I'm Robert Reich, former Secretary of Labor, professor, and author of the new eBook "Beyond Outrage." AMA.

• Hi Professor Reich, let's say, hypothetically speaking, you had a paper due tomorrow on reforming one policy that you believe contributes to wealth and income inequality in the US. Which policy would you find most important to reform and how would you reform it?
• Is Jon Stewart as funny in person as he is on his show?
• Can we expect to see you on more late night shows? Like on Conan

Your question sounds remarkably close to the question I set for my class, which is due tomorrow. So my advice to you is to stop Reddit and write your paper. Jon Stewart is very funny in person, and a very nice guy. And, yes, I'll probably do more late night shows, although producers haven't exactly lined up to get me on them.

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I'll teach "Wealth and Poverty" again next spring. As to Bill O'Reilly -- what can I say? He called me a "communist who secretly adores Karl Marx" because I said on the Daily Show last week that global corporatoins can't be relied on to make the kinds of investments in education, infrastructure, and basic R&D in America that the nation requires. I challenged him to debate all this, but I haven't heard squat from him. I left a message on his office phone a few days ago, but still nothing. Maybe you should write him: @oreillyfactor

any possibility of the class sessions being made available on the web?

I've been thinking about this. Don't know exactly how to pull it off, but it seems to me education ought to be cheaper and more universally available -- and some sort of online lectures/courses should be available.

Why do you think there's been such little enthusiasm from those in power for a New public works project (like rebuilding bridges, roads, highways, etc) when costs (materials) are so low and the employment among young people is so desperately needed?

The Works Progress Administration (WPA) and the Civilian Conservation Corps (CCC) were successful New Deal measures for putting lots of people to work rebuilding the nation's infrastructure, building public parks, and improving public spaces. I think it's nuts not to try to repeat the success when so many people are out of work -- and the portion of them out of work for a year or more is the highest it's been since the Great Depression. Also, it's now cheap for the Treasury to borrow money to finance this (the yield on the 10-year Treasury is still around 2 percent) -- far cheaper than paying unemployment insurance and all the other social costs of unemployment, far cheaper than rebuilding our infrastructure when borrowing costs are higher, far cheaper than trying to deal with crumbling highways, unsafe bridges, inadequate public transportation, outmoded ports, etc.

That didn't really answer the question. You named a lot of good things about those programs, but the question is why there had been so little enthusiasm for them in site of all the things you mentioned.

Partly because Congress (especially the Republicans in Congress) are inherently distrustful of government hiring programs. They think they're too prone to waste and corruption. Their position is understandable, but it's not relevant when 13 million Americans are unemployed.

Perhaps as an alternative to offering young people aid for college tuition based on military service, which is not viewed as being as attractive as it once was, we could offer financial aid for college tuition in exchange for service in a new public works project.

I agree.

The problem with many of these programs is that they are all aimed at younger people - there are age limits for Americorps and for the military. Granted, there are more younger people in need of assistance. But some of us who are older who still have student loans hanging over us, and whose kids won't be getting much help because of our student loans, so tey'll be needing larger loans of their own... just call ours the bellwether generation. We're the single parents, usually moms, who went to school to try to lift our kids out of poverty, and in so doing, doomed ourselves to it, and won't be able to be much of a safety net for our next generation. We're facing now what the younger kids are about to in terms of the loans being a lifetime burden.

I agree. The original idea behind the federal student loan program was sound -- give students an opportunity to attend college or get additional graduate skills, on the assumption they'd be able to repay the loan fairly easily with the higher earnings that the education would generate. But it hasn't worked out that soundly because (1) college costs have continued to soar faster than inflation, (2) government support -- directly in the form of transfers to public universities and indirectly in the form of grants to students -- has dropped significantly, and (3) jobs don't pay enough or aren't available, because we're still in the gravitational pull of the Great Recession. That's why I've suggested that loan repayments be proportional to full-time earnings.

AmeriCorps--- it offers delays on student loans as well as a $5000 educational award to go towards paying off federal student loan debt following a year of service.

avroots... did you participate in the AmeriCorps program? I'm curious how financial aid provided by the Segal AmeriCorps Education Award compares to financial aid awarded for military service.

I almost enrolled in the Navy due to a lucrative financial aid package that was considerably more substantial than $5,000 per year. However, I chose not to because of the time commitment, and a general feeling that it wasn't the right path for me.

I am currently working as an AmeriCorps member. It is a good option for those who didn't do military service, but it isn't nearly as lucrative. My boyfriend did 5 years in the Army and had his undergrad paid in full. Unfortunately that included a year in Iraq, which has left some scars on him. I cannot say that a free ride in a state school compares to a $5000 ed award, but the loan deferment is nice, and the diversity of placements across the country is great. I am in a State/National program that is regionally based, which means that there are a lot of programs within one organization. Because of this, when my first placement as a residential support counselor within a youth runaway and homeless shelter took too harsh a tole on my mental health, (it's hard to go to work every day and be constantly surrounded by youth who have been abused and are in crisis) I was able to switch to a more stable work environment without sacrificing my education award, allowing me to complete my term of service in an environment where I feel like I am doing good work that is also healthy for me. I would recommend it as an alternative, especially if one has an interest in service.

There's another advantage to having everyone (or at least the expectation that everyone) will devote two years of their lives to public service: It teaches and reminds us that we're members of the same society, with obligations to one another. Citizenship, in my view, shouldn't merely be a matter of paying taxes and doing jury duty once in a blue moon. It should be an active practice of civic engagement -- and it can start early.

Do you think the U.S. military is a jobs program? How can U.S. reduce defense budget without sacrificing capability?

Sadly, it's the nation's only real jobs program. And military contractors have cleverly spread out their (and their subcontractors') work across key congressional districts, in order to make it especially difficult to terminate any weapons system. I think we can reduce the defense budget substantially by cutting stuff that's outmoded and doesn't work -- but the challenge is really a political one. How do we do this without generating a political firestorm?

In your opinion, what effect would decriminalizing illicit drugs have on the economy?

I'm in favor of legalizing marijuana for several reasons. First, I don't believe it's more harmful than alcohol; in many ways, less. Second, by legalizing it, government can tax its sale, thereby providing us with ways to pay for public services that are now starved for revenue. Third, we don't use up scarce police and correctional resources on non-violent offenses. Fourth, we reduce the black-market premiums going to underground economies and to violence that's spread from Latin America up through central America and into Mexico. And so on...

What are your views concerning the Fed's possible ruling of reinstating the 6.8% student loan interest rate, effectively doubling it for students graduating in 2012 and beyond?

I'll start with student loans. The rate will essentially double July 1 unless Congress and the President take action. It's another showdown. Republicans say the country can't afford the $6 billion a year tab, but at the same time their budget gives trillions of dollars in tax breaks to millionaires. Obama is ready to extend the low-interest student loan but can't without the votes. A good issue to get outraged about (and get beyond outrage and do something about).

In your opinion, are we in the Endgame of the Republic?

No.

In the sense that the United States political system will no longer look like it used to, yes. Obviously the country is not going to fall into anarchy. But without institutional changes, all branches of government will have to be controlled by the same party if they're going to be at all effective. We will have to enter into a pseudo one-party state.

I'm not quite as pessimistic, but I do think there have to be major institutional changes. The most important, in my view, is limiting campaign contributions. That will be hard to do in the wake of the Supreme Court's grotesque "Citizen's United" decision, but I still think public financing of general elections can work, if the extent of the potential financing is raised. Remember, both presidential candidates used public financing in 1976, and didn't rely on any outside financing. Seems hard to believe from where we are now.

Mr. Reich, is the United States is a functioning republic? also - what would you do, now, if you were secretary of labor? would you encourage and protect small businesses? what about healthcare?

We're drifting toward becoming a plutocracy, run by a relatively small number of extremely wealthy individuals, CEOs, and Wall Street moguls. That's why we need to get serious about campaign finance reform, why tax reform is vital, and why the entire economy needs to be reorganized to widen the circle of prosperity -- so that far more of us benefit from the gains of productivity growth. If I were back in the administration, I'd strengthen labor unions, try to create a single-payer system for healthcare, use antitrust laws to break up big concentrations of power (such as the biggest banks on Wall Street), resurrect the Glass-Steagall Act (that used to separate investment from commercial banking), and enlarge the Earned Income Tax Credit (a wage subsidy for lower-income workers).

Why do so many people vote Republican even when it goes against their own economic interests?

Because Republicans have either lied (for example, saying repeatedly that corporations will produce more jobs if their taxes are cut) or changed the subject (to abortion, gay rights, guns, and religion).

We spoke about this in a class I had, and I believe studies show that a large number of individuals vote not based on their own economic situation, but on the economic situation they wish they had. So for example, an individual votes for lower tax cuts for the rich in the hopes of one day achieving enough wealth to then benefit from said tax cuts. I hope that makes sense...

This used to be the case, because most Americans expected they'd be rich one day. But that's changing. Recent polls suggest most Americans are losing faith in this aspect of the so-called American dream. They don't think they'll be rich, and they doubt their children will live better than they do.

I've written essays on this shift in thinking concerning the American Dream being very much a symptom of our Post-Modern Media condition. With the inundation of media and information we have in this society the truth of the "American Dream" as being near delusional is becoming more and more clear to the average American. In fact, if you compare the ideas central to belief in the "American Dream" to those which the DSM-IV-TR details as being characteristic of Grandiose Delusional Disorder it becomes obvious that a belief in it is almost impossible without some degree of blinding oneself to the truth of it.

This could change of course if our economic system changes to allow for more social mobility again, but as it stands currently, economic divides are growing and it is becoming harder and harder to move up from one class in to another.

Is this disillusionment of the "American Dream" a good thing, however? Much of our country's economic strength came as result of belief in it and the hardwork attitude that it seemingly fostered. Can we still be a successful economic power without an "American Dream" ideal ingrained within our culture? Is there maybe a compromise we as a culture can make towards the "American Dream"? Or do we need to begin asking for overhaul to our own tax and economic system to make the "American Dream" an American Potential Reality again?

Edited to make it a little more readable. I have issues with being unnecessarily verbose at times, sorry

I worry that so many Americans have become so disillusioned, frustrated, and angry -- they feel they've done everything they were supposed to do yet are falling further and further behind -- that they're easy pickings for demagogues (on the right or the left) offering easy solutions and ready scapegoats (immigrants, public employees, unionized workers, foreigners, the poor, the rich, etc.)

So do you think the loss of faith in the American dream will ultimately lead to more people voting democratic?

It depends on whether the loss of faith breeds anger (see above) or cynicism (in which fewer even bother to vote), or fuels progressive change.

How would you rewrite the American tax code? What do you think the top income tax rate and bracket should be? Also, what would you suggest for the capital gains tax rate and corporate tax rate and what are your thoughts on the Buffet Rule?

I'd raise taxes at the top (matching capital gains with taxes on ordinary income) and create more brackets at the top. So, for example, income over $1 million would be taxed at 70 percent (don't freak out -- the highest marginal tax rate was above 70 percent for forty years before 1981); income between $500K and $1 million would be taxed at 60 percent; income between $250K and $500K would be taxed at 45 percent; income between $100K and $250K would be taxed at 30 percent, and income between $50K and $100K would be taxed at 20 percent. Below that, I wouldn't impose a tax. In fact, I'd begin to phase in an Earned Income Tax Credit -- a reverse income tax. Between $40K and $50K, the EITC would provide $5K. Between $25K and $40K, it would provide $8K. Between $10K and $25K it would provide $10K. What do you think?

Hi, Cal student here. Somewhat offbeat question, but - in your opinion, why should I be proud that I'm going to Cal? Or should I be?

U Cal Berkeley is the best public university in the world (in my humble opinion -- not to denigrate any other public university, of course).

I went to a talk recently where the speaker suggested that either we need to reform capitalism -- or find something to replace it. Is there anything that can be done to make capitalism "liveable" or should we be looking for the next best thing?

Making capitalism more "liveable" is an ongoing challenge. Look back on the last century and you'll see three periods during which America took it particularly seriously -- the progressive era from 1901 to 1914, the Depression decade of the 1930s, and the late 1960s and early 1970s. In each of these eras, the nation essentially saved capitalism from its own excesses. I believe we're coming up to another such period.

Which administration did you enjoy working for the most, the Ford, Carter, or Clinton administration?

I can't really say I "enjoyed" working for any administration -- in the sense of pure joy. The jobs are very hard, but incredibly satisfying when and if you can make a positive difference. In the Ford administration, I briefed and argued Supreme Court cases -- heady stuff, but I didn't do it very well. I was too inexperienced. In the Carter administration I ran the Federal Trade Commmission's policy planning staff. Great people and fascinating issues concerning antitrust and consumer protection. But the "best" was being secretary of labor. It was the hardest. It kept me up many nights. But when you're a cabinet secretary and run a big department that affects to many peoples' lives you've got an incredible opportunity to have a positive impact on society. And I was very fortunate to be able to work with some of the most talented and dedicated people -- other political appointees as well as civil servants -- I've ever known.

What's your take on the recent news about Mexican immigration reversing?

It's reversing mainly because of the lousy job situation here in the U.S. Not surprisingly, people come to the United States largely because of the prospect of getting a good job. But with unemployment so high, there's less incentive to come here.

Looking back on the Obama Administration's first term, do you think that if he had appointed more Washington outsiders (as he promised in 2008) instead of the likes of Larry Summers and Timothy Geithner, his economic policies would have been more beneficial? Or do you think that the deadlock in Congress would have prevented more progressive economic policies regardless?

I read your book, Locked in the Cabinet, a couple years ago, and given your account in the Clinton administration, even with your intelligent, progressive approach to the economy, there was a lock of deadlock and immobility...

One of Obama's biggest mistakes, to my mind, was thinking he could achieve a degree of bi-partisanship. From the start, Republicans in Congress were determined not to help or cooperate with him. In fact, they often turned against a proposal when they learned it was supported by the President.

Maybe this has been asked before but here it goes. Why do the powers that be, especially in Europe, still keep touting austerity, even though it's been proven to be a failure? Is it to bust unions and otherwise take us back to the 19th Century re: employee protections?

It makes no sense because the goal is to cut the ratio of debt to GDP, not just the debt -- but by cutting spending when unemployment is high and growth is anemic, Europe is slowing demand and worsening that ratio. I blame Angela Merkel and many German officials who even to this day are traumatized by the inflation of the Weimar Republic. (They weren't alive then, but German economic policy has been shaped by that memory.)

But the German economy has been doing fine since its austerity measures in 2009. Why blame Germany for its success?

Germany doesn't admit it, but the euro has been a boon to it. The euro is undervalued when it comes to Germany and several other northern European economies -- but overvalued for Greece, Italy, Spain, and Portugal. As a result, the latter are less competitive than they should be (and would be if their currencies reflected the real value that trading partners put on their goods and services) and the former -- especially Germany -- more competitive than they'd be without the euro.

coming from a german :). do u think as well though, that too "loose" spending by the european governments/ the european central bank or the EU bares the danger of new bubbles (as: spanisch housing bubble). And how would u approch this discrepancy?

I don't believe inflation is nearly the problem Germany and some other European governments believe it to be. When so many Europeans are unemployed or under-employed, and when so many factories and offices and other facilities are underutilized, price pressures are nearly non-existent. The biggest challenge is recession. Spain and Britain are already officially in recession; I expect the rest of Europe is, too. Under these circumstances, fiscal austerity is, frankly, nuts.

Among "real" progressives (not just Democrats), who has the best shot at winning the presidency in 2016?

If Hillary Rodham Clinton is still interested, she's a shoe-in in 2016 (assuming Obama gets a second term). She's done an excellent job as Secretary of State, in my view, and her "favorabilities" -- Washington-speak for how well-liked she is by the electorate -- have soared to around 65 percent. That's very high for a Washington hand. (I also happen to think she'd do a great job as president.)

I am fascinated by the fact that people get so angry - at least in the Western PA small town I live in - about people who are on assistance. They feel as though they shouldn't have to be paying for their food, housing, etc. But there is precious little I have been able to say, to get their dander up about the money we all have spent on, say, Wall Street. Nor do they seem to understand how even they are on the govt dole so to speak if they own a home etc. What is going on here?

First, most people have become so accustomed to safety nets like Social Security, Medicare, and government-subsidized mortgage loans that they don't even see it as government action. (Remember the Tea Partiers who demonstrated against Obama-care, carrying signs reading "Don't Take Away My Medicare"?). Second, I think the typical American is genuinely frustrated and angry about his or her economic predicament (see my comment above), and is easily persuaded that government (or someone else who gets direct government assistance) is to blame. Third, many of us forget that we or a member of our own family could become needy. We assume the needy are "them" rather than "us." We're wrong, of course.

Thanks for doing this, professor! What do you think it would take to actually put people in jail for breaking laws during the financial collapse? There seems no disincentive for banks to keep gambling with the most risky and dangerous financial products.

All it requires is for one major CEO of one major bank to go to jail. That would shock the Street to its senses.

The question is why the Justice Department hasn't yet prosecuted one of the bigwigs for criminal fraud. Probably because such a prosecution would be hugely expensive in terms of lawyer time and money, and it's very difficult to prove criminal intent. Still, the prosecution itself would send an important signal.

What was one of your best experiences as Sec. of Labor-- any funny stories? :)

I have many. (I recorded most of them in "Locked in the Cabinet.") One that reverberates in my mind is Tommy the batboy. Every spring a farm club rewarded a local kid with a job as batboy (or batgirl) -- didn't pay much but it was considered a plum, and high-achieving school kids or others who did service to their communities won the prize. An overly-zealous Department of Labor inspector decided the award was a violation of the child labor laws, and insisted that it be rescinded. Tommy and his family were crushed. I heard about it when the ABC Evening News called to ask how I justified the decision. I met with my top assistants to try to come up with some reasonable response. Suddenly it dawned on me that I was the secretary of labor and I didn't need to get consensus -- I could do what I thought was sensible. So I phoned ABC News, told them the Department had been "off base," I restored Tommy's job, and had the Department issue a new rule exempting bat boys (and girls) from the child labor laws.

What is your opinion of your generation, the baby boomers? They are often blamed for a lot of the problems, and are seen as an incredibly selfish generation. I think this is true for most baby boomers (not all obviously). Just wondering your opinion on the subject. Thank you for doing the AMA. Your book Aftershock was great!

I try to avoid generalities about entire generations. I don't believe them. Sure, cohorts brought up in different times -- under different parenting philosophies, and different economic conditions -- tend to behave differently in certain respects. Many of the boomers were brought up under the aegis of Dr. Benjamin Spock, who rejected the strict child-rearing practices of the previous generation (who, in turn, were brought up by parents who lived in the shadow of the even stricter Victorian era) in favor of a far more permissive and respectful form of parenting. Did that make us more selfish than other generations? I don't believe so. (Thanks for the kind words about "Aftershock." Hope you get a chance to read the newest.)

How do you get good unbiased regulation of complex industries/ financial included when the only people who are writing the regulations are members of the industry itself?

You can't. That's why it's so important to limit lobbying, and slow or stop the revolving door between regulators and the industries they're regulating.

Why do you think the U.S. still has a problem with Communism? It's an economic philosophy that, in the works of Lenin and Marx actively disavows the expansionist actions of Stalin and his successors, which should be really be termed Sovietism. I sent this question to O'Reilly as well. @GenialityofEvil - Twitter

O'Reilly didn't call me a "communist" because he has a problem with communism. I doubt he even knows what communism is. Hell, how many true communists are left in the world? He uses the term as an insult, the equivalent in his mind of "asshole." The United States is in a completely different place than it was in during the 1950s, when Senator Joe McCarthy's communist witch hunt ended the careers of many innocent people. We considered communism a terrible threat, because the Soviet Union was said to practice it, and the Soviet Union was a threat.

If the US keeps off-shoring or bringing in h1 employees in an area like software development what is the motivation for someone to get a degree in computer science.

Under the H1B law and other related laws, employers can bring into the U.S. non-US employees only to fill jobs for which no American is readily available with the right skill sets. In other words, the program shouldn't be administered in a way that undercuts the wages of Americans. Unfortunately, many in the business community have been pressuring Congress and the administration to administer the law far more loosely.

Yesterday on MarketPlace (NPR/American Public Media), they were discussing this Pocket Book formula for determining the next Presidential election. In a nutshell, it stated that a bad economy bodes poorly for the incumbent. Have you heard of this formula? What do you think America needs to move forward in this election?

Reams of data show a strong correlation between how the economy is doing in the months leading up to an election and who's elected. If the trend is positive, the incumbent has an excellent chance. If not, the challenger almost always wins.

Can you please address this little matter that my right wing friends keep bringing up about $6.307 trillion in public debt being added by the previous 43 presidents (1789-2009) while the projected public debt added under President Obama in one term is $6.477 trillion?

They're playing with numbers. First, if you adjusted all these numbers for iinflation and for the size of the economy you'd see that the biggest federal debt over the last century was racked up under FDR during World War II. In 1945 the debt/GDP ratio was about 120 percent. How did we get out of that? Not by cutting government spending all that much; we went from World War II into a Cold War, a Korean War, and more Cold War. We rebuilt Europe and Japan. We constructed an interstate highway system. We vastly expanded public higher education. Yet the debt/GDP ratio dropped dramatically in the 1950s -- because the economy grew. The GDP exploded, so the ratio came down. That's what's needed again. And when I say "growth" I'm not just talking about material goods -- I also mean the capacity to spend on health, education, infrastructure, parks, the environment, and so on.

You say in Aftershock that consumer spending accounts for 70% of the economy. Some people say it's actually closer to 40%. Can you clear up this discrepancy?

Consumer spending is 70 percent of economic activity -- in terms of aggregate demand. But measured another way -- looking at every intermediate good, for example -- it's a smaller portion. The advantage of measuring it as a portion of aggregate demand is that to my mind it provides a more realistic assessment of the central importance of consumer spending in the economy.

In your books you seem to focus heavily on public investment, but it seems to me that the same services could be achieved by a tax rate that redistributes wealth so that poorer individuals can actually buy those goods (education, healthcare, housing, etc) for themselves. Given the current unpopularity of the US government, I feel like that would be a more effective political strategy. It could even win over some small-government libertarian types. Do you think that public investment is a better strategy than redistribution?

Depends on the service. We already have a voucher system for much of Medicare and for an increasing portion of public education (in the form of charter schools and other alternatives). It works okay for education, generally, although the record is spotty. With healthcare, though, our system of multiple private for-profit insurers and multiple competitive providers has proven to be incredibly wasteful and complex. We're spending almost 18 percent of GDP on healthcare, and yet we have among the worst healthcare outcomes among all rich countries -- most of which are spending a far smaller portion of their economies on health care. Most of them are single payer systems.

Do you think that a leveraged buyout is a legitimate form of creative destruction?

I worry that the social costs of levareged buyouts -- mass layoffs, deeply-indebted corporations, corporate abandonment of entire communities, economic fragility stemming from over-leveraging -- may outweigh the social benefits.