OLBERMANN: The President of the United States with his jobs bill
speech to a joint session of Congress, proposing the American Jobs Act.
And the key takeaway may have been a combination of two phrases --
"pass this jobs bill" and "you should pass this bill right away." He
said those two things a total of 16 times.
Whether or not there is enough substance and, in fact, enough cash in
what he is proposing and what he may propose in the days and weeks to
come remains for analysis and for time to tell. But in terms of the
efficacy of the speech and the situation he put his opponents in by
giving a speech that highlighted such things as rebuilding schools,
35,000 of them, cutting the taxes of small businesses by 50 percent
immediately -- and you see him with Senator Coburn there in an embrace.
They are friends from their days in the Senate together. A reference to
improved job prospects for veterans of military service, improved
qualifications for jobs for the middle class, the chanting, almost, of
the phrase, "made in America," these are all, if not necessarily
conservative catch-phrases, they certainly are ones that required both
sides of the House and Senate to rise as one in there. So as a speech,
as we begin an analysis that will continue for the next hour and 15
minutes, I am joined by economist Jeff Madrick and by the former
governor of New York, Eliot Spitzer. Governor, I will start with you on
the politics of this. I wasn't necessarily expecting a strong and
strident speech, but I think we got one from this president. Did we not?
SPITZER: We had a good campaign speech, as you point out. This
was a speech that could have been delivered in front of 10,000 union
members. It could have been delivered in the stadium after he accepted
the nomination in Denver, back when he was nominated in '08. It was a
very effective speech. The politics, however, will depend almost
entirely, in the long run, on the unemployment rate. And so tonight's
measure and the buoyant feeling within that chamber will dissipate
quickly next -- I think it's October 7, the next unemployment number if
there's not an uptick. And this is going to be, "what have you got?
Prove to us that this matters." And I think there's less than meets the
eye once you peel back the rhetoric.
OLBERMANN: Right. And the problem has been that in times of
economic crisis -- and two previous occasions, once this year at George
Washington University, and once at the end of 2009 in his speech at the
Brookings Institution, which was filled with small business tax breaks
and incentives, a hiring tax credit, infrastructure programs, many
things that, if were not identical to what we heard tonight, very
similar to them, certainly in terms of theme. There was no follow-up.
Has he -- has he sort of increased the chances of a follow-up by
repeating this mantra of, "you should pass this bill right away" 16
times? Has he kind of put the spur even to himself?
SPITZER: I think it's very difficult for the Republicans not to
do something, and the something they will embrace is the agenda of tax
cuts and tax cut extensions. 'Cause a lot of it is extending out the
trend, what has already been done. I think the Republicans will do that.
But the problem is, it may not matter. And at this point, the
president's going to be measured based upon his success to create jobs,
not on the beauty of his rhetoric. And he's always delivered a great
speech. That's what got him into the oval office. Now they're saying, as
you just said, Keith, "now what? Prove to us it works."
OLBERMANN: Jeff Madrick, can it work? Did you hear anything in there that was new, novel or sufficient?
MADRICK: It wasn't enough for me. I do want to give the president
some credit for the speech. He showed anger. And it's necessary to show
anger now. He hasn't shown anger a lot in recent economic speeches. He
may -- he may win over some public approval. He may start to motivate
some people to turn against Republicans and get Republicans a little bit
afraid. Does he have a plan, however? I was a little surprised by the
extent of some of the tax breaks. I think some of them are good. Good
credit incentives for job hiring. I myself believe we have to spend our
way out of this. Tax breaks, tax credits don't go directly,
dollar-for-dollar, into the economy. And that's what we need. But there
is one important area he deferred talking about. He said he's going to
be able to pay for this, and he has a plan, and he didn't talk about
that plan tonight. And that, to me, was very deliberate. That enabled
him to do a one -- a narrow, focused, angry speech, all upbeat. He
didn't talk about how we are going to pay for it and when we are going
to pay for it. Because we have got to stimulate this economy now. We
can't start paying for this now.
SPITZER: And Jeff, am I correct -- you are the economist -- but
it seems to me if the president in his budget proposal says we are going
to pay for it by cutting in zones A, B, and C to have additional
expenditures over here, he takes away the very stimulus he's trying to
get. In other words, unless he is willing to have short-term increases
in deficits, there is no stimulative effect from a pure Keynesian
perspective. Of course, Governor Perry told us the other day Keynes
doesn't matter. So we'll have to see whether the president agrees with
him or not.
MADRICK: He is implying paying for this will be delayed. He
hasn't given us any details about that. And that's where the big battle
is going to occur.
OLBERMANN: But politically, to people at home -- obviously, this
is the crux of the Republican argument, is we can never pay for anything
unless we have the cash in the pocket, which is -- we can talk about
that economically, the economics that you figure out in the third grade
and cease to be applicable in about the ninth grade. But to say that to
the public, "we are going to pay for this," in a time when cliches and
oversimplifications of the economy are the flavor of the year, is that
not enough? If you go to the public and say, "we will pay for this, here
is where it's coming from" and only define it in broad terms, is that
not enough to fire people up and get this thing passed?
SPITZER: Look, I hope so, and only time will tell. But I wish he
had said, "you know what? we have been too focused on the deficit. We
have a demand crisis." I wish I had heard that sentence quite clearly.
There is insufficient demand. We need to spur this economy. We own -- we
know how to do this. And I want to just put a contrast out there. We
found out a couple weeks ago the Federal Reserve bank, the federal
government lent to the banks $1.2 trillion, with a T. When they said,
"gee, we got a little problem here," started printing money, delivering
it in 18-wheelers to the banks. Now being parsimonious with the middle
class. The lines in there about helping homeowners, you don't solve this
problem unless you deal with the housing crisis. There's some vague
stuff in there about helping agencies maybe refinance. It hasn't worked
so far. There was no dedication of big money. If this whole thing is 400
billion, the number we heard before the speech when it was cost out,
the number they were circulating, of which about half is these tax cuts
that only affect things at the margins, this isn't going to do it. And
that's what worries me.
MADRICK: Clearly he avoided the most important issue, which is we
need a big deficit now, and we will take care of the balancing the
budget down the road, and maybe even way down the road. As I have said
before, we need a smart deficit now.
OLBERMANN: Right.
MADRICK: We are going to get a dumb deficit. We are going to get a
dumb deficit through tax cuts that are not focused on job creation, not
focused on public investment and won't get into the economy quickly
enough. We could have a smart deficit. And he avoided that subject, and
he tends to avoid trying to educate the people about basic economics. He
does not want to go there.
SPITZER: Yeah, he -- can I just pick up on -- you just said
something so important. This president has had the opportunity to
explain economics to the public, and instead, by deferring, he has let
the Republicans with their simplistic mantras that are gibberish. But
their simplistic mantras have taken hold and taken root, and we're
playing defense, not offense. And that has been a critical political
mistake.
OLBERMANN: And the simplest explanation of the economy, which was
said to me many years ago for trying to dumb it down for somebody who
once froze as a senior in high school when the math got too complicated
and started to look at the board sideways to see if it made more sense
that way is this. There are three units in an economy that can spend
money and keep pushing the money through the machine that we are both
served by and protected by and trapped by called this economy. The three
units are the government can spend, people, the consumers can spend, or
the businesses can spend. If the businesses are not spending and the
people don't have the money to spend, by process of elimination, it
requires the government to spend. That oversimplification -- would that
be enough for him to have said, simply that?
MADRICK: That is not oversimplification. That is precisely true.
People cannot spend because they are so indebted. Businesses aren't
spending because people aren't buying products. We hear all this talk
that business isn't spending because of uncertainty about regulations
and what the government -- The uncertainty is, is the economy coming
back? They don't want to spend and hire until they get a little -- a
sense of confidence about that. If they don't spend and the government
doesn't make up that gap, we really go down the chute. And when I hear
all the complaints about the Obama stimulus and how it didn't create
jobs, where is the president talking about? The Obama stimulus did
create jobs and prevent our unemployment rate from going to 12 percent
perhaps. We need more. We need him to be able to talk more. And the flaw
in the speech is that. And I think Eliot hit it on the nose. He does
not want to tell the American people about this deficit. And I think he
has refused to try to become the education president in these terms.
SPITZER: Keith, I wish he had educated the public. You just got
it exactly right. "C" plus "I" plus "G" equals GDP. There is a little
thing. Exports minus imports. Consumers, investment, government. If one
of the three of them is not spending, GDP goes down. Business is not
investing. Consumers don't have any money left because we are in debt,
our houses aren't going up in value, we are not being paid more, there
are too many unemployed, and we have too much on our credit cards.
Government is the only place that can do it. We have got to do it. Can I
do a simple piece of math?
OLBERMANN: Yes.
SPITZER: $100 billion.
OLBERMANN: Right.
SPITZER: We're spending $400. If he had have taken $100 billion,
divide that by 20,000. How much do you want to pay people, 20,000 bucks,
give 'em a good job. Not a great job, but give them something. You
could create 5 million jobs. If he took $100 billion and said, "We are
going to hire 5 million people, Jeff Immelt, you figure out where to
send them so they are doing something productive. Don't put them inside a
bureaucracy. Give them to G.E., to General Motors, the best -- to
Apple, to Microsoft. I don't care. Get them to work. Don't do it with
this parsimonious, little bit of dribbling it out here and there. Make
it real, make it big, and then he would have been like F.D.R.
OLBERMANN: The argument being, I suppose, to not do that, is that
the more details you put out in this speech, the more individual things
you give the Republicans to attack as, "Look, he is spending $100
billion." Is that why you would hold back? Or what is it? Because
certainly -- we are agreed on this -- the tone of this speech was, to
the point, excellent and had the sufficient amount of anger and urgency
with the sense of conveyance of urgency and the passing forward of that
urgency to the Republicans, saying, "You damn well better do something
about this, and do it now," as he said it 16 times. Why would you hold
back on details like that?
SPITZER: Because there has been a divide with this president
since the beginning between the power of the rhetoric and the underlying
substance. The rhetoric is great, but if you think about it, he says --
there is a line in here, "we don't need to pull back on environmental
standards and expose our kids to toxins and mercury," the whole bit.
Just three days ago, we did just that. In other words, the disconnect
between his beautiful rhetoric and the substance of what he does is
what, at the end of the day, is causing people to get upset.
MADRICK: Let me just say this -- that "deficit" word is a trigger word in his mind.
OLBERMANN: Yeah.
MADRICK: It's a trigger word in the nation, and it has been a
trigger word historically. In many respects, we are fighting exactly the
same battles today that we fought in the early 1930s. But he is not
fully fighting them. Despite the anger and rhetorical, really excellence
of the speech in many respects.
OLBERMANN: Do we need to repackage that word in some way and make it called "future money" or "investment"?
SPITZER: Look, there is not a business -- you know, here is the
great irony. All of the private equity firms, the Steve Schwarzmans. You
know, you go to G.E.'s balance sheet --
OLBERMANN: All the people who were in Michelle Obama's area there.
SPITZER: That's right. See how much debt they carry on their
balance sheet. They're leveraged. Somehow, when they borrow, it's an
investment for the future, and they get to take the rewards and then go
with the bankruptcy and we bail them out. It's crazy.
MADRICK: One of the European leaders -- and they are as bad or
worse than we are in the current circumstance -- one of them said, "you
can't reduce your debt by adding more debt." Every company borrows more
to invest to make themselves a bigger company, to make themselves a
more profitable company. We can do that in America. And you know what?
Our interest rates are remarkably low. It's almost impossible for us to
make a good rate of return on an infrastructure investment when you're
paying 1 percent or 2 percent a year on your money. What an opportunity.
OLBERMANN: As anybody with any small amount, up to $10,000 in
cash, is told, when, you know, when there are low interest rates, take
that money and go get yourself more money based on that money, because
you are paying less than the cost of increase of the economy.
SPITZER: The federal government should be borrowing as much as it
can at these rates to invest. There is the litany. And the president
referred to it briefly in the speech, the sequence of investments that
government has made. I read an article earlier today -- the railroads,
the universities, agriculture, aircraft, the Internet. All these things
that are the backbone of our economy these days, the government really
did pay for them, lead to them. We should be borrowing now to do that,
not just repairing the schools. There was not grandeur to what he set
out as our objective, and that is, ultimately, the problem.
MADRICK: But he did -- you know, there were a set of paragraphs here that were very nice, talking about how government builds America.
OLBERMANN: Right. The transcontinental railroad, for instance.
MADRICK: All of that. And lots of stuff that's forgotten. The
primary education system. In 1850, we had the best primary -- in 1850
-- the best primary education system in the world. On and on. The
sanitation systems that made New York City possible. But he did start
talking about that. He did start saying, "you know, I know a lot of you
just want to do away with government, we'll all be fine. It's not going
to work." He has to come through, though, on the details, and he has to
be willing to fight the fight.
OLBERMANN: Let me play one clip for our friends in the truck.
It's number two of the sequence, about what he wants to do with small
businesses, and see if you can interpret what this actually, practically
means. Here is the president.
(Excerpt from video clip) OBAMA: Pass this jobs bill, and
starting tomorrow, small businesses will get a tax cut if they hire new
workers or if they raise worker's wages. Pass this jobs bill, and all
small business owners will also see their payroll taxes cut in half next
year. If you have 50 employees, if you have 50 employees making an
average salary, that's an $80,000 tax cut. And all businesses will be
able to continue writing off the investments they make in 2012. It's not
just Democrats who have supported this kind of proposal. 50 house
Republicans have proposed the same payroll tax cut that's in this plan.
You should pass this right away.
OLBERMANN: All right, those are the highlights of the speech also
included in this idea about small business, the 50 percent payroll tax
cut on small businesses. Jeff Madrick, what does it -- deconstruct it.
What does it mean?
MADRICK: It's a little hard for me to deconstruct some of those
details, because they seem new. This idea that you get a tax credit if
you raise wages, I would love to see the actual details of that. That
may be a little bit where this jump in the estimate from $300 billion to
$450 billion comes from. They may have added some of that recently. I
think some of that will help. We have to keep in mind, though, that
corporate profits are way up. Profits -- this is for smaller business,
but nevertheless, profits are pretty good. It's spending by consumers,
demand for those goods and services that are not up. And that's what
we've got to move. And we learned that in the Great Depression, and we
are willingly and willfully unlearning that again in this period.
SPITZER: I think Jeff got it exactly right. This is a good thing
for your small business owner. It means your profits are going to go up
by that delta, 50,000, 80,000, whatever it is. What are you going to do
with it? Are you going to use it to hire somebody or not? Are you
going to put it in the bank? Because unless there is demand for the
widget that you're building -- a shirt, a house, or whatever else it may
be -- you're not going to invest. It's a demand crisis.
OLBERMANN: One area in which we all agree the economy is
exceptionally strong -- perhaps as it has never been -- is cash on hand
in corporations.
SPITZER: 2.5 trillion bucks now.
OLBERMANN: It's all sitting there. This would allow more of it
to sit there unless you put that spur into it. You can keep that money
rather than paying it to us, but it's got to go somewhere into the
economy. And that wasn't included in this.
SPITZER: Which is why $100 billion to create 5 million jobs at
$20,000 per person, maybe that creates the demand for food, for shirts,
for X, whatever it may be.
(COMMERCIAL BREAK)
SPITZER: Can I raise another issue that was barely mentioned in the speech?
OLBERMANN: Yes.
SPITZER: That's trade. It seems to me --
OLBERMANN: Louis Slaughter is happy tonight that that was included in there.
SPITZER: But not a whole lot and not enough. In other words,
there was, I think, a critically important article written by a guy,
Mike Spence, got the Nobel Prize in economics, conservative guy, who
studied the past 20, 30 years of the U.S. economy and said that all the
job growth was in what he calls the "non-tradable" sector. In the
tradable sector, we've had zero job growth. Why? Because China is, in
fact, playing games. I know the economists love to say comparative
advantage, all this stuff -- the course you love to take in high school.
But you know, the economists were wrong.
OLBERMANN: Yeah.
SPITZER: We have been paying for them through currency
manipulation, theft of intellectual property, and I'm not becoming sort
of a Luddite on this, but they're playing games and they're costing us
tens of millions of jobs.
OLBERMANN: What was -- so there's a product they're willing to have distributed in China, provided we give them all the specs first?
SPITZER: Right.
OLBERMANN: -- an electronic product.
SPITZER: It was the technology for electric cars.
OLBERMANN: Yes.
SPITZER: They want to take the technology in return for our right to sell it.
OLBERMANN: They'll sell the Volt for us, as long as we give them the schemes.
SPITZER: So they can then undercut it with cheaper labor and take
the market away from us. The president hasn't come to grips with the
fact that trade is really where we're being destroyed. Now, it's
globalization. It's good at many levels.
OLBERMANN: Mm-hmm.
SPITZER: But we are not playing on a level playing field. He danced around that tonight, and I think this is a critical issue.
OLBERMANN: Right, the Chinese will then be selling the "Dolt"
after we give them the plans. We are going to take one more break.
Congressman Keith Ellison of Minnesota will join us as we continue our
coverage in the wake of the President's speech after this.
(COMMERCIAL BREAK)
Editor's note: This clip on Countdown Online is comprised of different portions of the show. The full transcripts for those portions are reflected here in their entirety.
