Rob Johnson and Michael Linden respond to the president’s prime-time address
Story Transcript
PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I’m Paul Jay. On Wednesday night, President Obama delivered his State of the Union address, and most of it was about the economy and jobs. And here are some excerpts of what he had to say.
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BARACK OBAMA, US PRESIDENT: —that has unified Democrats and Republicans and everybody in between is that we all hated the bank bailout. I hated it. You hated it. It was about as popular as a root canal. If we had allowed the meltdown of the financial system, unemployment might be double what it is today. Because of the steps we took, there are about two million Americans working right now who would otherwise be unemployed. We’re on track to add another 1.5 million jobs to this total by the end of the year. The plan that has made all of this possible, from the tax cuts to the jobs, is the Recovery Act. That’s right, the Recovery Act, also known as the stimulus bill. So tonight I’m proposing that we take $30 billion of the money Wall Street banks have repaid and use it to help community banks give small businesses the credit they need to stay afloat. We can’t afford another so-called economic expansion like the one from the last decade, what some call the “lost decade”, where jobs grew more slowly than during any prior expansion, where the income of the average American household declined, while the costs of health care and tuition reached record highs, where prosperity was built on a housing bubble and financial speculation.
JAY: Now joining us to tell us what they think of President Obama’s speech are Michael Linden. He’s the associate director for tax and budget policy at the Center for American Progress. And Rob Johnson. He’s executive director of the Institute for New Economic Thinking and the director for economic reform at the Roosevelt Institute. Thanks for joining us, gentlemen.
ROB JOHNSON, INST. NEW ECONOMIC THINKING: My pleasure.
JAY: So, Rob, let’s start with you. Has President Obama outlined a plan that will prevent another lost decade?
JOHNSON: I think he’s expressed tonight an awareness that things need to change and need to move forward. I’m quite disappointed in his discretionary spending freeze. I think that is tying his hands unnecessarily and he won’t have all the tools he needs to restart more vibrant employment growth, infrastructure investment, and so forth. So I think he identifies the concerns, but I think his prescription is lacking.
JAY: Michael, what was your impression?
MICHAEL LINDEN: I think that the overall plan is sound. Increasing regulation on banks, the bank tax, using some of the repaid TARP money to fund small business lending, those are good ideas. The discretionary spending freeze, I want to wait to see what’s in his budget before I pronounce judgment on it, but I agree with Robert it’s not the most promising part of this plan. But if it’s part of a larger effort to reduce the long-term deficit, it could be useful.
JAY: Now, if one—I know I get to interview a lot of economists, and there’s a couple of assumptions in this speech. One is that we are in fact at the beginning of a kind of recovery, and a lot of people dispute that. One of the things that’s going to be happening as this stimulus money, recovery money that has already hit the economy starts to be used up: state and local governments are going to be shedding jobs in the hundreds of thousands. A lot of states are on the verge of bankruptcy. The situation really is not, you know, very rosy in outlook, the unemployment numbers, many people are saying, best-case scenario, staying around the 10 percent level. But it actually could get worse, not better. Rob, are we seeing a dramatic enough proposal here?
JOHNSON: We’re not seeing a dramatic enough proposal. And I’m most concerned about this commission that the Senate turned down yesterday. But he’s issuing an executive order, that is, President Obama, that will now put in the hands of elite experts the right to go and cut benefits, entitlements, and so forth. I understand that the logic of medium-term fiscal discipline is very important, but in the short term, their first stimulus program, the Recovery Act, was far too small. We are sitting with 10 percent unemployment. We’re not coming into a period when our infrastructure is what you might call topped up and tweaked out; we’re talking about a time when most of our infrastructure’s been run into the ground by eight years of Republican leadership. So I think right now he just doesn’t put enough what you might call gunpowder in the cannon to really get us up and moving to the place where we need to be.
JAY: Michael, some people were suggesting the situation is really so urgent in terms of unemployment that tax credits to small businesses and such is just not enough and can’t hit the economy quickly enough, there needs to be a kind of Rooseveltian-style direct employment program by governments, and without that there is not going to be a serious dent in the unemployment numbers. What do you make of that? And do you think this tax credit thing is really going to be effective enough quickly enough?
LINDEN: Well, that’s a good question, and I do see the logic behind a direct government employment program. But I think we have to recognize political reality, in that something of that nature is just going to be really tough to get through the Senate, especially right now, and I think that the president is trying to drive a middle path toward job creation that he can actually get passed, because even if direct job creation by the government is a more efficient and effective way of creating jobs right now, it won’t create a single job if it can’t pass the Senate. So I understand that concern. But I really appreciated the president saying that we do need another jobs package right away. We need the Senate to pass something approximating the House bill as soon as they can.
JAY: But is it this issue of what can pass? You know, the conditions for what can pass has a lot to do with how much does a president come out swinging. Now, President Obama in this speech said, “I’m not giving up my fight to change the tone of politics.” But how do you change the tone of politics when one side’s at war with you and you’re trying to have a civil discourse? And who’s paying, you know, [inaudible] you could say the price or the consequences of this? Rob, is President Obama himself just ideologically so committed to this idea that everything has to come through small business, through the private sector, that he himself doesn’t actually want to go towards a direct jobs program?
JOHNSON: Well, what I would say is that President Obama is not taking any risk. He’s not telling you what he wants when there’s a risk that it might not pass. So he lays back, takes the consensus. Michael’s very accurate: if you lay back the consensus with 41 Republican votes and some Blue Dogs in the Senate, you’re not going to get a public jobs program through. President Obama goes out to the swing districts, including Democratic districts where the Blue Dogs reside, and starts talking about jobs and start talking about how this senator or that senator needs to step up to the plate in both parties, he could turn the result around. But he’s not taking that kind of risk, and he has to. He has to.
JAY: Yeah. There is no sense of that at all. Even on the Health Care Act, it was like if—.
JOHNSON: And you don’t have to lose your civility in order to declare your intentions and demonstrate your resolve and dare someone to disagree with you when the public has 10 percent or more unemployment, many of these states. If he went to Michigan right now with a jobs program, I don’t think anybody could stand in his way. If he went to some of the other states, he would be very, very popular. But he’s not taking on the powers that be, and as a result the status quo continues to reign.
JAY: Go ahead.
LINDEN: I think that’s a little unfair to the president. I mean, he certainly has taken on the status quo on a whole host of issues. Now, maybe he hasn’t been as successful as some of us wanted him to be in his first year, although I think maybe it’s a little too soon to judge, you know, his entire presidency based on one year. And—.
JOHNSON: I’m not judging his entire presidency. I’m judging the first year. In the first year, he was behind the curve, particularly on bank reform.
LINDEN: Well, I think he’s coming out pretty strongly on bank reform, and I think he was telling, today, that he made a big push for it and he said he wanted to do this bank tax, which I think is a good idea if maybe a touch too small, and I thought it was very shrewd of him to bring that up. And you notice that none of the Republicans clapped.
JAY: The idea that military spending is not going to be touched here, I mean, the whole question of having 1,000 military bases around the world and such, it never gets talked about.
LINDEN: Right, and I think that’s a mistake. I think we should be saying, listen, there absolutely waste in the government, but it’s not limited to non-Defense discretionary programs. We all know that the Pentagon can take a haircut, too, and still protect us just as well.
JOHNSON: House Speaker Pelosi tried to inspire that notion over the last couple of days. She wanted to put the Defense budget in under the same kind of restrictions that non-Defense discretionary are going to experience, and she was rejected in putting that forward to the White House.
LINDEN: I was really happy to see the president carry out a full-throated defense of the stimulus bill. That’s something that’s been sorely lacking. The stimulus bill, by every independent measure, has been a remarkable success, especially the parts that progressives pushed for. The conservative additions to the stimulus bill are less successful in stimulating economic growth in jobs, but the progress parts of it have been doing very well. I agree with Rob it may have been too small, but it was actually pretty—an impressive legislative victory, and I appreciated the president took some time to really [inaudible]
JAY: Rob, final comment?
JOHNSON: The thing that concerns me most at this juncture is that many progressives are told the alternative would be worse, meaning a return to Republican power. And on many issues other than the economy—gay rights, women’s pay, racial considerations—that’s exactly right. My fear is, by not being bold enough, President Obama on the main issue, the economy, will disappoint, and people will not remember the bad hand of cards that he was handed by President Bush. And in two years, meaning this coming November, and in four years when he’s up for reelection, he will suffer the consequences. And the people who care about all of that progressive agenda may suffer a change of power because he wasn’t bold enough in the short run. I think that would be tragic across the entire spectrum. I hope that progressives will push him harder and harder and harder to help him make the change he needs to make.
JAY: Thanks very much for joining us. And thank you for joining us on The Real News Network.
DISCLAIMER:
Please note that TRNN transcripts are typed from a recording of the program; The Real News Network cannot guarantee complete accuracy.
