MS. DIANE REHMThanks for joining us. I'm Diane Rehm. The Senate has confirmed Janet Yellen as Fed chair and advanced a measure to extend unemployment benefits. But Congress is just beginning to tackle its 2014 agenda. Other items at the top of the list: negotiating the debt ceiling, passing a farm bill, and prospect for immigration reform. Joining me to talk about what we can expect from the House and the Senate this election year: Susan Davis of USA Today, Byron York of the Washington Examiner, and William Galston of the Brookings Institution. And welcome to all of you.

MS. SUSAN DAVISGood morning, Diane.

MR. BYRON YORKHi, Diana.

MR. WILLIAM GALSTONGood to be here, Diane.

REHMGood to see you. Byron York, yesterday the Senate passed a hurdle which ultimately could allow them to extend the unemployment benefits for 1.3 million people. How successful do you think both the Senate and the House will be in getting this through?

YORKI think it's ultimately going to pass because I think Republicans are ultimately going to find a way to support it. I think, in the last few days, we saw a number of Republicans who had previously said they oppose this say, well, in fact, I don't really oppose extending unemployment insurance benefits. I just think they should be paid for. So that changes the issue into finding some method to pay for it.

YORKAnd then there's one other Republican wrinkle we're going to see. A Republican talking point is that the answer for unemployment is not unemployment insurance -- it's a job. Well, they'll have some job creating ideas which they will want to trade for extending unemployment benefits. You put all that together in some sort of mix -- and the details are not clear yet -- I think you're going to get passage of unemployment benefits.

REHMAll right. Byron York, hold those thoughts. We'll get back to you in just a moment. First, joining us from Capitol Hill, House Democratic leader Nancy Pelosi. Thanks so much for joining us, Leader Pelosi.

REP. NANCY PELOSIGood morning, Diane. My pleasure to be with you.

REHMSo glad to have you with us.

PELOSIThank you.

REHMYou've said that Republicans acted cruelly by failing to extend unemployment benefits before leaving Washington for the holiday. Do you believe they'll move forward now?

PELOSII certainly hope so. It was really hard to understand how we could have a Congress that would allow the benefits to lapse on Dec. 28 -- Scrooge lives. And, yeah, it was cruel. I'm hopeful, though, with the action taken by the United States Senate, that we will be closer to passing that extension, which we have done over and over again in an unpaid for fashion in the past, because it does qualify as an emergency. But I commend the Senate.

REHMNow, Republicans are demanding that it be paid for. Do you see that as a total obstacle, or can money be found to pay for that extension?

PELOSIWell, let me just say that rarely have these benefits been paid for because people have paid into it, as an insurance, unemployment insurance. However, I will say this: I think we should just pass a three-month extension -- and that's what's being discussed -- and then in the course of that three months discuss how we approach the longer term, which is what we do over the next year.

REHMAll right.

PELOSIThe Republicans have some suggestions about how to offset this that is not harmful to the same people we need to expand prosperity for. That would be one thing. Let me just say, though, because the Republicans have said it should be paid for, how do you suggest to pay for it? That should be job creating.

PELOSIWe tried to pass many job creating bills. In fact, with our budget we wanted to include infrastructure, which is a very fast way to create jobs. I hasten to add also that economists will tell you that unemployment insurance is one of the fastest way to inject demand into the economy because the money will be spent immediately. It injects demand, creates jobs, grows the economy.

REHMAll right.

PELOSIWe do want a positive initiative. But you can't keep moving a goal post saying it has to be paid for, and then it has to have a jobs bill. Well, we're all for that. But if a jobs bill is defined as a tax cut for the high-end or special interests, which is what is being suggested, that's not really a fair standard for doing something that we in fact owe workers who've lost their jobs through no fault of their own, who've paid for home -- insurance has been paid into the system. But, you know, let's be optimistic. Let's say yesterday was a very positive day. Let's see what suggestions people have.

REHMAll right.

PELOSILet's try to find common ground, and let's do it quickly because -- and hopefully retroactively so that these families will be made whole as they seek jobs.

REHMAnd speaking of retroactively, there's lots of looking back 50 years ago to Lyndon Johnson's war on poverty. However, today you hear Republicans accusing Democrats of using the issue of income inequality to turn political focus away from what they see as a failed healthcare law. How do you respond?

PELOSIWell, first of all, with all due respect to my Republican colleagues, that is as political a statement as one could make. First of all, the war on poverty, it's important for us to observe it in our colleagues who are under the leadership of Congressman Barbara Lee and the Congressional Black Caucus today. But we'll all be joining in commemorating that important decision on the part of the Johnson administration, "A."

PELOSI"B," income inequality has exacerbated over that past 50 years. It has gotten worse. Fact is, fortunately, we have some safety nets that were in there for the poverty program, but, say, 40 years ago the difference between the income of the CEO and the average worker was about 40 times was the disparity. And as productivity increased, the wages increased, as did the income for the CEO as productivity increased. And that was a fair dynamic.

PELOSINow, the disparity is more like 350 times difference between the CEO and the worker in many of these same companies. And that disparity, even though productivity is increasing, the CEO pay has increased, but the workers have plateaued out. And that causes -- as I say, it's a right angle going in the wrong direction. So this is an issue. Income disparity is something we must address. We have an initiative called When Women Succeed, America Succeeds.

PELOSIBecause the fact is that many women are victims of this disparity. Sixty percent of women make the minimum wage. So part one of our agenda is about pay. Raise the minimum wage and Pay Equity Act, equal pay for equal work. Another part of it is paid sick leave. And we have legislation to address that. And the third part is early childhood learning, childcare. Very important to unleash the power of women in the workplace. They're paid fairly, they can be treated fairly in terms of sick leave, and they have childcare. That's helpful for men and women, but very important for women.

REHMWe have only a few moments left, and there are a couple of other issues I'd like to get to. Just before the Christmas break, Speaker John Boehner talked about inflexible conservative groups. He lashed out at those who simply saw issues in one way and no other. Previously, he criticized only those Democrats who were, as he saw it, inflexible. Which John Boehner do you expect to be working with, number one? And, number two, do you believe he will remain Speaker of the House?

PELOSIOh, absolutely do believe he will remain speaker of the House. I don't know which John Boehner it will be. Time will tell. I don't know whether that was good theater or a change in emphasis in the Republican Party, but it's important to note that, in large numbers, 80 percent of Republicans in the House voted against Sandy aid. Ninety-seven percent of the Republicans in the House voted for a $40 billion cut in food stamps. Nearly two-thirds of the Republicans voted against some of the budget bill.

PELOSISo it isn't just a few. You know, people say, oh, it's 30 or 40. It's tail wagging the dog. No. It's many, many more. But let's just say we have a new year, a fresh start. Let's hope that we can work in as bipartisan a way as we can and that the speaker will use the awesome power of the speaker to bring an immigration bill to the floor, a bill to raise the minimum wage.

PELOSIAll of these are very popular with the public, in the 70 percents. Background check bill on gun safety and the rest, let's hope that public sentiment being important, that what we do in the Congress reflects public sentiment. And public sentiment wants us to work together to get the job done.

REHMAnd what about the Farm bill? Do you believe it will come before the House?

PELOSII think so. The speaker has said, if they came to an agreement, they would bring a bill to the floor. So I'm optimistic that that can happen soon. We need a farm bill for our farmers, for our nutrition programs, for our economy. It's really important for not only farmers but for our entire economy. But it is very important for our farmers, so hopefully we will have that, and we will have it soon.

REHMHouse Democratic Leader Nancy Pelosi, thank you so much for joining us.

PELOSIThank you, Diane. My pleasure, Diane, thank you.

REHMAnd short break. We'll be right back.

REHMAnd now turning to the guests in our studio: Byron York of the Washington Examiner, Susan Davis of USA Today, William Galston of the Brookings Institution. He's a former policy advisor to President Clinton. I have an email question here. "Is it true that all U.S. workers pay into unemployment insurance, and all are entitled to it under what circumstances?" Isn't it true, Byron York, that it's the employer who pays into unemployment insurance?

YORKIt is, and that's part of the Republican argument against extending it, which is that it penalizes these small businesses that have to pay that, the other one being is that Republicans have made an issue of dependency for years and years. And they worry -- they cite some studies to say that extending unemployment insurance is a disincentive for people to apply for a job because some people on unemployment insurance do sort of put off ramping up their search for a job until after the benefits are over. There's a lot of controversy about those studies, but that's what they say.

REHMBill Galston, how do you see it?

GALSTONWell, first of all, unemployment insurance is not as widely available as many people believe. This is a joint program between the federal government and the states. The states have different regulations from state to state, and so the percentage of unemployed workers who actually qualify for unemployment insurance also varies wildly from state to state. And that percentage has been going down over time.

GALSTONHaving said that, the ratio of job seekers to jobs available is still much higher than it is in normal economic circumstances. And in these circumstances, it's going to be, I think, particularly difficult to make the argument that if you simply took away extended unemployment insurance benefits that people would suddenly surge into the workforce to find jobs that in many cases are scarce to nonexistent in most of the areas where they live.

REHMAren't there some requirements that those receiving unemployment insurance must verify that they have been searching for jobs?

GALSTONYes. And my understanding is that many Republicans would like to strengthen those requirements and...

REHMHow?

GALSTONWell, within reason, it seems to me, it would be possible, for example, to talk about enhanced job training after a certain length of time, as both Republicans and some Democrats have. So I think there are ways of talking about sensible job preparation and job creation reforms of the unemployment system.

REHMSusan Davis, I asked Democratic Leader Pelosi about John Boehner and which one we're likely to see. What are the indications you as a reporter are getting?

DAVISWell, I would say that one of the leading things that, I think, has drawn a lot of attention is his decision to -- on the issue of immigration and which John Boehner are we going to see. And one of the signs that we've seen is that he's hired a former John McCain aide who is aide at the Bipartisan Policy Center who has been sort of a policy advocate for a broad integrated immigration approach. And he has said publicly that he is still very open to doing something on immigration. He has said that he is not interested in doing the kind of comprehensive one huge package that the Senate has moved.

DAVISBut he's very open, at least publicly, and the move of hiring the staff and the private conversations he's had with lawmakers suggests that he is trying to get some kind of legislative product this year. And in trying to get a legislative product, he is going to have to continue to take that hard line that we heard from him about these outside groups who are going to be very forceful against probably any kind of immigration action, particularly if it comes down to what to do with the illegal immigrants that are residing in the U.S. currently.

DAVISSo we'll see, but in the early indication, you do get the sense that John Boehner would like to have as productive a legislative year as possible, particularly considering coming off the year we just had which was one of the most unproductive in recorded history.

REHMAnd coming up to election in November, Byron York, do you see real bridge building going on?

YORKNot at all. Look, as far as the Boehner rant that he went on last month about the outside groups, I think that was very, very specifically residual anger over the shutdown. He felt that he had been backed into a corner by these groups, leading the party into a disaster strategy and the shut down, and it was the groups. And it was very interesting to hear Nancy Pelosi say that she felt that many, many, many Republicans were like that. Well, a lot of Republicans believe it was really 30, 40, 50 Republicans -- members of the House Republican caucus who were pushing that.

YORKAnd the other thing is the anger at some of the outside groups that are pushing primaries against Republican lawmakers. I mean, the Senate Conservatives Fund is spending about a million dollars to oppose Mitch McConnell in Kentucky. And there are a lot of Republicans who are very, very angry about that. So I think when you hear Boehner, he's not saying, we're going to work with Democrats a lot. I think he's just really mad at some of these Republicans.

REHMBill Galston.

GALSTONI totally agree with that assessment, but I also think that in areas where there's real public opinion in favor of legislative action, I think that Speaker Boehner would like to try to get to yes if at all possible. And immigration is a very good example of that. He's not going to go for comprehensive immigration reform. On the other hand, with a majority of grassroots Republicans and independents as well as Democrats in favor of immigration reform, including by the way a pass to citizenship, I think the speaker has to show some action in that area. And he's going to try to do it step by step.

REHMWhat kind of steps?

GALSTONWell, the standard formula is to try to break up comprehensive immigration reform into discrete pieces like border security, employer-based verification of work status. And then, and perhaps only then, take on the question of the legal status of the 11 million now in the shadows.

REHMBut do you see Democrats going along with that step-by-step?

GALSTONNot necessarily unless there's a guarantee at the end of the day that whatever the House does will get to a conference with the Senate. And that, I think, is going to be the sticking point because a lot of House conservatives are afraid that they're going to get caught in that conference trap if they're not careful.

REHMSusan Davis, Leader Pelosi also talked about income inequality. And she especially focused on women who still currently are in 77 cents on the dollar versus men. Do you see any movement in that direction trying to raise the minimum wage?

DAVISI don't because I don't think that it's something that can pass a divided Congress. But I do think it's very interesting substantively how we've seen both parties shift to this conversation about poverty and income inequality. And it's the first time we've had both parties engaged on that topic level in quite some time.

REHMDo you think both parties are fully engaged on that topic?

DAVISWell, I think that we're at the beginning of it. I mean, Democrats and President Obama just started talking about how he wants to make income inequality the issue of 2014. Paul Ryan on the right has said he wants to make poverty -- the war on poverty sort of one of his next great policy issues. Marco Rubio, another potential presidential candidate, is giving a speech today on poverty and how to address it in which he's expected to declare Lyndon Johnson's war on poverty a failure and offer a conservative vision about how to help people in this country.

DAVISI do think, as you already eluded to, that we are entering an election year. I think so much of this is about message and appeal and trying to tap into voters who are very frustrated, not only at Washington but at Congress in particular.

REHMByron.

YORKI think some Republicans are kind of amazed at how quickly the president has been able to turn this conversation to income inequality. He gives a speech on December 4 and he basically says not only will inequality be an issue for the rest of this year but for the rest of his presidency. He says it's going to be the major issue of that. And believe me, for most Republicans it's still Obamacare, Obamacare, Obamacare.

YORKReince Priebus, Chairman of the RNC, had a conference call yesterday to announce commercials they're now running on radio in a number of vulnerable Democratic states and districts. And it's all about the president promised you could keep your health plan and you can't. And this particular lawmaker also made that promise, and they lied.

YORKThis is going to be -- there's a division inside the Republican Party between those who want to push Obamacare 24/7 and those who are trying to change the Republican Party's image. It's not an accident that Paul Ryan and Marco Rubio and Rand Paul are all talking about inequality, poverty, various issue related to that. They want to soften the Republican Party's issue because they want to run for president.

REHMTo what extent is continuing to harp on the Affordable Care Act going to ring well with the American people, Bill Galston, especially those who have already signed up?

GALSTONWell, the survey research indicates pretty clearly that the American people do not want to spend the next 12 months arguing about the Affordable Care Act. They would prefer to talk about the economy and the way the economy can function better for them. So even taking into account the people who haven't yet signed up or haven't yet benefitted or don't know how the Affordable Care Act is going to affect them, there is a widespread public desire to put first things first. And for the American people right now the performance of the economy for average households is that first thing.

GALSTONHaving said that, I think that we may be on the cusp of a more productive discussion. Let me put it this way. Republicans historically have liked to talk about growth. Democrats have focused on inequality. But there's an issue that could unite the two political parties, namely opportunity and mobility. And if we spend the next 12 months or the next 3 years arguing about the restoration of opportunity and social mobility in this country, we will have spent our three years well.

REHMAnd, Susan, do you believe that the American people -- what are USA Today's polls indicate about the American people and the Affordable Care Act now?

DAVISWell, the polling on this has been all over the map in part because of the website failures.

REHMSure.

DAVISAnd I think one of the issues that is going to continue through 2014 is this very basic concept -- and basic concepts do well in elections -- that the president made a promise and it didn't -- it wasn't true. And I think that that is a very salient argument that we're going to continue to hear from Republicans. And I don't -- I think this goes beyond just what Republicans need to say or campaign on.

DAVISI think the implementation of health care and how Americans feel it has changed their lives positively or negatively is going to be a hugely motivating factor in 2014, outside of whatever message you're hearing from Washington. And you hear it when you travel and talk to people who are being affected by the law. I think it's going to motivate them to vote either in support or in opposition. And I would say this even about income and inequality. We do live in a time right now where I think that whatever the latest pivot is we think is going to be the next big issue, and the topic changes very quickly.

DAVISAnd I would just think that this time last year we had started a Congress talking about gun legislation and how guns was going to be the big legislative issue of the year, and that kind of fell to the wayside. So I'm a little bit skeptical that income inequality is going to be this prevailing argument over the next year, but it remains to be seen.

REHMSusan Davis, congressional correspondent with USA Today. And you're listening to "The Diane Rehm Show." Byron, you mentioned Reince Priebus. He was on CNN yesterday excoriating Hillary Clinton because he believes she will be a candidate. If she is apparently he and Republicans are already positioning themselves not so much for this congressional term but really looking toward the 2016 presidential election.

YORKAbsolutely. I'll go back to something Bill said just a minute ago about jobs. John Boehner had his first press conference of the year this morning. And he said, our focus will continue to be on jobs. And there are a lot of Republican strategists who are urging every Republican, not just the Speaker of the House, not just legislative leaders, but the guys who want to run for president that the focus has to remain on jobs.

YORKAt the same time though, they do view Hillary Clinton as a target-rich environment, not just with Benghazi or her performance as Secretary of State but going all the way back to her time as first lady. But we're talking about a woman who entered national prominence. It will be, what, 24 years ago come 2016. So they feel like they have a lot to talk about. And clearly if she runs, they're betting that she's going to be the nominee.

REHMAnd they're going to start talking about her right now, Susan.

DAVISI mean, I feel like they've been talking about her.

REHMAnd we'll continue to do so even through the 2014 elections?

YORKI think so but -- and let me speak now as a citizen and not just a scholar and a political analyst. I hope we're not getting into a frame of mind here in Washington where we're writing off the next three years and just waiting for the presidential election and the next president because the American people really can't wait three years for something better.

REHMThey're in the here and now.

YORKThey're in the here and now, and the fact that so much of Washington is looking forward to January of 2017, I think, is a huge problem for the country.

REHMAll right. I'm going to open the phones now, 800-433-8850. First let's go to Pat in Portsmouth, N.H. You're on the air.

PATHey, I just retired from the military after 20-plus years, and I'm -- my family runs a small farm. I'm actually on my way to one of my two jobs to support -- to make a difference between my pension and what our costs are with the farm and other things. And I guess I'm pretty irritated that there's so much worry about extending unemployment benefits that have already been paid out for another three months or so at the cost of $6 billion, which just happens to be what they are going to save over 20 years by taking over $120,000 out of my pocket from my military pension.

PATAnd I guess it irritates me that there's so much time being spent talking on other things when, you know, I think that people should be outraged that combat vets like myself are having the game changed and the goalposts moved.

REHMAll right, Pat. And I want to thank you for your service. Byron.

YORKWell, that's a good reminder of something that's just sitting out there and is probably going to be changed in some way. It was a feature of the budget deal between Sen. Patty Murray and Paul Ryan, the House Budget Committee chairman. And, by the way, one of the things we haven't talked about that Congress has to do is they actually have to pass appropriations bills to set out the spending under that agreement.

YORKBut one of the things that emerged almost instantly from that is one of the ways they spend money is trimming military pensions over the years. And I do not believe that it will be politically defensible to do that in the coming year when you have stories like Pat's right now of people who have active duty service who are having their pensions cut.

REHMSusan.

DAVISI think one of the -- I agree with Byron completely in that we are probably going to see this come up again. Mitch McConnell yesterday offered -- suggested that they do something on the UI bill for it. What I think the problem is is they did not do any kind of carve-out for combat vets. And I think that there needs to sometimes be a distinction between military employees and combat veterans.

REHMSusan Davis of USA Today, Byron York of the Washington Examiner, Bill Galston of the Brookings Institution. Short break, we'll be right back.

REHMAnd we're looking at what's coming from the Congress in the year to come. Byron York is the chief political correspondent for the Washington Examiner. Bill Galston is senior fellow of governance studies at the Brookings Institution, a former policy advisor to President Clinton. Susan Davis is congressional correspondent with USA Today. Let's go to James in Cleveland, Ohio. You're on the air.

JAMESGood morning and Happy New Year to everyone.

REHMHappy New Year to you, sir.

JAMESThank you for taking my call.

REHMSure.

JAMESAnd just a couple quick things, I'm going to be very quick. My first -- actually I have a question and then I want comments from everybody on something that segues to it. How can the panel help we, the people who are listening to your show, corroborate this thing about -- you know, by going to certain websites and studies, what have you, seeing the people who are waiting for their unemployment to run out before they go look for a job.

JAMESNow I'm going to essentially say why I ask this question. I was listening to something recently -- it was a program on Finance Channel -- and the gentleman they were talking to was from North Carolina, and he said they had a ceiling of $300 for unemployment, OK. Here in Ohio, we get half of what we earn up to a certain level, and I don't know the scale for that.

JAMESAnd then I have a friend that was in the plain states and he said they got one-third. So if we have this crazy disparity in how much we're all getting paid unemployment, how is it that some of us could sit so long supposedly and, you know, just live off of this money, which is in some cases half or a third of our income?

REHMAll right, James. And let's see if Bill Galston can address that.

GALSTONWell, those are all very good questions. Just a couple of points. First of all, unemployment insurance is not a purely national program. It was set up as a partnership between the federal government and the states. And each state maintains its own unemployment insurance fund. And states have different regulations, as the caller just pointed out about how long the state benefits will last, what the level of payments will be, to some extent what the terms and conditions are.

GALSTONAnd then the debate we're having now is about federal benefits put on top of the state benefits, federal benefits that are paid for out of federal resources and not out of any of the unemployment insurance funds.

REHMSo James is right, yeah, yeah.

GALSTONHe is absolutely right. And there are many people who think that maybe this federal state arrangement has outlived its usefulness, but I don't expect it to change any time soon.

REHMAll right. And to Ira in Jacksonville, Fla. It's your turn.

IRAThank you, Diane, for taking my call.

REHMSure.

IRAI have a little bit of a contrary opinion of one of your earlier callers. I'm a U.S. Army Airborne retired. And while I'm upset that part of my cost of living was given away, I would've been more happy and more supportive as a soldier and a citizen if the Pelosis and the Boehners of the world would've taken a more strategic comprehensive view and did cost of living decreases on, for example, all federal retirees. Maybe done cost of living reductions in Social Security and Medicare and welfare benefits.

IRASo I don't have a problem giving up part of my retirement but I would like it to be a more comprehensive shared sacrifice. And one thing I've noticed since Tim Russert died, very seldom do you have the Pelosis and the Boehners sitting side by side on a great show like yours talking about comprehensive statesmen, stateswomen type solutions. Thanks, Diane.

REHMI'll do my best, Ira. Susan Davis.

DAVISI think the caller makes a really good point and again touches on how sensitive this military retirement provision has been. I will say that federal workers have been on the receiving end of significant COLA cuts, pay freezes to the point that that was a huge issue in the same budget deal that created the military cuts in that congressmen like Barbara Mikulski and Chris Van Hollen represent a lot of federal workers defended them saying, they have been cut the most while we have protected a lot of military workers.

DAVISI will say that of the people that receive military retirement benefits, less than 40 percent -- or about 40 percent have served some form of combat. And I think that most people have a view that those combat veterans are a different carve out than someone who is essentially a federal worker but happens to be working at the Pentagon and that the Pentagon has been protected significantly from the budget axe and that, if you are serious about the debt and need to look at places to make cuts, the Pentagon cannot be entirely protected and the source of military pensions is a huge funding source and where federal pensions have been changed.

DAVISFederal workers for the most part do have to contribute more to their pensions. They have been cut and reduced in previous budget negotiations. And this was the first budget agreement that even attempted to touch military pensions and we see how volatile the issue is.

REHMBill.

GALSTONThe problem is that we're having a short-term discussion about a long-term problem. You talk to people in the Defense Department, and they will all tell you that the military budget is being eaten alive by benefits. In the long term, we're going to have to address that problem. But here and now, what we're finding out is how difficult it is to change benefits retroactively rather than prospectively.

GALSTONAnd so if we were having the long-term discussion, we could talk about changing the terms for people who are going to be entering the military. But taking away things from people who have served is very difficult politically and, I think, morally.

REHMByron.

YORKWell, you're absolutely right about the benefits thing. I mean, it is interesting about the Pentagon budget and the benefits. This is, by the way, a result of something happening that a lot of Republicans didn't want, which was opening up the sequester cuts. They were there -- there were a number of Republicans who said, leave them there. It's the first spending victories Republicans have really had. It's the law. In a sense, like when they used to say Obamacare is the law, the sequester was the law.

YORKBut it was because of Pentagon cuts that a lot of Republicans wanted to open it up and start this whole thing. The thing about the sequester cuts is that they did fall on everybody. Yes, they fell disproportionately on the Pentagon but there are a lot of things in the Defense Department that are not personnel costs that could be cut.

REHMAll right. To Jerry in Baltimore, Md. Hi there.

JERRYGood day, Diane. Thank you for taking my call.

REHMSure.

JERRYBack during the Depression -- and I don't know exactly which speech, but Roosevelt made a speech to the nation basically saying, if private industry won't do it, the government will. And there we got, you know, the job programs and the stuff for the parks. So, you know, I really wonder how it cannot be a fiscally conservative idea that even, you know, the Tea Party can get behind to raise the minimum wage to what the restaurant workers ask for, $15 an hour.

JERRYThat will immediately -- and at that point what everybody's making. It doesn't have to, like, come all of a sudden next year. They can do it over three years, but that will kick thousands if not millions of people off of food stamps, other government subsidies...

REHMOK. Jerry, I get your point. Susan Davis, how much of a chance for raising the minimum wage in this election year?

DAVISI see almost none, and in no small part, because Republicans control the House and John Boehner in particular as speaker, John Boehner has been his entire career relatively forcefully opposing the minimum wage. And he will sight his own family background as small business owners and bar owners.

DAVISAnd he will make the argument that most of the people, in his view, on minimum wage are temporary workers, are young workers. And that if you raise the minimum wage it goes to what Bill was talking about earlier is the job equation. There'll be fewer jobs available because employers will not want to hire as many people.

REHMThat's the argument.

DAVISThat's his argument.

REHMBut how true, how filled with fact is that argument today, Bill Galston?

GALSTONWell, look, there is research that goes back to the 1990s suggesting that moderate increases in the minimum wage do not have a measurable effect on job creation or job...

REHMA negative effect.

GALSTONA negative effect. A lot of people have questioned whether that research is still as valid today as it was in 1993. And it's also the case that numbers matter. Increasing the minimum wage in three years from 7.25 to 10.10 which is $10.10, which was one of the proposals on the table, is probably consistent with very modest levels of job loss, if any. Fifteen-dollars an hour would have an immediate ripple effect through the restaurant industry, the sorts of industries that John Boehner's particularly concerned with. So...

REHMBut don't restaurants have to have waiters and waitresses? Why would it negatively impact them?

GALSTONWell, the question is, how many of the fast and moderately slow restaurants that now populate, you know, urban strips all across America would certainly go out of business because they're operating in such small margins that they couldn't afford to pay 15 or even $12 an hour? These are questions that we need to pay some attention to.

GALSTONHaving said that, the president that I was proud to serve, Bill Clinton, campaigned on the premise that if you're working full time, you shouldn't be living in poverty, and neither should your family. And I think that moral principle is as good today as it was then and we have to find ways of honoring it.

REHMByron.

YORKWell, the minimum wage has popped up and down over the years, and its real purchasing power has popped up and down over the years. I think the highest was maybe in the late '60s, was about $10 in today's money. And it is $7.25 right now. But I don't think there's anything -- any doubt at all, if you listen to what Bill just said, that there's widespread agreement that if you raise it too much you do stifle economic activity and you end up hurting people. So then it becomes just a question about how much it goes up.

YORKNow the minimum wage, I believe, went up in '07, '08 and '09. It stepped up then. And so perhaps it could go up a little bit now but I think Republicans who are arguing against this -- especially since the caller mentioned $15 an hour, I think they're going to win.

REHMBut what about Bill's statement of the moral argument, that those who hold down a full time job or even two should not be living in poverty?

YORKWell, I mean, the current minimum wage, I think that gets you above the poverty level. I mean, the poverty level's incredibly low.

REHMUnh-unh. Unh-unh.

YORKWell, yeah, take the current minimum wage, multiply it by 40 and then by 52 and you get a little bit above the poverty level. I think you get about $15,000. Is that correct?

GALSTONWell, your math is good but...

YORKAnd the poverty level for an individual is about 11,000 something.

REHMYeah, but if you've got a family...

GALSTONThat's the point, that if you're working at McDonald's 2,000 hours a year full-time, you know, 50 times 40, you -- your family is going to be below the poverty line. And so what we're really talking about is how to honor the value of work, what balance of minimum wage, earned income tax credit and other benefits packaged around work will honor the basic principle.

REHMYou've already heard Susan Davis from her reporting indicate that it's unlikely that this Congress is going to take it up. Do you agree with that?

GALSTONI'm in no position to challenge Susan's reporting, but I will say this: I think the Republicans would be making a political mistake, as well as a moral and economic mistake, if they blocked any reasonable adjustment to the minimum wage.

REHMAnd you're listening to "The Diane Rehm Show." Now to Ormond Beach, Fla. Tomasina, you're on the air.

TOMASINAYes, thank you. Republicans know that they look bad by not extending the unemployment insurance and by opposing raising the minimum wage, so they're very acute. They flip the script for distraction. Now it's Obama's fault there's not enough jobs. Two years ago, President Obama had an excellent infrastructure job bill, and the Republican's opposed it along with other measures that he put forward. But, you know, when George W. Bush unnecessarily cut taxes, most of those cuts were for corporations to create jobs. They didn't.

TOMASINAI know. I worked for a well-known resort timeshare in Ormond Beach. After Bush's tax cuts, my company made one worker do the job of two or three, raises and Christmas bonuses stopped. There were no jobs during Bush's Administration. It was common to see hundreds of people standing in line around the block for 20 or 30 jobs. The bottom line, tax cuts do not create jobs. The rich just get richer and more greedy.

REHMAll right. Thanks for calling. Tax cuts do not create jobs, Byron.

YORKWell, I think what you're going to see Republicans saying, certainly the context of the campaign, is that pushing for an increase in emergency unemployment insurance in the fifth year of an economic recovery tells you something about the economic recovery and that it's not going very well. I think one of the bigger questions that emerges from the caller's call is, how much is this Obama's economy and how much is George W. Bush's economy.

REHMSusan Davis.

DAVISJust wanted me to solve that question right now?

DAVISI mean, clearly the caller has a very strong view about this. I think that -- I will say largely to the issue -- I will speak more broadly to the issue of tax reform and what do they want to do with that. I think there was, in the beginning of this Congress, a somewhat earnest and real push to try and do something big and bold to overhaul the tax code both on the corporate side and the individual side, to try and address some of these inequality and job issues.

DAVISI would put that on the list of things I'm not sure is going to happen this year, but will definitely be an issue that I think we hear spoken about and fought about leading into the 2014 election. And part of the reason I -- and I think there is a possibility for this to happen because we're going to have new chairmen in the committees in the next Congress regardless of what happens.

DAVISAnd I think the tax code -- and when we talk about minimum wage and a lot of these things, a lot of this is sort of curtains to the broader issue of policy, poverty and how you fix it and the root of the issue. And the real substantive things that I think Congress can try and do are the big things, like overhaul the tax code, which I think we will hear more of a philosophical debate this year.

REHMBill.

GALSTONTwo points, Diane. First of all, I am really startled by how many Americans continue to blame George W. Bush rather than Barack Obama for the condition of the economy. The last survey I looked at still had Bush in the lead in that, you know, very unfortunate race. Second point, there are sins of co-mission and sins of omission. And I think one of the worst economic sins of omission that this Congress is guilty of is not paying attention to the very strong economic arguments in favor of a major investment in infrastructure. And for the life of me, I do not understand the source of that resistance.

REHMDo you think anything will go forward this year?

GALSTONUm...

REHMThat was a huge sigh.

GALSTONInfrastructure spending is the single most sensible, productive and job-creating investment we could make and I'm afraid it's not going to happen.

REHMByron, do you agree?

YORKI would agree with that. I want to say one more thing...

REHMQuickly.

YORK...about Obamacare being a continuing issue. It's an unfolding story. It's not over. There'll be new stuff to talk about in coming months.

REHMByron York of the Washington Examiner, Susan Davis of USA Today, Bill Galston of the Brookings Institution, thank you all.

DAVISThanks, Diane.

GALSTONOur pleasure.

YORKThank you.

REHMAnd thanks for listening. I'm Diane Rehm.