Obama's Policies Won't Create Jobs, but Romney Will be a Disaster

Uploaded by TheRealNews on 10.09.2012

PAUL JAY: Welcome to The Real News Network. I'm Paul Jay in Baltimore.
President Obama spoke Thursday night to the Democratic Party convention. Jobs, of course,
was at the center of the speech. He says the prescription he has, or the solution he has,
will rely to a large extent on export--reviving American manufacturing and exporting those
goods. Here's a little bit of what he had to say.
BARACK OBAMA: We can help big factories and small businesses double their exports. And
if we choose this path, we can create a million new manufacturing jobs in the next four years.
You can make that happen. You can choose that future.
JAY: Well, Friday morning, jobs numbers came out, and I expect President Obama and a lot
of unemployed people were rather disappointed.
Now joining us to talk about all of this is Bob Pollin. Bob is the founder and codirector
of the PERI institute in Amherst, Massachusetts. Thanks for joining us, Bob.
ROBERT POLLIN: Very glad to be on, Paul.
JAY: So, first of all, there's two ways to talk about President Obama and the Democratic
Party. One's in relationship to the Republican Party, and then in relationship to whether
those policies are actually going to be effective in solving the unemployment problem. So why
don't we quickly talk about it in terms of relationship to the Republican Party, and
then we can go and kind of dig into what the policies really mean.
POLLIN: Well, in relationship to the Republican Party, that certainly is the Democrats' and
Obama in particular's strong suit, because the Republican Party are, you know, absolute
disaster in terms of job creation. I think that Obama characterized them pretty accurately
last night in his speech when he said their prescription for everything is tax cuts for
the rich. I mean, that has been true for a long time and it remains true, and despite
the fact that there's no evidence that tax cuts for the rich are going to increase employment.
I mean, as it is, the rich are getting richer. The rich are, over the recovery--the quote
"recovery"--since 2007, the rich have gotten over 90 percent of the income gains. That
has not led to an overall recovery in employment. So how many more times do we have to be obsequious
at the feet of the rich before we start to see them generating jobs? That's not the solution.
So, yes, relative to the Republicans, the Democrats and Obama look good.
Relative to what's needed now to create decent jobs for people in this economy, the Democrats
continue to offer very little. The general approach that Obama has outlined before, outlined
a year ago in his jobs proposal, the general approach is, okay, you know, the idea of investing
in manufacturing, investing in the green economy (though that, the rhetoric around that has
certainly been dramatically dampened down), supporting education, in terms of jobs in
education, in addition to the long-term benefits, all of those things are good.
What he doesn't do is talk about how you actually get there, the magnitude of what's get--of
what it'll take to get there. Quite the contrary, he talks about these initiatives around jobs
at the same time as he basically is saying, well, yes, we are going to support this big
deficit reduction proposal, the Simpson-Bowles bipartisan proposal, we're going to get somewhere
close to that, and that in turn is going to mean big cuts in social spending and is not
going to stimulate the economy. It is going to impose austerity on state and local governments
where we are seeing jobs still being lost--no job increases whatsoever. So they don't really
have a jobs plan that is commensurate with the needs of the time.
JAY: I thought there's also something. If you kind of pry away some of the rhetoric
around General Motors, I thought it was a little disturbing, actually. If General Motors
and how it was saved is the model for the restoration of American manufacturing, and
American exports will be then increased based on that model, well, the essence of that model
was lowering the wages of the workers, shifting a lot of the health care costs onto the union,
and particularly this two-tier wage system where, you know, new workers are making $14
an hour, sometimes even less--I'm told they're even making $13 an hour--when they used to
be making in the high $20's, which means demand, workers' ability to buy stuff, goes down.
So maybe you'll export more, but in terms of any real strength in any of the domestic
market, we don't see that, and President Obama doesn't talk about that. All we hear is General
Motors has a great victory.
POLLIN: Well, there's a couple of points there, important points that you're making, Paul.
Number one, on the overall point around exports, in order for us to export more, there have
to be other countries that want to buy more. Now, who are those other countries going to
Europe is in a total disaster, worse than the United States. We don't have a plan for
reviving the European economy. In fact, to date we are still mired in an austerity agenda
throughout Europe led by Germany. And the latest data from Germany is that Germany itself
is now heading towards recession, which had not been the case. Germany had been pulling
the rest of Europe. To the extent Europe is not in a total severe recession, it's only
due to Germany, and now Germany is itself heading into recession. So Germany and the
rest of Europe is not about to expand its exports, imports coming from the United States,
China, the Chinese economy is slowing down. The Indian economy is slowing down.
So those are the three nodes of economic growth in the world economy that have been operating
over the course of--since the recession, Germany, China, India. They're all slowing down. The
rest of Europe is in the tank. So I don't know where this demand for U.S. exports is
going to come from, number one.
Okay, on your point with respect to the auto industry, you're absolutely right. The solution
that Obama established to save General Motors and the auto industry imposed this two-tier
wage system that had already been developing, such that younger workers are working at,
as you said, much lower wages, $14 an hour as opposed to $22. That has had very serious
negative consequences, as you suggest.
One of the important negative consequences is that in the lower tier now, in the lower
tier within the auto industry, you're getting to the point at which these workers are not
making all that much more than minimum wage workers, if we were to establish something
close to a decent minimum wage like $10 an hour, which is in part one of the reasons
I think that the labor movement has not gotten strongly behind a higher minimum wage, because
then that is going to contradict the very idea of this two-tier system that they have
accepted. So the two-tier system for manufacturing for the auto industry is upending all the
kind of basic wage standards that we have had in the economy.
And that's why what we're also seeing--even the jobs that are getting created are tending
to force down the average level of wages. They're jobs in the service industry, restaurants,
hotels; they're jobs in real estate, in retail. No jobs in manufacturing, no jobs in the public
sector, and the jobs that are in manufacturing are the ones that are getting forced down
in wages.
JAY: Now, in the speech, President Obama referenced Roosevelt in having sort of imaginative solutions.
But Roosevelt created a big public works program financed by the government and not necessarily--and
most of the--if I understand it correctly, not through the private sector, through the
public sector, directly. President Obama, since the beginning of his presidency, has
been very wedded to the idea that everything more or less has to go through the private
sector. And he still seems to be talking that way, even though the private sector on the
whole doesn't want to make those kinds of investments.
POLLIN: Well, Roosevelt's--the picture of the New Deal through the 1930s was itself
pretty spotty. We now have this rosy, of course, historical image where everything was perfect.
Roosevelt was sputtering along. I mean, we got some growth from 1933, when Roosevelt
first came in, to 1937, but then in 1937 we then reverted to something like an austerity
agenda in the United States under Roosevelt itself. It really--if truth be told, it really
wasn't until the U.S. undertook massive levels of deficit spending in the '40s after Pearl
Harbor, where deficit spending went up to about 25 percent of the economy, that we got
out of the Depression for good and the world got out of the Depression for good.
I don't know that we would need to get to 25 percent of GDP in terms of government injection
of spending, but we need something on a major order of magnitude of, number one, increase
government spending to defend the social sector, state and local spending on health and education,
and to put money into people's pockets. That is the way through which we then energize
the small business sector, which is right now starved for credit and is not growing.
So without that, it is--we are not going to see anything like the kind of recovery that
we think about in terms of a New Deal.
JAY: So on the whole, then, while you're saying the Republicans will be a disaster, the message
from the Democratic Party, which is we're on the right path, we just need--give us more
time to complete the journey, you don't think this is the right path.
POLLIN: I think there are areas that the Democrats emphasize which are positive. You know, just
the mere fact of talking about supporting manufacturing, well, to me that implies industrial
policy. Now, that may not be what Obama had in mind, it may not be what's going to pass
through Congress, but, you know, if you think about it for a second, there's no way to support
a manufacturing sector in this country and putting emphasis on that without undertaking
a serious industrial policy. As you and I have talked about before, that's absolutely
crucial. Similarly, on the green economy, you know, the words are spoken, there is some
support, there are important things that have been done. Is it enough? Absolutely not.
Moreover, in his speech last night, Obama took a turn in favor of so-called clean coal
and natural gas. Those are not clean energy sources. So if we are really serious about
supporting the environment, we can't go to coal, we can't go to natural gas. We do have
to invest in efficiency and we have to invest in renewables. And those are the things Obama
did talk about, but he put more emphasis on these other things because that's where the
politics has shifted. The Republicans have been relentless on this, you know, drill,
drill, drill, let's not hold back our huge energy resources, and all this environmental
stuff is a bunch of garbage. Well, the Democrats, of course, don't go as far as the Republicans,
but they are being influenced by that into the wrong direction.
JAY: Alright. Thanks very much for joining us, Bob.
POLLIN: Okay. Thanks for having me, Paul.
JAY: And thank you for joining us on The Real News Network.