June 12, 2009
BILL MOYERS: Welcome to the Journal. Get out the stretchers and unroll the bandages. The fight is joined.
PRESIDENT OBAMA: In order to preserve what's best about our health care system, we have to fix what doesn't work. For we've reached the point where doing nothing about the cost of health care is no longer an option
BILL MOYERS: Despite the speech President Obama made at a Wisconsin Town Hall meeting this week, the question now is will he push back against the profiteers of health care? A powerful coalition has emerged to keep the profit in sickness and disease the Business Roundtable, the Chamber of Commerce, the big drug companies, the insurance giants, Rupert Murdoch's media empire, all of them opposed to what my guest says is real health care reform.
Robert Reich was Bill Clinton's Secretary of Labor; he implemented the Family and Medical Leave Act, and headed the Clinton Administration's successful effort to raise the minimum wage. Now you can hear him on public radio's MARKETPLACE and read his byline all over the mainstream media and across the Internet, including his blog at Robertreich.org. He is the author of eleven books, including this, the most recent, SUPERCAPITALISM: THE TRANSFORMATION OF BUSINESS, DEMOCRACY, AND EVERYDAY LIFE.
Robert Reich, welcome to the Journal.
ROBERT REICH: Hi, Bill.
BILL MOYERS: I wanted to talk to you because you do know how Washington works. TIME MAGAZINE called you one of the ten most effective cabinet secretaries of the last century. So take us inside for a moment or two into how you think this healthcare debate is playing out after the President's speech yesterday.
ROBERT REICH: Well, we're now just about in the real time of fight and conflict. Republicans and the healthcare lobbies, mostly big pharmaceuticals, their trade associations, also the big insurance companies, private insurance companies, they are bringing out the big guns, the lobbyists, the threats, the promises. They're swarming all over Capitol Hill. And the question is how hard the President's going to fight back?
So far the style of the White House is to set objectives and to let Congress come up with the details.
But I think the President's going to have to get involved in the details to a much greater extent because the lobbyists on the other side have so much to lose, they fear, and so much to gain, they expect, if they win.
BILL MOYERS: But this President seems given more to finesse than fight. He seems to want-- you know, he said in his speech yesterday, "Let's get everybody together." Has consensus become his primary aim?
ROBERT REICH: Well, he wants a bill apparently that has some Republicans on it. He only needs 51 votes in the Senate to get healthcare through on a Reconciliation Bill. That's a big victory for the Senate Democrats that wanted him to be pushing hard but he seems to be indicating he wants some Republicans on that bill. The Republicans are not willing to budge. They don't want what's called a public option which essentially would be something like Medicare that gives people a lot of bargaining leverage to get lower drug prices and also puts some pressure on private insurers. That public option is going to be absolutely critical. That's where the fight is going to really be squared.
BILL MOYERS: One of the problems with the Clinton health plan when you were Secretary of Labor was that it was too complex to explain to journalists like me, members of Congress, and the public. So in a sentence, if you can, tell me what a true public option would be in healthcare reform.
ROBERT REICH: Well, regardless of what you want to call it, Bill, it could be called liverwurst. I mean, it simply means that the public-- average members of the public have a choice, if they want it-- of either their private for-profit insurers like they now use or a public not-for-profit insurer.
And that public insurer would resemble ideally Medicare-- low administrative costs. And it would have the economies of scale. It would be so large that it could actually negotiate low drug prices and very, kind of low premiums. That's what the private insurers are scared of. That's what the--
BILL MOYERS: Why are they scared of that?
ROBERT REICH: Because that means that their profits will be squeezed. They don't want anything that's going to squeeze their profits. And, they're putting up smoke screens. They're putting up other things that may look like public options but don't have the bargaining leverage to get drug prices down and also to keep the private insurers honest.
BILL MOYERS: How do we know the real thing?
ROBERT REICH: Well--
BILL MOYERS: How do we know the duck from the decoy, right?
ROBERT REICH: Well, there's a very simple test. And that is the public option big enough and is it going to have bargaining leverage to get drug prices down and keep private insurers on their toes, forcing them to cut prices.
There's nothing actually pushing the system unless you have a public option that gives the insurers and the pharmaceutical industry and the hospitals a real run for their money.
BILL MOYERS: In other words, in one word, competition.
ROBERT REICH: Fierce competition.
BILL MOYERS: With the private for-profit insurers, right?
ROBERT REICH: Absolutely right. See, right now, Bill, we've got a medical system in which private for-profit insurers are spending a lot of money trying to avoid sick people. It's an absurd system. And all of that money they're spending, marketing and finding groups of people who are relatively healthy and at relatively low risk and avoiding the sick people, all of that money is being wasted.
And they're also-- as anybody knows who has private insurance, you've had the experience, I've had the experience, they contest a lot of claims, not only our claims-- but also doctors' claims. They are in the business of making money. They are for profit. I don't blame them. They are part of-
BILL MOYERS: Capitalism--
ROBERT REICH: --capitalist system.
BILL MOYERS: Right.
ROBERT REICH: But unless they are going to be pressured, genuinely pressured to reform through a public option, there is nothing that's going to change them.
BILL MOYERS: Well, I guess what puzzles me is whether you can squeeze them, as you say, pressure them without regulation or if you just think having a competitive rival out there that is negotiating for prices and trying to come in at a lower cost than the private health plan, you can really achieve anything.
ROBERT REICH: Well, that's a good question. You know, the single-payer system would be the best of all.
BILL MOYERS: Because?
ROBERT REICH: Because a single-payer actually would have huge bargaining leverage, be able to tell the providers what they can do and what they can't do without it being-- this isn't socialized medicine. A single-payer would actually have the reins.
BILL MOYERS: You heard the President say yesterday that we can't go to single-payer because we're too late in the game. It would change the rules.
ROBERT REICH: Well, look it, I lived through Bill Clinton's healthcare attempt--
BILL MOYERS: Yeah, how did you do that? That--
ROBERT REICH: Not very well. But a President, to some extent, has got to be politically realistic. There is no real political option in Congress now for a single-payer.
BILL MOYERS: Wait a minute. The folks who are fighting for single-payer out there say it is feasible if only Congress would look at the economics of it.
ROBERT REICH: Well, a lot of things are feasible if Congress looks at the economics of them. But politically, no, unfortunately and I'm a big single-payer fan. Unfortunately, we cannot get there from here because the political forces are just too strong against single-payer.
BILL MOYERS: Are the business forces prescient when they say that if we get a public option, it opens the door down the road to single-payer?
ROBERT REICH: If the government simply requires that the public option pay for itself, can be not-for-profit, just pays for itself that's not going to be necessarily a direct opening to single-payer. But it is going to force the private insurers and the drug companies and the medical suppliers to be honest, to control costs, and to provide better quality.
BILL MOYERS: You've got these powerful lobbies that you've been writing about on your blog. And you said on your blog this week that the real question for you is the extent to which Barack Obama will push back against these lobbies. What's your answer to your own question?
ROBERT REICH: I don't know, Bill. This is the first test where there is huge organized opposition. And it's coming from very, very powerful lobbies who have prevailed-- not just for ten or 15 years. You've prevailed for decades on this issue. So this is the truth time in terms of how able and willing the President and the White House is to really set boundaries and push members of Congress.
So it's at this point-- and I'm talking about the next two or three or four weeks. I mean, we're talking about crunch time right now-- that the President has got to step in and be forceful and be specific. And I don't know whether he will be. I hope he is.
BILL MOYERS: What will you be looking for?
ROBERT REICH: I'll be looking for whether he can say to Max Baucus, for example, of Senate finance, "Look, this is what I want. And if you're not going to go along with this, I want to know why. And if you're not going to go along with this, then would something else you want down the line you're not going to get." In other words, he's got to really create very, very specific conditions, threats, promises. This is the stuff of politics.
BILL MOYERS: When you talk about these lobbies, the public seems to want something that tends toward public option, if not single-payer. So how is it possible for these big lobbies to trump what the public and the President seem to want?
ROBERT REICH: Well, look, Bill, the problem, that's not just pharmaceuticals and it's not just the AMA, the American Medical Association, and the private insurers, Blue Cross/Blue Shield and so on. The whole system now is dominated by for-profit corporations. I think a lot of that growth in private sector lobbying over the years has come about because, in every industry, as the industries have become more competitive or more cutthroat in terms of their competition every individual company has hired fleets of lobbyists to take on their competitors.
You know, Google, for example, didn't have any Washington presence before it went public and discovered that if it really wanted to get favors out of Washington or at least ward off Microsoft, it had to have its own team right there so it's like an arms race.
But when you've got that many lobbyists and public relations professionals and lawyers swarming over the Hill for these corporations, they also can come together against the public. And the public's voice can easily be drowned out. You know, even with regard to Wall Street even Democrats are reluctant to take on--
BILL MOYERS: Yeah.
ROBERT REICH: --some of the big power players. I mean, in trying to pay for healthcare one of things that Obama wanted was a limit on deductions for the very wealthy. A lot of these very wealthy are Wall Streeters, partly of the financial community. They reacted so strongly that the Democratic leadership said, "No, we can't possibly do that."
ROBERT REICH: Look what the lobbyists have managed to do First of all, with regard to the medical drug benefit that George W. Bush and that administration along with many Democrats pushed-- they prevented in that drug benefit bill, they prevented Medicare from negotiating with the drug companies low prices.
Well, that was corporate welfare. I mean, the drug companies got something wonderful out of that bill. They got a bigger market. And they didn't have to pay for it. And, in fact, they got even bigger profits. They didn't have to face the negotiating power of the federal government. That's what is at stake now.
BILL MOYERS: What about this complaint? I'm satisfied with my coverage, and I don't want anybody to take it away from me. Did the President address that satisfactorily yesterday?
ROBERT REICH: I thought he did. He said again and again what we're talking about is not taking away anybody's choice, anybody's coverage, anybody's doctor. Now, the other side is going to trot out that old "Harry and Louise" fear and play upon those fears, just as they did in 1994, just as they did for decades before. They're going to use the term "socialism." They're going to try to scare people.
They have raised, as you said, the specter of socialism. Let me play you what Senator Shelby of Alabama said on Fox News last Sunday. Take a look.
CHRIS WALLACE: Senator Shelby, you say that the Obama administration is taking us down the road to socialism. Explain.
SEN. SHELBY: Well, obviously so. They intervened last fall in the bank crisis. No one has ever done it on that scale before. Now the automobile crisis. Now, Bush, you have to go back to the Bush administration; they started it. Now you're talking about a massive health care plan, while we're trying to right our economic ship.
ROBERT REICH: I believe that there's no doubt that we're going down to government intervention everywhere, government ownership unprecedented in this country. And it's a long road and it's a slippery slope.
BILL MOYERS: A slippery slope. What do you think about that?
ROBERT REICH: Look, Senator Shelby did admit just now that it was the Bush administration that started the big bank bailouts. And they started that bank bailout because the financial system had overreached with wild speculation and was on the verge of breaking down. Now, I happen to think that those bailouts have not worked very well.
Tim Geithner continued them. Obama continued them. That's kind of socialism for the big corporations. But there's no socialism for average people here. I mean, there is, even now almost none of, nothing of a program to help mortgagees who are in trouble, who might otherwise lose their homes.
BILL MOYERS: And I just saw today, I think this morning I saw the story that the foreclosures are supposed to increase dramatically this year.
ROBERT REICH: Well, because you've got so many people who are losing their jobs. And this is related to medical care as well because if they lose their jobs, most of them had medical insurance through their employer. They lose their medical care. If they have a major illness, they're in deep, deep trouble. Just losing their jobs means they can't pay their mortgages. So, you know, you have an interlocking system in which average Americans need a great deal of help. Wall Street does not need help. I mean, Wall Street, in fact, has pulled the wool over the administration's eyes and over the public's eyes. A lot of these toxic assets are still on the books.
You know, Wall Street has made, basically, wangled the system right now where it's beginning to show profits not because it's got rid of the toxic assets but because it's gotten an accounting change that enables it to paper over these toxic assets.
BILL MOYERS: Is it possible that we could be next year right back where we were last year with the financial system that has successfully resisted oversight and regulation and has reclaimed for itself the same powers it had two years ago, three years ago?
ROBERT REICH: Well, Bill, that's going to be another besides healthcare, that's going to be the next big lobbying fight on Capitol Hill where the president is going to have to go toe to toe with the financial lobbyists who are very, very powerful and are going to say, "We don't want regulation of any kind of compensation. We don't want regulation with regard to conflicts of interest."
You know, a lot of what happened in the- on Wall Street had to do with the fact that, number one, you had people who could make gigantic bets with other people's money. And if the bets turned out great, they would make a great deal of money. If they turned out badly, too bad. Well, their compensation was based upon making the big bets rather than being responsible. You also had all kinds of conflicts of interest. You had the credit rating agencies who were rating the issues coming out of the very companies that were paying the credit rating agencies to begin with. That's all still there. It's all still there.
BILL MOYERS: And the banks, as we speak, are fighting regulation. And they're winning. The banks are actually winning on this issue. Do you see it that way?
ROBERT REICH: Well, they're winning right now because, as these banks come out from under TARP basically the bailout mechanism the government has less and less leverage over them with regard to regulations that are going to prevent a repeat of the future. There's still no regulations out there. And there are lobbies. I want to come back to this theme, Bill, because it's important for the public to understand. The lobbies, whether we're talking about healthcare, insurance, pharmaceuticals, or we're talking about the banking system, the lobbies in Washington are enormously powerful.
The only way we're going to have any kind of regulatory regime for the banks that make sense is if people understand what's going on, if they pressure their individual members of Congress if Obama stands up to the banking industry and forces real regulation on them.
BILL MOYERS: You were on the transition team, Obama's transition team. You were a supporter of his. And the coalition, the Democratic Coalition seems to be holding behind him now, progressive Democrats, like yourself, are staying with him despite his compromises on detention, despite his escalation of the war in Afghanistan, despite other compromises he's made, including possibly a compromise on the bailouts and healthcare. When will he show you what you want to be shown? What will you be looking for?
ROBERT REICH: Healthcare and the public option is the first big one. I think that's a big test. And then the real hard, tough regulation of Wall Street to prevent a repeat of what we've had before. Those are the two big upcoming fights. And, but, you know, Obama can't do it alone.
Even though the presidency has all this power attached to it, only has a limited amount of power if the public is not pushing the president to take certain action and pushing Congress as well. There is no substitute, Bill, for an informed active citizenry.
BILL MOYERS: Is there any other way to see what's happening on Wall Street? As anything but a massive transfer of wealth from the middle class to the financial class?
ROBERT REICH: Well, that's what happens between 2000 and 2007. You had for the first time a lot of people in the middle class buying shares of stock, getting involved, thinking, "Oh, this is great, greatest thing since sliced bread." They were lured into a speculative bubble. And that speculative bubble burst obviously leaving behind a lot of middle-class people who have lost their homes and their savings and their 401(k) plans, 40 percent of them.
The only people left standing and I hate to say this because I sound like a class warrior and I don't want to sound like a class warrior is a lot of people at the top. Look, I'm not one to cast blame at anybody. There's enough blame to go around. But the fact of the matter is that as late as 1980, the top one percent by income in this United States had about nine percent of total national income.
But since then, you've had increasing concentration of income and wealth to the point that by 2007, Bill, the top one percent was taking home 21 percent of total national income. Now, when they're taking home that much, the middle class doesn't have enough purchasing power to keep the economy going. You know, that was hidden by the fact that they were borrowing so much on their homes. You know, they kept on consuming because of their borrowing. But once that housing bubble exploded, it exposed the fact that the middle class in this country has really not participated in the growth of the economy. And over the long term, we're not going to have a recovery until the middle class has purchasing power it needs to buy again.
BILL MOYERS: What has happened to capitalism that has led it to the abyss?
ROBERT REICH: Essentially, capitalism has swamped democracy. You see, there's no such thing really as pure capitalism without rules and regulations that set limits on profit making, because otherwise it's everybody out for themselves. Otherwise, nobody can trust anybody. Otherwise, it's the law of the jungle.
I mean, we rely upon government to set the boundaries. This can't happen because it's fraud. That can't happen because you're stealing something. This can't happen because you're imposing a huge burden on other people. But unless you have a democratic system that allows the rules to be created not by the companies but by the people and the people's representatives reflecting what the public needs, not what the corporations need, you're going to have a system that is not a democracy and it's not democratic capitalism. It's super capitalism without the democracy.
Go back to years and ask yourself why did we get into the banking crisis we did get into. And what you see again and again is that Wall Street lobbyists prevented the right kind of regulations. Again and again. The Wall Street said, don't do it. Don't limit us. Let us speculate. Let us do whatever we want to do. The market can take care of itself. Well, again and again we learn the lesson and then we forget it. The savings and loan crisis should have been-
BILL MOYERS: Twenty years ago, late '80s.
ROBERT REICH: Yeah, we should have learned it then. You know...
BILL MOYERS: We don't learn, though. Why don't we learn?
ROBERT REICH: And then Enron and WorldCom in 2001, 2002, we should have learned it then. We don't learn it partly because we forget and partly because the lobbyists are so powerful that they have our representatives around their- a chokehold over them.
BILL MOYERS: It seems to me there's another reason. And I still have an essay you wrote some 10 or 12 years ago. You talked about how people who are at the top of the establishment had abandoned their sense of responsibility, that they had, looking out for themselves.
ROBERT REICH: That is and continues to be both a tragedy and something that is perplexing. Go back 20, 30, 40 years. And people who were at the top of our institutions, political, economic, not-for-profit, big corporations they understood their social responsibilities. They had, left over from the Depression and the Second World War, a kind of a sense that they were there not only to maximize profits and not only to look for themselves, not only for their shareholders, but they were there because they had some public duties. That, over the last 20, 30 years, 40 years, has been lost completely. And we've got to bring it back.
I mean, how we do it is it turning the pendulum swinging right now? Is the election of Barack Obama signaling maybe a change in public consciousness from a period of me to a period of we? Well, I hope so.
BILL MOYERS: Finally, a historian knowing that you were going to be on the show tonight wrote me and said, "I would hope you might ask Secretary Reich, if we're rebuilding the financial system with some controls over the exuberance and the greed that led us over the cliff, or is the administration giving lip service to our concerns while planning instead just to put back in place the status quo that existed before the collapse?"
ROBERT REICH: Well, first of all, there's no recovery in the sense of going back to where we were before because the old path was unsustainable. Look where it got us. If we don't lift middle class wages, if we don't get some control over Wall Street, if we don't have genuine healthcare reform, if we don't do something about the environment and global warming, we are going to not have a recovery.
And then the next downturn is going to be worse than the downturn we just had. There's no going backwards. A lot of people would like to say, "Oh, we can just go back to where we were before." That is not possible.
Now, I think the administration understands this, Bill. Certainly, the president, every conversation I've participated in with him during the campaign and in the transition, left me with the impression that he understood this very, very well. I think most of the people around him understand this. The question is can he pull this off? Can he overcome the vested interests?
BILL MOYERS: But for you, as I hear you, the Armageddon that now is before us is the healthcare debate. You'll be watching how he handles this to see if he's tough enough to push back against the Business Roundtable, the Chamber of Commerce, Murdoch's media empire, big pharma, big industry. How he stands up to them you think will, in effect, determine how he's going to handle these other battles?
ROBERT REICH: It will be a clear indication of his toughness with regard to the willingness to twist arms and demand that the public interest be foremost.
BILL MOYERS: The book is "Super Capitalism: The Transformation of Business, Democracy, and Everyday Life." Robert Reich, thanks for being with me.
ROBERT REICH: Thanks, Bill.
CROWD:Single-payer! Single-payer! Single-payer! Single-payer!