment in the young adult generation, the president needs to call for-- and I understand it would be difficult to pass through Congress.

But on the campaign trail, he needs to call for a WPA style, generational jobs program all across this country. And it would be a transformational generational experience. It would be something that would expose people to different Americans from different walks of life. But it would also be something that would say, finally, for once and for all, 'Yes, your American Government is on your side, young people. We're not always going to leave you to the mercy of the banks and selfish employers and the vagaries of the so-called 'free market. We're going to say that your future matters to us as a country.'

BILL MOYERS: You're calling for more and more government help. You just asked Obama to take a more aggressive position with using the government to put people to work. You're up against, of course, the predisposition of people out across the country that, 'I don't want to pay taxes to those folks who haven't been spending it well, fighting wars, passing the cost on. Extending benefits to Wall Street, bailing out the banks. I don't want to support government anymore.'

HEATHER McGHEE: Absolutely. I mean I think that in order for us as Americans, who want to see public solutions to our common problems, to really achieve what we want to achieve, we are going to have to clean up Washington first. It is absolutely important. For example, why would the American people trust Washington to do what's right when they know that so much of their energy is focused on rewarding the people who brought them to the party, which is the wealthiest people in the country and the organized corporate elite?

And so we've got to clean up the money in politics problem. And it's time to take that incredibly personal issue of your own personal finances and make them political.

BILL MOYERS: Doing what?

HEATHER McGHEE: I think we need to stay politically involved on policy issues. We need to, as a generation, really be the generation that calls for and holds leaders accountable for cleaning up Washington, for addressing the political inequality that is perpetuating economic inequality. We need to become a very politically engaged generation. We need to run for office, debt be damned.

BILL MOYERS: Heather McGhee, I’ve enjoyed this conversation. Thank you for joining me.

HEATHER McGHEE: Thank you so much for having me, Bill.

BILL MOYERS: Heather McGhee speaks of how the neoliberal economic experience of the last 30 years – including cutting taxes on the rich and waiting for the wealth and prosperity to trickle down -- has left her generation of Millennials standing under a spigot someone forgot to turn on. After a few drips and drops, it went dry. So did the very notion of equal opportunity for all. And today we’re living in a country deeply divided between winners and losers. Nowhere is that more evident than in our tax system – so distorted by loopholes, exemptions, credits, and deductions favoring the already rich and powerful that it no longer can raise the money needed to pay the government’s bills.

Among the people who saw this crisis coming was the conservative economist Bruce Bartlett, the supply-side champion who wrote the manifesto for the Reagan Revolution. Bartlett became a senior policy analyst in the Reagan White House and a top official at the Treasury Department under the first George Bush. Yet for all those credentials, he is today an outcast from the very conservative ranks where he was once so influential. That’s because Bruce Bartlett dared to write a book criticizing the second George Bush as a pretend conservative who slashed taxes but still spent with wild abandon. The subtitle says it all: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy.

For his heresy Bartlett was sacked by the conservative think tank where he worked. Undaunted, this card-carrying advocate of free markets and small government has been a prolific writer for popular and academic journals and has just published a new book: The Benefit and the Burden: Tax Reform - Why We Need It and What It Will Take. It’s a layman’s guide through the jungle of a tax system that, thanks to rented politicians and anti-tax ideologues like Grover Norquist, enable the one percent to make off like bandits while our national debt soars sky-high. I talked to Bruce Bartlett soon after he had finished his new book.

BILL MOYERS: You've made the point that America's top earning one percent had an effective 33.1 percent federal income tax rate in 1986, and an effective rate of only 23.3 percent in 2008. And you say if the top one percent had kept paying at the 1986 effective rate, quote, "the federal debt today would be $1.7 trillion lower." That's a lot of money.

BRUCE BARTLETT: Well, that's right. And when I say effective rate that means the taxes that they paid divided by their income. So that tells you what the revenue is that the government gets from taxing them. And clearly, they were doing okay at the beginning of that period.

And that was Ronald Reagan's administration. Up until 1986, the top marginal rate, the top statutory rate was 50 percent. Now it's 35 percent. And all the pressure is on to lower that even further. And this just doesn't make a great deal of sense to me. When people say, 'Oh, we can't raise taxes on the rich. They'll go on strike, they'll move to another country.' But within recent memory, it hasn't been that long ago that we had rates that were substantially higher. And these people did just fine.

BILL MOYERS: Well, when I was growing up in the '50s the top marginal tax rate, if I remember correctly, was 91 percent.

BRUCE BARTLETT: That's right. And I just think that there's a disconnect between the facts of what taxes do and the sort of mythology of what they do.

I think in many ways, the tax debate is a code for an attitude towards the individual vis-à-vis government. If you think government is bad or incompetent, if you glorify the individual against the state, then taxes is sort of your, the territory where you're going to fight these battles.

It's a signaling mechanism. It tells people you're one of us on the tax issue. You're for tax cuts and low tax rates and things like that. And that translates into an attitude towards government that goes into spending and lots of other issues.

BILL MOYERS: It's also a case, though, isn't it, that if you pay taxes, whatever taxes you pay, you want to get some services in return. You want your mail to be delivered on time, the potholes to be fixed, the bridge to be safe, the schools to teach your children. And there is that dissatisfaction with government because it hasn't been delivering the services that people really have a right to expect.

BRUCE BARTLETT: That's true. The composition of government spending has changed enormously over the last 50 years or so. The vast bulk of federal spending goes to Medicare, Social Security, Medicaid, interest on the debt. And that has a lot to do with, I think, people's attitudes towards government. They view this redistribution policy as taking from me and giving to them, so there is an antagonistic attitude towards that kind of just shuffling money around. And, but people don't seem to be willing or able to confront that fact, and instead, have concentrated solely on the tax side of the equation. But you can't do one without the other. You just can't keep cutting taxes unless you're going to start cutting spending meaningfully, which means essentially, cutting Medicare. That is the 600 pound gorilla.

BILL MOYERS: You write the Bush tax cuts have added at least $3 trillion to the debt. When Bush took office, budget projections showed a $6 trillion surplus, enough to pay off the pending $6 trillion national debt.

Instead, by the time Bush left office, the national debt had ballooned to over ten trillion, and the Republicans are refusing to take responsibility for having driven the borrowing binge that put the nation in the hole it is in now.

BRUCE BARTLETT: That's exactly correct. One of the things that Bush argued during the campaign, not so much after he took office, is that budget surpluses are a bad thing. Because they might get spent. It really sounds silly when you say that. But he did say this over and over again.

And so, the idea of cutting taxes was a part of a policy that I call starving the beast. It's you take away the government's credit card, as Ronald Reagan said. And this will force spending down. This will shrink the size of government. And conservatives believe that there's only so much freedom out there. And the more the government, the more power government has, there's less freedom for the people.

And they have a tendency to look at this in terms of spending as a share of GDP. So it can be measured very precisely. So if the federal government takes 25 percent of GDP, then essentially, we have only 75 percent freedom. We're not 100 percent free. You know, if we could cut government spending down to 20 percent of GDP, then we would gain five percent freedom. We'll go from being 75 percent free to being 80 percent.

I'm serious. This is the way they think. And this drives a lot of these policies that on the surface don't make any sense. They're just about taking away the government's resources to force it to shrink to -- if you cut the budgets of the regulatory agencies, then they can't regulate. This is a good thing.

They really believe that there's absolutely nothing good that comes out of government, unless it comes out of the Pentagon.

And the starve the beast theory is really extraordinarily pernicious, because one of the things that it is related to is the so-called tax pledge, which my friend Grover Norquist came up with. And which has become a ban on raising taxes at any time for any reason.

But at the same time, all tax cuts are okay. So you just have this constant ratchet down. Every time you can cut taxes, you've lowered the threshold that you can never then go up against. So it's like you're coming down a series of stairs. And this is all very conscious, because Grover believes that if you take away the government's ability to tax, it will necessarily be forced to spend less. Government will shrink. Freedom will increase. It's that simple.

BILL MOYERS: Grover Norquist is the one who famously said that he'd like to shrink the government to the size where it could fit into a bathtub and be drowned, take it back to the size it was before World War II.

BRUCE BARTLETT: Well, we'd have to go back before World War I, really, to get to that size.

BILL MOYERS: You remember back when the first George Bush was in the White House, and he raised taxes because even though he had said, "Read my lips, no new taxes," in his convention speech, his acceptance speech, he raised taxes because he felt the economic situation necessitated new taxes. And the conservative Republicans went after him. They were willing to take down one of their own.

BRUCE BARTLETT: Yes. And they did. Remember, you had Ross Perot running. You had -- and a great many Republicans voted for him because they thought that George Bush was a turncoat, and I think Mr. Bush's support for a tax increase in 1990 was an enormous act of courage that no Republican has been willing to show since, and probably never will.

I mean, would you want to be a Republican running in a Republican primary, where Grover Norquist comes in and says, ‘This guy must be defeated because he violated the pledge, or he refused to sign the pledge’? The members of the Tea Party don't need to know anything else. That guy's history.

And we saw during the 2010 campaign that these Tea Party people are capable and perfectly willing to defeat incumbent Republicans even when -- at the cost of having that seat go to the Democrats. You saw guys like Robert Bennett in Utah, who is no liberal by any means.

BILL MOYERS: He was the epitome of the conservative--

BRUCE BARTLETT: That's right.

BILL MOYERS: Stalwart. And--

BRUCE BARTLETT: But he wasn't conservative enough. And so, they tossed him out.

And Republicans lost seats in places like Colorado and Delaware, where the Tea Party people were so insistent that their own people be in there, and that they don't have these RINO Republicans, you’ve probably heard that term, stands for Republican in name only. And believe me, among Republicans there's nothing worse that you can be called. But there’s other groups as well. The Club for Growth has been extraordinarily important.

Because they ensure that there will always be unlimited or virtually unlimited financing available to anybody who runs against a RINO, against a tax pledge breaker, or somebody who refuses to sign the pledge. They're very, very obsessed about this.

And they just have vast sums of money. And even before the Citizens United decision made it easier for them to raise money, they still had an enormous amount of money available. And I honestly don't know where it's coming from or what we can do about it.

BILL MOYERS: You've made it clear that the Bush cuts were worth little to those making $150,000, but a huge amount to those making five, ten, 15, $25 million. Do those folks in the Tea Party get that?

I'm not sure. I'm not sure if they really know very much about taxation. Back when the Tea Party first came into existence, back in 2009 they had a big demonstration in Washington. And we went around and we surveyed a good percentage of the people in this demonstration about what they knew about taxes, what they thought the top rate was, what they thought their tax rate was. You know, questions of just straight factual knowledge, not opinion.

And it turned out that these people all thought taxes were vastly higher than they really are, and that they were paying exorbitantly high tax rates that would be impossible for them to pay. And so, I think that this is part of what's going on here, is simple misinformation.

And there have been other polls and things that are showing the same thing. I mean, if you really thought, if you're a typical middle class person, you really believe the government was taking half your income, you'd be out demonstrating. But the fact of the matter is that the vast majority of people pay less than 10 percent federal income taxes. So they simply have a wrong understanding of what they pay.

BILL MOYERS: Well, there are all the other taxes, of course. State taxes, sales taxes, toll fees and all of that.

BRUCE BARTLETT: That's true. But all taxes taken together as a share of GDP is only about a third, or even less. More -- it's like 30 percent. That's all federal, state and local taxes all put together. So that you're not going to have taxes being much higher than that for anybody.

BILL MOYERS: You remind me that ideology is a worldview that can be believed despite all the evidence to the contrary.

BRUCE BARTLETT: Well, it's very much like religion. And I think that it's not a surprise that so many very, you know, devout Christians are a part of the Republican Party and accept a lot of this. Because the nature of deep religious belief is faith, which means you accept things for which there is no proof.

And so, I think it's not that hard to shift that faith over to believe a lot other things that you've been told are true so many times that you just accept that on faith as well. That if you cut taxes, revenues will go up, you know, and things of this sort. That all tax cuts are good and all spending cuts are good, and all government is bad.

BILL MOYERS: Are you pessimistic?

BRUCE BARTLETT: Oh, absolutely. I'm very pessimistic.

BILL MOYERS: What makes you most pessimistic right now?

BRUCE BARTLETT: The gridlock in Congress. Or I don't know. It's the lack of willingness to discuss issues in a reality-based way. We just seem to live in a zone in which people no longer really seem to care about facts or analysis. And we talk in sound bites.

And the media of course contribute to this. The decline of the major media. People don't want to read magazines. They don't even want to read a newspaper article if it's more than a couple of inches. And if it doesn't mention Lindsay Lohan, they move on.

Clearly people don't seem to know as much. And they don't seem to care that they don't know as much about public policy or just the basic facts of, you know, how much does the government tax, how much does the government spend? What does the government spend money on? I've seen more than one poll that shows people believe that 20 percent of government spending goes to foreign aid.

20 percent. It's actually one percent. But of course if you believe a huge percentage of government spending is going to just giveaways to foreigners then why not cut taxes and slash spending? It's not coming out of anything that matters to you. People have to be given the factual information they need to make decisions. And they're not getting it. And they may not even want it.

BILL MOYERS: I just read a summary of a study done at the University of Michigan that over a period of time shows that people have confronted with facts they believe to be true will reject them nonetheless if they offend or undermine their belief system. That their beliefs -- our beliefs are more important to us than the facts.

BRUCE BARTLETT: Oh, I think we need some -- instead of talking to economists like me, we need to be talking to psychologists and sociologists to try to get at the root of this problem.

BILL MOYERS: You wrote in the "Washington Post," "The growing inequality of wealth and income distribution is both a moral and economic problem." How do you see it as a moral problem?

BRUCE BARTLETT: Well, I think it's wrong to have people with such extraordinary wealth that pass it down from one generation to another, with people not having to work for a living, being able to have control perhaps over government. Clearly wealth and power are interrelated at least to some extent. And, of course you see members of both parties now going hat in hand to the exact same group of people on Wall Street.

And it's naïve to think that they're not getting something for their contributions. I don't think it means that politicians are being bought. But when the class of people that they spend all of their time with, talking to and so on, they're bound to pick up part of their point of view, their attitude. And, of course, many politicians these days hope to be able to join those groups of people.

BILL MOYERS: When they leave office--

BRUCE BARTLETT: When they leave office, that's right.

BILL MOYERS: 300 former members of Congress are now lobbying in Washington.

BRUCE BARTLETT: Yes indeed. But it’s more, I don't know, class consciousness is the only word I can think of, but it doesn't really get quite at what I'm talking about. It's the community of shared interests.

But we have public policy problems. For example, we have a large budget deficit that many people, myself included, believe will require higher taxes to deal with at some point. But -- and so, if the wealthy don't contribute more, then the rest of us are going to have to contribute more.

If the wealthy are unwilling to pay more taxes, then this is going to lead to spending cuts. And if you put off the table things like national defense, then you're going to end up cutting more and more out of programs that aid the poor. So, I think there are consequences to this idea that tolerance for inequality requires us to -- to just do nothing to make the wealthy contribute a higher share of resources to fund the government.

BILL MOYERS: Here's some data from the nonpartisan Congressional Budget Office. Let me see what you think about this.

Between 1979 and 2007, about 30 years there, roughly 40 percent of all income growth, post-tax, post-benefit, accrued to the upper one percent. And in just the five years between 2002 and 2007, over half went to the top one percent. What do you make of that?

BRUCE BARTLETT: It's extraordinary. But I think it's even worse than the data show because if you disaggregate the one percent, you find out that the vast bulk of the gains made by the one percent were by the top 0.1 percent. So -- and this also makes another point, which is that if you ignore the top one percent, the increase in inequality is not that great.

The income classes of the bottom 99 percent have moved more or less together. It's the top one percent that has just skyrocketed up out of proportion to everybody else. So, in other words, there's a huge difference between being in the ninety-eighth percentile and being in the ninety-ninth percentile. And it's important not to lump in people who merely make, you know, a couple hundred thousand dollars a year with people who are making millions upon millions, and even billions of dollars a year.

And that's something that I think is not -- doesn't always come through in the context of the debate. We're talking about a really small number of people, in the hundreds, who have really acquired a huge outsized share of all of the gains that this country has made in terms of income and wealth over the last few years.

BILL MOYERS: More than any other group, the tax rates for the wealthiest Americans have been coming down these last 30 years. This couldn't have happened without a bipartisan consensus that it's a good thing.

BRUCE BARTLETT: Yes.

BILL MOYERS: How did that happen?

BRUCE BARTLETT: Clearly, ideology has a great deal to do with it. The conservative side of our political spectrum has had an outsized voice over the last few years. I think especially since the establishment of Fox News, which has created an echo chamber in which people just hear the same ideas repeated ad infinitum.

And you know, it's just basic advertising, basically. You hear the same idea over and over again. Or you can call it propaganda if you like. It's broadly believed and people just keep saying these things all the time, that ‘Rich people create jobs.’ ‘Yes, rich people create jobs.’ ‘They're motivated primarily by taxation.’ ‘Yes, they're motivated by taxation.’ ‘We must cut their taxes.’ ‘Yes, we must cut their taxes.’

BILL MOYERS: Becomes a mantra.

BRUCE BARTLETT: That's right. Year after year after year of people watching Fox News and listening to talk radio, had conditioned them in advance to believe that the government is responsible for all of our problems.

BILL MOYERS: Your old boss, Ronald Reagan, said government is the problem, not the solution. And Bill Clinton, Democrat, echoed that refrain when he was in office.

BRUCE BARTLETT: One idea that a friend of mine, Mike Lofgren came up with, is that the conservative side of this political spectrum hates government, per se. And it's in their interest to make it be ineffective. And so, they'll cut the budget, for example, for a regulatory agency such as the Securities and Exchange Commission.

And then, when some problem arises on Wall Street, they will then say, ‘Ha-ha, this proves that the SEC doesn't work.’ And this will justify further cuts in the agency's budget, so that everything that they do reinforces their basic ideology, which is that government is the source of all of our problems. Government doesn't work. And then they make sure that it doesn't work by cutting its budget and tying its hands so that everything is a race to the bottom and it didn't use to be that way.

I think coming out of World War II in particular, people had a much more positive attitude towards government. It was something that was capable of doing good. And, of course, that led to the creation of many programs, to aid the poor and the middle class. Housing programs, things of that sort.

BILL MOYERS: But if it's true that in some profound way Washington, the government, has made the rich richer, and turned its back on the middle class, you can hardly blame Tea Partiers and others for saying, ‘Why should I be taxed more for the government? The government's working for them. It's not working for me.’ Isn't that dynamic working out here?

BRUCE BARTLETT: I think so. I mean, certainly the Occupy Wall Street group has some similarities with the Tea Party group in that regard. And I've always thought that a lot of these Tea Party people could easily switch sides, like, overnight depending on the circumstances. For example it's obvious that a lot of Tea Party members tend to be elderly. You've seen that famous sign, "Tell the government to keep its hands off my Medicare." And I think as long as the government does keep its hands off their Medicare, they're fine with talking about low taxes.

But once they start to realize that the Republicans really do want to not just cut Medicare, but essentially abolish it, you know, I just think those people are not going to be part of the Tea Party. They're going to be over with the Occupy Wall Street.

BILL MOYERS: Bruce Bartlett, thank you very much for sharing this time with us.

BRUCE BARTLETT: Thank you.

BILL MOYERS: Watching what’s happening to our democracy is like watching the cruise ship Costa Concordia founder and slowly sink into the sea off the coast of Italy. The passengers, shorn of life vests, scramble for safety as best they can, while the captain trips and falls conveniently into a waiting life boat.

Here at home we are drowning, with gaping holes torn into the hull of the ship of state from charges detonated by the owners and manipulators of capital. Their wealth has become a demonic force in politics. Nothing can stop them. Not the law, which is written to accommodate them. Not scrutiny they have no shame. Not a decent respect for the welfare of others. The people without means, whose safety net has been shredded, leaving them helpless before events beyond their control, like those passengers on that ship.

The obstacles facing the millennial generation for example didn’t just happen. An economy skewed to the top, low wages and missing jobs, predatory interest on college loans. These are consequences of government politically engineered by and for the one percent. So is our tax code, the product of money and politics of influence and favoritism, of lobbyists and the laws they draft for politicians to enact.

So here’s what we’re up against. Read it and weep: “America’s Plutocrats Play the Political Ponies.” That’s from something called “Too Much,” an internet publication from the Institute for Policy Studies that describes itself as “an online weekly on excess and inequality.” Yes, the results are in and our elections have replaced horse racing as the sport of kings. Only these kings aren’t your everyday poobahs and potentates. These kings are multi-billionaires, corporate moguls who by the divine right -- not of God, but of the United States Supreme Court and its Citizens United Decision -- are now buying politicians like so much pricey horseflesh. All that money pouring into SuperPACs, much of it from secret sources: merely an investment, in the best government money can buy, should their horse pay off in November. All this can numb the soul, and chill the ardor of the most devoted citizen, who's exposed to the buying and selling of our democratic birthright. But there is an antidote, on our website BillMoyers.com. We will link you to a vision of hope.

Sara Robinson, a senior editor of Alternet.org, has written an essay entitled “New Rules for Radicals: Ten Ways to Spark Change in a Post-Occupy World.” Check it out. My hunch is you’ll cease to weep over our sinking ship of state, and start working to repair it.

Coming up on Moyers & Company, Rita Dove and the poems that tell the story of America.

RITA DOVE: Suddenly there were these voices that came out, ordinary, town folk voices. And what he says in this poem is that, where are those voices. Do they disappear? Do they disappear when we shut the book?

BILL MOYERS: On our website, BillMoyers.com, you can find out more about the Millennial generation and hear directly from some of the young people who are struggling against economic inequality. That’s all at BillMoyers.com.

See you there. And see you here, next time.