Transcript: Mayor de Blasio Discusses Social and Economic Inequality in Conversation with Paul Krugman

February 18, 2016

Moderator Janet Gornick:  Mayor de Blasio, why did you decide to make combatting inequality so central when as mayor you have access to a limited set of policy levers? Why pursue inequality reduction in a city so famous for - and some would say dependent on - its financial sector, where they tend to enjoy their compensation on the high-end? And why focus on reducing inequality at a time when the country was just beginning to climb out of the Great Recession?

Mayor Bill de Blasio:  Well, it was for me very personal. Beginning with stories I heard from members of my family and my wife Chirlane’s family, because it became clear to me that we didn’t climb out of the recession -  that people had their lives disrupted and the rules of the game as we had known them before weren’t operating anymore. You know I grew up in a family where a lot of the older relatives talked about the effect of the Great Depression. And you know we heard this at every family dinner like a mantra. And people lost their businesses and lost their jobs - people were set back for years and years. I didn’t expect to hear anything like that again in my life. But what I found was people in my own family who had suddenly found or experienced the kind of economic insecurity they thought was unimaginable. People in my own family had to wonder whether the next generation would do as well as they had done. And even for Chirlane and I - we have great confidence in Dante and Chiara and their possibilities. But we see you know some limits on them that we didn’t have and both our children we’re early on just independently obsessed with concern about college debt in a way we weren’t.

So I saw a whole series of things happening very personally, but then I started to more and more hear it from just everyday New Yorkers, especially when I started to run for mayor. You know I kicked off my campaign in many ways substantively in October 2012 - calling for a tax on people who made a half million or more to pay for the pre-K program. And that really was the beginning definitional moment of saying this campaign would be about fighting inequality and calling out some very hard truths that we were experiencing and the tale of the two cities that we are still living in so many ways.

After that I found people - they didn’t just tell me their stories - they like grabbed me by the arm to tell me they had lost their job, to tell me they could not afford their housing any longer, to tell me that they were desperately scared. Or even if they had a little bit of savings, they didn’t know if it would sustain them.

So it became clear to me that something very different was going on in our city, in our country. And it has to be talked about here. This is a place - you’re right - there are some real disparities here and there are realities here as the center of so much of the national and global business community and certainly the finance community. This is the place where this debate has to happen. We have to make change starting here.

Now I contest, respectfully, that the limits on our tools - not to say that we can do what a state or a federal government can do, but to say that we have powerful tools. In fact, every government has powerful tools. Because if you can - depending on where you are - if you can give a half million more people paid sick leave like we did in the city. Or in some places, you can raise the minimum wage and we’re fighting to do that at the state level. Some cities have the power to do that themselves. Or if you can give 68,000 families free pre-K, which takes an expensive $10,000 or $15,000 a year off them, or give middle school kids free after-school programs. I mean all of these are ways of addressing inequality and lightening the burden. Obviously no expense more important to New Yorkers than affordable housing - we have the biggest affordable housing plan in the history of any city in this country. These are the things we can do. But it does not for a moment replace what the federal government could and should do.

And so I’ll close this answer with this. I’ve been working with progressives around the country. And more and more we are forming common cause on issues of economic inequality. We started a coalition called the Progressive Agenda and you can look it up at progressiveagenda.us. And the notion is to gather together elected officials, labor leaders, faith leaders, even some business leaders who understand that what’s happening now in inequality is destabilizing this nation to fight for the changes we need on the federal level: higher taxes on the wealthy, more benefits for working people, paid sick leave, paid family leave, pre-K, higher wages, higher minimum wage. These - this basic prescription - is what will reverse this rampant inequality. And it must be achieved at the national level.

And I think the debate that’s happening this year and last year, 2015 and 2016, is a moment of profound change. And I would wager this to the whole audience this evening - I believe we’re at the beginning of a sustained new progressive era in this country. I can see things happening in this debate right now nationally that were unimaginable just a few years ago. This issue, this impulse for change, is not cresting now. It is just beginning now. It is just beginning. And so we in New York City will show what one city can do to fight inequality. We hope it will also add to what is now a growing national movement to do this in every city and every state and indeed have our federal government join the fight against inequality.

Gornick:  Paul, talk to us a little bit about - why do you think this has happened now? Why not 30 years ago when the increase in inequality began? Why has it sustained itself? We were all saying five years ago this is never going to last. And I think my final question for you is are your fellow and sister economists paying attention?

Paul Krugman:  Okay, first I have to say sometimes these days I find myself feeling rather old. Because the truth is it’s a little more complicated. It was not that inequality was ignored. It has had ebbs and flows. It was a surprisingly - I think for younger people probably don’t remember - not even sure older people remember. But it was a surprisingly big issue in the early 1990s. It was a pretty big theme in the 1992 presidential election. You may remember Bill Clinton saying 70 percent of the gains have gone to one percent, which happens to have been my number. And if you look at Clinton’s original, his first-year agenda, which was higher taxes at the top and universal healthcare - that was actually a program of making at least a moderate-sized assault on inequality. So the issue was there. It faded away partly because the health reform crashed, burned. But also because the 90s was a good decade because during an economic boom that although it was very disproportionately still going to the top - it in fact did produce a substantial rise in living standards, a substantial rise in median income and wages. So that people - it kind of faded out. It was also, may I say, a boom that was driven by technology - you know felt almost like capitalism was working the way it was supposed to. It wasn’t actually, but it looked like it was. Then after 2000, we were a little bit distracted by terrorism and wars and so on.

And so it really took the revelation of the rottenness of the system in 2008 to bring this thing to the fore, which is actually part of why I would - I want to answer the question that you posed that the mayor didn’t quite answer, which was why focus on these things when we have also the task of an economic recovery that’s still incomplete? And the answer is if not now, when? You have to grab these things while they’re salient. The fact of the matter is inequality has been an issue that we should have been addressing all along, but we have got the public’s attention. I don’t think it’s ready to go away, but you don’t - I think now is the time to elevate it.

And perhaps also we are learning. I think progressives are learning something about achieving stuff. I think that the - you look at the minimum wage movement and we see that people have found, have realized that look - you know, you don’t have to - raising the minimum wage isn’t going to solve the problem of inequality, isn’t going to solve the problem of poverty. But it will make a big difference. And finding that they can do these things. And also acting locally. You know think locally, act locally. Well actually, there are lots of things that can’t be done at the level of the city, but quite a few things that can. And they can provide a model, a template for the rest.

So now is the time. I don’t think this is going away. I think people have, in fact, finally gotten sensitized. It took amazingly long. If you had asked me in 1992, whether we would be sitting around 24 years later and saying gee, finally it’s an issue - I would have probably given up in despair. But you know good things come to those who wait.

Mayor:  Quick follow-on, if I may. To the $15 minimum wage - two points. One, the Fight for 15 movement, and I think you’re absolutely right to identify Occupy as a crucial point of this historical trajectory. But the Fight for 15 movement - I think we are going to look back and realize that it was catalytic. And a movement - I remember literally less than two years ago, this being just dismissed out of hand in many, many places, here and around the country. This now has become the lingua franca. This is now the main street of the discussion in this country - that $15 minimum wage is the reference point. That’s a powerful achievement for a social movement. And it says a lot about the moment we’re in and how much more there is that can be reached.

Secondly, that in our vision for the city - we’ve put forward a long-range vision. We call it OneNYC. And it is literally how we want to see this city develop in every sense - in terms of environment, and economy, and resiliency, but also in terms of equality and fairness over the next 20, 30 years. Our vision is over the next 10 years, we can get 800,000 New Yorkers out of poverty if we raise the minimum wage to $15 an hour and we continue to build all the other supports - the affordable housing, the pre-K, the paid sick leave - all the pieces that uplift people. Think about that for a moment. That is basically a tenth of the population of this city. That is reachable and attainable if we get to a $15 minimum wage because we’re already committed to the other pieces. So I think Paul’s exactly right that minimum wage is - achieving a higher minimum wage is not the same thing as ending inequality. But achieving a higher minimum wage is the gateway to fundamentally changing a lot of other things in our society.

Gornick:  For all our economists listening?

Krugman:  Yes, well economists to an interesting degree have actually driven this. This is one of those cases where there’s almost a perfect marriage of really good economic research and really good social policy. I mean if you had asked most people, even me, you know 20 years ago - what do you think are the effects of raising the minimum wage? I would have said, well I’m for it but I’m really worried about the side effects. But then we found out from Alan Krueger, David Card - terrific and have done a huge batch of research - that at least at U.S. levels of the minimum wage, there is no hint of those adverse effects and it really is a win-win type of policy. So it all comes together.

Economists, I think - economists were slow. Although some people have focused on some of these issues, economists were slow to get moving on the issue of inequality partly for bad reasons - it wasn’t popular, you’re not going to get large amounts of money from the Heritage Foundation to study inequality you know. But also because it’s actually - it happens to be an intellectually difficult subject. Trying to understand - I mean to this day we still don’t fully understand why inequality skyrocketed the way it did. So it’s a hard subject and simply being important is not always enough to get people working on it. But I think people have finally - my profession has realized that this is important enough and we have enough good work. So I think there’s a kind of a multiplier - I sound like an economist - there’s a multiplier effect. As people work on it, it becomes a better field. As action, often local action, makes significant progress on pieces of the inequality problem, it becomes a more popular political movement - because this is some place where you can get things done. And so we are building. I think it’s a wave that comes not just from public outrage, though that’s part of it, but also from political and economic success and at least making some difference in the right direction.

Mayor:  The conversation has now turned from just - not just a description of what each individual circumstance is and their concerns and their complaints - but now people are literally talking about inequality. They’re talking about income inequality. They’re naming it, as was indicated earlier, in polls as their central concern. It was a very uncomfortable moment in one of the recent Republican debates when the Gornick said how do you respond to this polling information that says 68 percent of the American people want higher taxes on those who earn one million dollars or more? 68 percent - that’s not just Democrats and liberals. And we see very interestingly that this is cutting across traditional ideological and regional and partisan boundaries. So I think it has become an American values question - that this kind of inequality doesn’t comport with what we understood our country to be - how it was founded, what we’ve been told our lives are, the values, and our opportunities to have real access to meaningful opportunity. This is now grating against people’s sense of who they are and who the country is. And that’s why I predict much bigger changes because I think it has now become very personal and very cultural.

Gornick:  Wonderful. I might add we also have much more data and better data than we had -

Krugman:  Yes, definitely.

Mayor:  Of course - better data.

Gornick:  Self-serving comment, but it’s true. Mayor de Blasio, why did you decide to make pre-K so central to your campaign and administration?

Mayor:  Of all the things that could be done, and done fast, and done truly universally, this is one of the things that will have the greatest impact. In the immediate foreground, it fights inequality because again - for a single child in this city, it will cost you $10,000 to $15,000 to get full-day pre-K. If you couldn’t get it in a public program that existed previously, it would cost you that kind of money. For working people and middle-class people, that is an unbelievably big bite out of their budget. Multiple children in a family over years - you can imagine how that ends up. So there is an immediate tangible impact. And of course freeing up time for people to work who were previously constrained because they didn’t have good options for their children.

When we came into office, 20,000 kids had full day pre-K - today 68,500 - almost 50,000 more. And we said and part of what - we found plenty of constraints. We found plenty of problems because the system wasn’t geared to doing something on such a mass level. It literally - it was adding a whole other grade to our school system. But there was no constraint that couldn’t be overcome if we said this was our number one priority. And a simple, easy leadership lesson - if you say something’s your number one priority enough times, everyone around you starts to believe it. And they do things they wouldn’t normally do. And so we just stayed very on message and moved the bureaucracy.

But the other thing I’d say is the longer term impact on fighting inequality. So this is sort of a key twofer. In the here and now, a family gets some major budgetary relief and a parent can work who might not have been able to work before. But going forward, that child who is four years old today - when they graduate high school in 14 years, or college in 18 years, they’re going to be, I believe in many, many cases because they got that early childhood education foundation, they’re going to be in a much stronger situation. They’re going to be much better educated. I also think a lot of kids are going to graduate high school or get to college because they got that foundation. A lot of kids are going to not be unfortunately diverted into negative life choices or negative outcomes because they got that foundation.

And once you see - if you go to a pre-K classroom, not only is it the great equalizer because this is a truly universal program - every kind of child together. You can tell early on - I don’t need the research to know this part - you can tell it is hope inducing for both child and parent alike. These kids get engaged very early. And they learn how to learn. And they learn how to love learning. And then that has an amazing multiplier effect going forward.

Krugman:  And I think there’s something important about values. Everyone in America says that they favor equality of opportunity.

Mayor:  Yes.

Krugman:  Now, many of them don’t actually mean it. But as the line goes - hypocrisy is the vice place to virtue. No one in American politics dares say that he’s against equality of opportunity. And here’s something which is so clearly about equality of opportunity. It’s something you can do and it works. I don’t think - obviously we don’t know it yet - how you’re program is going to work - though I’m quite sure that you’re right. But there’s lots of evidence that early things - nutrition, healthcare for children - even in the narrowest sort of I-don’t-care-about-people just fiscal sense - well over pays for itself. It makes more productive citizens who pay more taxes later in life. So this is one of the things we’re - yes, you can really - I think it’s important to have success stories. And it is something where we can say look, this is the story we tell ourselves about America. It is the place where anyone can make it their way. And if we say well look, here’s something we can do that makes that closer to actually being true. It’s something you can make actually happen.

Mayor:  Yes, we’ve been evaluating it - because you asked that question to. And we’re very pleased with what we’re seeing - the real, immediate impact it’s making. And you know we’re hearing from a lot of teachers from the kindergarten level what that first year of pre-K meant in terms of a whole class of children ready to learn at the next level. So we’re seeing great results in terms of qualitative consistency across our program. There’s always more to do, but very satisfied qualitatively.

Quantitatively, there’s still more kids that could take advantage of it. And we still have work to do at the community level convincing parents that this opportunity is extraordinarily important for their kids. So please anyone who knows a parent with a four-year-old starting this September - make sure they know about free pre-K.

But the other thing I want to say is this is an interesting issue because it has tremendous bipartisan potential. After New York City - we’re very proud of what we’ve done. And a few other cities have done amazing things. But the next place you think about is the state of Oklahoma, which has been a leader on pre-K which happens to be a very red state - equal fervor there. This may be one of those issues, in terms of fighting inequality, where we can start to find some bipartisan consensus.

Gornick:  Let me turn to another topic. Perhaps, number two in terms of what you’ve really emphasized. I’m going to actually direct this to you Paul first. So as we all know, Mayor de Blasio’s administration has talked a lot about affordable housing, and it is something you have written about and thought about quite a bit. Let me step back and first let me ask you to say a bit about the underlying problem - what is driving up housing prices in New York? And let me add - in a column that you wrote which I think attracted a bit of attention - you were writing about differences in economic and population growth - economic development and population growth across regions. And you wrote: “Limits on building height in the city's, zoning that blocks denser development in the suburbs and other policies constrict housing on both coasts; meanwhile, looser regulation in the South has kept the supply of housing elastic and the cost of living low. So conservative complaints about excess regulation and intrusive government aren’t entirely wrong,” Could you say more about that? It’s somewhat surprising from you. Say more about that and clarify what you see are the policy implications for the mayor’s administration?

Krugman:  Okay, so just to say right away, no we don’t want New York to turn into Houston or Dallas. Right? That’s not the goal. No, but there is something. If we look at - if we step back at the national level for a moment and what you see is that there’s a peculiar, and I think fundamentally dysfunctional dynamic, which is population in the United States does not flow from highly productive - from low productivity in parts of the country to high productivity - it’s actually the reverse. We have places like New York where worker productivity is very high, where people really make a huge contribution to the economy. But on balance, people flow out of those regions into places like the South and the big sprawling metro areas where housing is cheap.

And no, to some extent - okay, New York is an enormous city, an enormous metropolitan area. It’s never going to be as cheap a place to live as a much smaller city, but it doesn’t have to be as expensive as it is. It is possible to build higher. This is a little thing I’ve been tracking. If we look at not overall population density - obviously the number of people in metropolitan New York has gone up over the years - but if we ask how dense is the district in which the average person lives? It has actually be declining - not dramatically but a little bit. We actually have been seeing declining populations - weighted density - which is saying, look it’s just one indicator, but we could be building more housing.

Now New York - actually let me say - two more: an economistic thing and then I can segue it I think. There is a - when people for whatever reason - for their neighborhood - when they oppose increased development, more housing, there are reasons for that. But they are also imposing what we would call an externality. They’re imposing a cost in some ways on the rest of the population of New York. They’re making housing more expensive because they are limiting the supply. And housing happens to be one of those things - if you make housing more expensive, that actually does increase effective inequality because people with lower incomes spend a higher share of their income on housing. Though it is somewhat exacerbating the inequality problem, [inaudible] if you like, has some adverse effect.

Now there are also other kinds of externalities - congestion, noise, crowding at the light - which a city like New York has to take into account.  But I think there’s lots of reasons I think that we could change that balance. And in particular - because New York is such a high productivity, such a desirable place, it can make deals. It can basically say look we’ll let you do a little bit more. We’ll let you go higher, we’ll let you go denser, but you have to provide affordable housing - which is what you’re trying to do of course. There is - this is something - it’s not going to be - it’s not going to be completely zoning free. It shouldn’t be, like some cities out there. But it can be more. We can have more people. We can have density that will make the city a better place and also make it a place that’s more affordable for ordinary people - which is the program.

Mayor:  It is the program. We agree, as is so often true. The - so right now we’re debating something in this city. It’s a proposal I strongly believe in called Mandatory Inclusionary Zoning. And despite that sexy title, it is a very important thing. Key word - mandatory. Our view is that since the public sector controls the spigot of development in many ways - not entirely because there certainly are areas of this city where you know there’s a right for a certain amount of development to occur that we don’t get to intervene on. But when there are so many opportunities in the public sector to determine the shape of development on the behalf of the people, there should be an ironclad requirement on the real estate industry to create affordable housing. Literally if we don’t get affordable housing, you don’t get to develop. It’s as simple as that. And so this concept of Mandatory Inclusionary Zoning puts a clear set of rules in place that simply require affordable housing as part of anything that’s created within certain contexts.

So why I think this is so important - and it picks up on what Paul was saying - I felt this contradiction as someone who represented communities in Brooklyn in the City Council. And they happen to be - many of the communities were places that people were doing reasonably well. They weren’t the biggest or sort of tallest, densest areas. And people I think with a full heart professed progressive beliefs in an economically diverse city and in addressing the inequalities among us. And then I said, great - we need to build affordable housing. That’s going to take heightened density. Shockingly some people were like, well wait a minute, I want to help people in need but I don’t want heightened density. And to be real with people, we are going to need a certain amount of heightened density to actually achieve the kind of affordable housing we need. My plan is for 200,000 units of affordable housing. 200,000 units - that’s enough for half a million people. My affordable housing plan would provide affordable housing to as many people as live in all of Kansas City. And it’s not enough - and I say it very openly. That’s what we think we can reach over the next 10 years.

But there’s lots more need beyond that. But we have to have heightened density - in the right places, not everywhere, not without rules - but in the right places to be able to achieve that. And the last thing that I would be comfortable with is freezing in place inequality. And I understand why it’s such a painful and complicated discussion because bluntly, this city has never come to grips with gentrification. We’ve never looked it in the eye and had a serious, sustained policy discussion about how we’re going to confront gentrification. I’m trying to do that through my affordable housing plan and a lot of other approaches. But in fact, if we look at a stratified city and we look at a tale of two cities, it’s our obligation to shake the foundations of that. That’s why I believe in things like Mandatory Inclusionary Zoning and a very aggressive role of government in creating affordable housing.

Krugman:  Let me just add that - wearing my economist hat - if I were going to ask, where are the restrictions on development doing the most to reinforce or lock in inequality? It actually, although there is stuff, quite a lot that can be done in the city, it is of course the suburbs are where were really have the - as a resident of Princeton, which I am no longer but when I was, it was a - I had mixed feelings, of course, you know, if would I really want an apartment-block down my street. But the zoning is ridiculously exclusionary in a lot of the suburban areas. 

Gornick:  How would raising the minimum wage affect inequality? And also say a little bit about, obviously, the question we would hear all the time - can the market tolerate $15 an hour? What do you say to critics who tell you that employers will lay off, cut hours, or raise prices?

Krugman:  Okay, so this is - actually this is one of the - I’d say, it’s one of the most studied and one of the best studied issues in economics because it turns out we have natural experiments. This is what became with Card and Krueger, when New Jersey raised its minimum wage, and Pennsylvania did not - and not in the same year anyway. So, you could just look - what happened to employment in adjacent areas. And the answer was, to their surprise nothing and we now have many, many examples because we have a federal system, because we have minimum wages set at the state, and sometimes the city level. We have many cases where minimum wages are changed and no one has have ever been able to find any real evidence. And we think we know why. We think that labor markets are not like the market for wheat. It’s supply and demand, sort of. But actually we are dealing with people here, and we’re dealing with situations where employers care about having sufficient incentive for workers, where there’s a lot more wiggle room in markets than we think. And so it turns out that with the - U. S. minimum wages are very low relative to average earnings, relative to our own historic standards, relative to other advanced countries. And in that range, it seems to be, I would say, the evidence is overwhelming that there is no significant employment defect of raising the minimum wage that you should worry about. And of course it means more income for people who need, so it’s all - it’s an all good thing.

Now, if we - you would ask, I don’t think even the most progressive economists in here would be in favor of a $40 minimum wage, right? We know that there have to be some limits. What you can say about New York is that this is a high-productivity, high-income economy. If we look at any kind of historical norms for minimum wages, $15 in New York is not a high minimum wage. It’s not pushing remotely into the region where you would start to say, “Oh, now we’ve finally reached the point where bad things start to happen.” So, perfectly - $15 in New York, if you compare it with the minimum wages prevailed in  most of New York, for a generation after World War II - adjusted for inflation, adjusted for productivity - is not high. So no problem at all - I mean it should be a no-brainer. Of course, politics being what it is, it’s not, but it shouldn’t be a problem at all.

Mayor:  [Inaudible] we had for years been out of step with the reality of the cost of housing and the cost of living here. So, I think one of the powerful things about the Fight for 15 in this whole discussion is it’s getting us back to the concept that minimum wage is supposed to be something below which we do not think working people should have to live - that we should not subject people to a wage that they cannot actually live on, at least essentially. And in that way, this is a very healthy debate because it’s redefining our notion of fairness. I’ve heard all these arguments a thousand times about the negative effects. Paul’s made the point that they were not proven. But you know, to me, the kicker has always been, “So, okay what’s the alternative?” Have people make less money than they can afford to live on, and we’re going to make it up with welfare programs? You know, that’s not productive, that’s not affective, that’s not fair. But it’s kind of been a lie to suggest that we should have someone exist with a minimum wage that people can’t live on. I think that was a broken concept that, actually, we all allowed to happen for too long.

Gornick:  And you sound fairly optimistic about the politics.

Mayor:  I think you’re going to see good dominoes falling - more and more states and localities acting. I think at a certain point it’s going to make federal action inevitable based on what I’m seeing now. In the State of New York, this is going to be a real fight, and anyone who cares about this issue should not take it lightly over the next few months because there’s still a Republican State Senate that is rapidly opposed to going all the way to $15. And we’re going to have to fight hard to get there. This state - this should be a no-brainer but in fact it’s going to be a real fight.

Gornick:  What comes next? Paid family leave - that’s usually down at the state level, we know. What comes next? How far can the City go on protecting and improving working conditions and benefits for New York City workers?

Mayor:  Two things we’re doing right now - so the paid parental leave was for the 20,000 City workers that we could grant it to immediately - six-weeks fully paid parental leave, and that’s for the birth of a child, adoption of a child, or when someone becomes a foster parent - and that’s of course for any parent. And the goal is to then expand that to our entire work force of 350,000 people. That’s going to take collective bargaining agreements in each case. But you know, we’ve got a lot of enthusiasm from our labor unions to get this done. So, I’m very, very hopeful that this will ultimately reach hundreds of thousands of people.

We also announced a new initiative to create a retirement security plan that would be available to workers in the private sector in New York City businesses that they could buy into because bluntly, there’s a huge number of people in this city who have no retirement - no meaningful retirement security plan whatsoever. And the private sector is no longer consistently providing that nor are their sufficient federal and state options right now. So, the City came forward with our own proposal that we hope will add that benefit for a lot of people.

So, from my point of view, it’s continuing to build out the whole package, and to round it off to your point, look, what’s the society we’re trying to build? A higher wage level, paid sick leave, paid family leave, the actual retirement security - all of these pieces combined with affordable housing programs, combined with pieces like free pre-K and afterschool, which take, again, big pieces out of a family’s budget, combined with a higher wage. We’re very proud of the fact we’ve increased to $15 minimum wage to 50,000 City workers and non-profit workers who weren’t yet at that level. All of these pieces make, I think - each and every one makes a very major impact on a family’s life. If you combine them, it’s a huge impact, and that’s why I’m so hopeful, and that’s why we have a vision to get 800,000 New Yorkers out of poverty.

But this is a city what has, arguably, the strongest local government anywhere in the country, the most social-democratic local government anywhere in the country in terms of, you know, we’re New Yorkers and we’ve always assumed a big muscular government. I have an $82 billion budget and 350,000 employees. You know, that’s what we think is the normal scale here. Most places, locally, don’t have as much opportunity proportionally. That’s why this extraordinarily powerful movement has to migrate from locality to state and ultimately to the federal level because we can’t put that package of change together that would actually start to break the back of inequality. We can’t do that until we get to the federal level for most Americans.

Krugman: There’s a prejudice - carefully instilled prejudice against government doing stuff. Everybody, even self-identified Republicans, tend to favors things that let people work - who work get bigger rewards. So, things like higher minimum wage, more family benefits - those are things that tend to command remarkably broad support. It’s really only the professional politicians on the right who are against it. Their own voters are actually for it, which again this means that this is a very good place to work.

Mayor: So, how are we going to get all of this? We’re going to have to tax the wealthy. We’re going to have a truly progressive tax system. And two examples to me are powerful, and I’m going to be working on both of these - closing the carried interest loophole and the Buffett rule. Simply put - famously Warren Buffett saying he pays a lower tax rate than his secretary. These are two ideas that when you talk to everyday people across the ideological spectrum - and I’ve talked to people in different parts of the country. These are really readily acceptable to people, very diverse constituencies can buy into, that hedge funders should not have a separate set of tax rules that benefit them. And that they pay a lower tax rate than everyone else. That’s a really straightforward notion. And the notion that working people should not pay a higher tax rate than the wealthy. Those two alone would provide tens of billions of dollars that actually would start to fund some of these changes we need. And again, those could become cross-over issues if this current political dynamic continues to grow which, just on an action point, is why we should all be pushing this current political dynamic because there’s lots of potential action that could come from it.

Krugman: We actually had a little experiment at the national level in 2013 - it’s amazing how few people really realize it but tax rates at the top went up significantly. The average tax rate paid by the one percent is up three or four percentage of income. And we also had a major expansion of benefits to the general public in 2014, all of which was supposed to produce catastrophe - a job killer - and in fact we’ve had the best job growth since the 1990’s, all through that period. So, we’ve just seen, all of these things - nothing goes on forever, you know, we don’t want - even I don’t want 91 percent top tax rates the way we had back when that socialist Dwight Eisenhower was president.

[Laughter]

But we clearly have a lot more running room on this and this is where to go, and there’s no - none of this will change us, even everything on your wish list, even everything on my wish list not only wouldn’t end inequality - probably wouldn’t even push inequality back to where it was in 1970. But it would help, and the changes in ordinary people’s lives can be immense.

Mayor: Amen.

Gornick: So, a lot of us here at CUNY are concerned about a possible reduction in state support for people who read The New York Times - which I hope is everybody -

[Laughter]

We’ve learned that there’s talk of moving almost half-a-billion-dollars a year from the state to the City budget. I imagine that’s keeping your budget office interested. And I won’t go through the whole litany of concerns because I know you know and many, but we’re worried about cuts of course that would have dire consequences for our students. [Inaudible] spoke about the profile of our students, our staff, and the faculty, especially the adjuncts. You’ve linked support for public higher education to this concept of inequality, to efforts to reduce inequality - we need something different. You’ve talked about CUNY as being the heart of economic development for the city, so what do you see for the coming weeks and the long term in terms of public investments in the City University of New York.

Mayor: So first of all, I’m proud to say we have proactively invested tens of millions more each year in succession now going into my third budget, which we project to invest even more in CUNY beyond the basic support the city provides to the community colleges. We’ve invested additional money in the community colleges because we believe that there’s just endless potential here to - one, prepare the people of this city, particularly young people of this city for today’s economy. And we’re putting a lot of our focus on STEM programs, especially two-year STEM programs, which I think is a great ticket straight to this booming technology sector we now have in the city. We’re also investing a lot in the ASAP program because what’s happened in CUNY and many other universities around the country is that young people get there not having been given the support, not having come from an environment where the pathway through higher education was necessarily laid out to them by family members previously. And there are some real tangible supports that can be provided to help have a successful experience, and graduate, and thrive. So, we’ve been proactively putting extra money into both of those. And we believe, by the way - I have a lot of respect for the people who teach here and the people who make CUNY work every day. So, we’ve said, just like with 95 percent of our city work force that we’ve come to new labor deals with that help the workers fair to the tax payers, we believe the same should be done for CUNY professors and CUNY staff. And the City already has long since committed to a share of that labor deal that we’re ready to pay right now. And we look forward to the State doing their share, so we can settle a long standing issue and pay the people who work at CUNY well. You were right -

[Applause]

You are right, we were more than surprised when the State of New York proposed hundreds of millions of dollars that would be taken away from the state’s obligation to CUNY and suddenly dropped on the City of New York. And I made very clear that that was not acceptable to the City of New York, and it’s not acceptable to the people of the City of New York. It’s not acceptable to a lot of folks in the legislature. We have been given the governor’s word very publically that that cut would not occur, and I’ve said that I appreciate that and we will hold him to it. And this will all come to culmination in the state budget on April 1st. But rest assured there are lots of people in this city who will join with me to make sure that the state does not back away from its commitments to CUNY.

Krugman: What we really should have - bunch of public education graduates - and that’s America. Janet’s father, my father - how can we not honor that great tradition in our country?

Mayor: Amen.

[Applause]

Gornick: Amen. Mayor de Blasio you have endorsed Hillary Clinton.

Mayor: Yes.

Gornick: Professor Krugman, you have been outspoken in your criticism of Bernie Sanders, which has lit up the internet a good bit. It seems obvious that Bernie is the superior choice in relation -

[Cheers]

In relation to tackling inequality, he is more outspoken and he’s bolder, especially about the top. Why are you both not more enthusiastic about his candidacy?

Mayor: well, let me start this because I think we have to really appreciate, again, the moment in history. This is from the heart - and by the way, from the heartland. I just came back from Iowa a few weeks ago, and talking to activists in Iowa and talking to every day voters, and I went and I knocked on a lot of doors and talked to a lot of people. And amazingly they said they liked them both. And this is not an idle point. People appreciated the qualities of both candidates, and if you look carefully at the platforms, you’re seeing - thank God, in my view - Democrats acting like Democrats. Or to borrow from Howard Dean from the Democratic wing of the Democratic Party, people - both cases talking about higher taxes on the wealthy, expanding paid family leave, paid sick leave, higher minimum wage across the board. And I thought Hillary’s speech this week in Harlem about addressing the intersection of economic inequality and racial inequality was extraordinarily sharp, and blunt, and powerful. At the same time, we’ve got to appreciate what Bernie has done because - I’ve appreciated Bernie Sanders for decades. But I’ll tell you he has helped to energize the discussion of income inequality in this country. He has helped to push the spectrum and a lot of people I talked to in Iowa, and a lot of people I talk to here - and I feel it myself - really appreciate that this is all adding up to bigger change.

So, I believe, honestly, that Hillary Clinton has in many ways a stronger platform - and obviously Paul has spoken to the issue of why her platform addresses the excesses of Wall Street more effectively. I obviously believe her experience, her capacity would make her able to be a very, very effective president particularly at fighting issues as entrenched and thorny as income inequality. I happen to know her very personally and believe in her abilities. But I think it is important, whichever side of this discussion you’re on, to see the sum-total of what’s happening here. A lot of change is happening. Every one of these debates, literally, every one of these Democratic debates signifies a change in the way we are talking about the issues of this country. They - you literally are watching history move before your eyes.

So, to all the Bernie Sanders supporters, I say, God bless you because I know you are doing a lot of good for this country. I believe Hillary Clinton is the one who can achieve these changes, but we are actually one big happy family in my view.

[Laughter]

Krugman: Where I come from is basically that having your heart in the right place is not enough. It really isn’t and you need, first of all, you need to really think hard about the issues - not just go for what feels good. And I, for a long time - it’s been now for about seven years - I’ve been arguing that while it’s easy and probably appropriate to hate the big banks, that too big-to-fail is not actually the essence of our problem. That it was in fact smaller players - Lehman was not that big a player, it was a - for that matter, some of the worst offenders, in terms of abuses were things like Countrywide. Small banks, small financial institutions can be just as, in some cases, more evil than the big banks. So, on financial reform you really need to think hard about where the issues are, and I think on that issue, I’m sorry to say, I think that Sanders, to some extent, has gone for the easy slogan and Hillary Clinton has been closer to the bone of what really is wrong. On other issues, it’s very important to ask - it’s very important, I think, to appreciate that we’re dealing with - a real country with real people, many of whom are understandably cautious about big changes. The really important thing - I think I mentioned it at the beginning - that we had a pretty progressive agenda coming in 1993, on the part of Bill Clinton’s administration, of which half - a critically important part crashed and burned. Part of it, there were a lot of reasons for that, but I think one of them was it was asking too much. It was asking people to completely transition to a different system of health care, and that just was not going to happen. Even without the insurance industry, even without the drug companies, that’s just too much because people who have good insurance are going say, “You say this is going to be just as good or better but I don’t know that.” I think there - not I think. There is a lot to be said for framing your case for change in ways that is conservative in the good sense of the word, not in the political sense, but in the sense of not requiring people to take bigger leaps into the unknown than we need to do. And that I think is really the distinction here between that part of the program.

And let me also say - we now having a controversy about some fairly outlandish economic performance estimates that don’t come from the Sanders campaign but were endorsed by it. Clear thinking - taking the facts seriously, taking analysis seriously is in itself, is a progressive value. It’s something that you need to stand up for. And if you reject, if you say we’re only concerned with what serves the cause, then I think you betrayed an important part of what you’re supposed to be standing for.

Mayor: We’re in a different, but still very powerful moment in history when the two leading Democratic candidates are battling each night on who is more progressive - who will be tougher on Wall Street, who will be tougher on the wealthy, who will speak more bluntly about racism and sexism in America. I feel like I’ve died and gone to heaven, okay.

[Laughter]

So, that is - that is something that we need to understand unto itself - you can’t put genie back in the bottle. Once the discussion is reset, it does not go back. I believe that in my heart because there’s a progressive impulse in many ways to history and you can’t take away these truths once they are spoken. But second - what’s happening on the ground - I had this amazing experience, Chirlane and I, out in a college gymnasium in Iowa with a thousand or so caucus-goers of all different stripes philosophically - but the energy, the desire to change things right now was so sharp. And that’s another genie that doesn’t go back in the battle. This debate is bringing out massive intense participation for both Hillary and Bernie. And as we learned with Barack Obama in 2008, it feels at times contentious but the sum-total for the Obama campaign was a huge uptick in energy and activism later when it mattered in November. I predict something very similar here. This level of intensity and activism does not dissipate. It gets fed into a whole host of movements and what those movements have to do is keep all of us to our promises.

Gornick: Paul, you’ve written a lot about the spectacle, dare I say, going on in the Republican Party. I think it’s, you know, an unusual period there.

[Laughter]

What are the lessons for progressives in what we’re hearing from the Republican side - hearing, seeing, experiencing?

Krugman: I think what we’re learning - and this is to the extent - I mean if there is what Mayor de Blasio is saying won’t happen but if there is some back-sliding, if once again we have the push that old Democrats need to back to the center again - it’s worth what we’re learning now is that even Republican voters don’t care one bit about the classic, modern, conservative agenda. That there really is no one, except the handful of giant donors who thinks cutting taxes on the rich is a great idea - that there is it turns out - actually I think this shocked Republicans, in the last week or so - has been it turns out that nobody in the base cares about justifying the Iraq war. Their own party doesn’t even believe in that stuff.

It really means that the American public, even on the Republican side, wants higher wages, wants higher taxes on the well-off - there is no ideological force. Now, there is, unfortunately, there is an ugly strain. There is the old, the original sin of America still coming back to visit us - the racism is a real thing. It’s really quite amazing actually that South Carolina, which now looms so large on both contests, should be the state that - one of only two states that had a majority slave population in 1860, and is still in many ways facing that legacy. Which on the Republican side means one kind of electorate, on the Democratic side means a very different kind of electorate.

But, no, we’re seeing - it should be enormously encouraging. We are seeing that - the whole - there are, if you like, there are no supply-siders. There are no Reaganites out there in the real world. It’s only the party apparatus, the Republican side, who believe in any of that or at least are paid to claim to believe in that. And that means that the country is much more ripe for change. But it also means that the ugliness out there has not gone away. I think we’re a much better country, a much less racist, much less xenophobic country than we were 30 years ago. But we ain’t there yet.

Mayor: The conventional dynamics are changing constantly. I think it gets back to what Paul was saying - it’s not the superficialities and the tactics that are really the issue. The issue is that people feel cheated. They feel the simplistic change is true - the American dream that they were promised - they didn’t get. And that which they grew up with was undermined and it was undermined by people in power. And so, that’s a pretty straight forward equation. And they have a lot to recommend - that theory when you look at the concentration of wealth and power in this country. And you look at the way the one percent dominates this country and its policies - like those hedge funders who have created such lovely tax rules only for themselves. So, that builds up a different kind of frustration than we’ve had previously. And that gets to economics - and this is not to say that race isn’t a profoundly essentially issue - but it says economics is leading this discussion in a way we haven’t seen in most of our eras. That is unhinging the Republican base from the Republican orthodoxy and the Republican apparatus.

So, if you watch the commentary lately - these anguished Republican, mainstream spokespeople who are like, “I don’t know what’s going to happen.” I mean they’re literally like talking like they realize it’s not their party anymore necessarily - it’s something different. If that something different is a lot of working people and middle-class people who are seeking economic fairness - well as a progressive I would welcome a lot of them to join us.

Gornick: So, Donald Trump said you’re the worst mayor in the United States.

[Laughter]

Did that hurt your feelings?

Mayor: You know, I want to -

[Laughter]

I want to join Pope Francis as -

[Laughter]

There we go - part of an affinity group who have been attacked by Donald Trump. Joining together with women, Mexican-Americans, Muslim-Americans - we’re going to form a really big coalition.

[Laughter]

I’d certainly nominate the Pope as our leader, and I think we can handle Donald Trump.

[Laughter]

Gornick: You’ve been in office during an extremely complicated time regarding race in the United States. Professor Krugman - this is a question from the audience also - you’ve been very outspoken about race as well, noting how important it is in American politics. What do you think of the Black Lives Matter movement? Are you hopeful that it will lead to a transformational period in the United States?

Mayor: We still have a profound race problem in this country. It is structural. It combines with structural, economic unfairness, and amplifies in communities of color. The Black Lives Matter movement has said that we must break down the whole culture surrounding that. That we have to call it for what it is. It’s structural racism, and it’s amplified in so many elements of American life. And until African-Americans feel the absence of overt racism, we’re just not there. And it is through the prism of what people feel - whether they’re followed around in a store, whether they’re treated equally in a job interview - there are a thousand other permutations. So, I think this movement has called the question in a way that needed to be done. And in terms of what I’ve experienced - it’s increasingly clear to me that the only way forward is to be blunt about it.

I spoke about the conversation Chirlane and I had with our son Dante, about how he had to comport himself in any dealings with the police. And I said something that hundreds of thousands of American families acknowledge as their reality - families of color know they have to do with their young people. And of course, it became a huge controversy but it shouldn’t be a controversy because it’s true. And we have to grapple with it and we have to change it, which is why - I’m very proud, right now with the NYPD, we’re introducing Implicit Bias Training to say explicitly, we are all humans, we all come with biases, we have to explicitly help our police officers to understand those biases, to weed them out. It is a very positive process, as human beings, getting under the skin of that, and expunging it so we can all serve the public properly. This is the path we need to go on. And I do think this movement will be remembered as one that opened that door and finally got us to say a truth that we only said partially before. We say it fully, we can address it fully.

Krugman: One of the things that Black Lives Matter is showing is that people on that side part of politics - people on the right side of politics, if I may say that, I think that didn’t violate the Times’ rules - are feeling good enough about America, feel that we as a nation have made, not enough, but sufficient progress - that we can come out of that cringe and we can confront these issues and we are. Systemic racism is a very big thing but it’s nothing like it once was. There was a - you will appreciate as I will - I look at polling and in the early 1980’s, a plurality of the American public still disapproved of interracial marriage.

Mayor: Yep.

Krugman: Now, think about how much progress we’ve made there and what we’re seeing now is that that progress is not over - despite what may be going on to some extent in that other primary. We’re not going backwards. We are going to move forward. We’re going to continue to become a better country I think on all dimensions.

Mayor: Amen.

Gornick: On that note -

Mayor: Very good note.

Gornick: I have to bring us to a close.

[Laughter]

Thank you.