TOPICS > Economy

Obama Presses for an Economy in ‘Overdrive’: Will Jobs Soon Follow?

January 21, 2011 at 4:18 PM EDT
Loading the player...
President Obama on Friday named General Electric CEO Jeffrey Immelt to lead a panel on job creation and economic competitiveness. Jeffrey Brown discusses the White House's evolving relationship with big business with former Clinton labor secretary Robert Reich and John Makin of the American Enterprise Institute.
LISTEN SEE PODCASTS

TRANSCRIPT

JIM LEHRER: The president took to the road today in his latest effort to woo the business community, and he appointed a major CEO as an economic adviser.

Ray Suarez begins our coverage.

RAY SUAREZ: Speaking at a General Electric plant in Schenectady, New York, President Obama tried again today to highlight bright spots, amid a sluggish economic recovery.

U.S. PRESIDENT BARACK OBAMA: And over the years, in the wake of these shifts, Upstate New York and places like it have seen more than their fair share of hard times.

But what has never changed — we see it right here at this plant; we see it right here at GE — is that America is still home to the most creative and most innovative businesses in the world.

(APPLAUSE)

RAY SUAREZ: He used the event to name General Electric CEO Jeffrey Immelt to a new economic policy panel.

BARACK OBAMA: The past two years were about pulling our economy back from the brink. The next two years, our job now, is putting our economy into overdrive. Our job is to do everything we can to ensure that businesses can take root and folks can find good jobs and America is leading the global competition that will determine our success in the 21st century.

And so now, to help fulfill this new mission, I’m assembling a new group of business leaders and outside advisers.

RAY SUAREZ: Immelt said the new council would focus on manufacturing, trade and innovation.

JEFFREY IMMELT, CEO, General Electric: I’m now honored to lead your Council on Competitiveness and Jobs. It’s a great honor.

(APPLAUSE)

And I know that, despite the fact that 60 percent of GE’s revenues are outside the United States, I, personally, and this company share in the responsibility and the accountability to make sure that this is the most competitive and productive country in the world.

RAY SUAREZ: Immelt had previously served on the Economic Recovery Advisory Board chaired by former Federal Reserve Chairman Paul Volcker.

Today’s announcement signals an administration shift from policies designed to stabilize the economy toward a renewed focus on boosting job growth. Naming a prominent CEO to head the panel underscored the president’s recent attempts to shore up relations with the business community.

Immelt was one of 20 CEOs who met with the president during a daylong summit at Blair House last month, and one of 14 U.S. business leaders invited to meet with Chinese President Hu Jintao at the White House this week.

On Tuesday, the president ordered a review of federal regulations on businesses which may hurt job creation. He wrote in The Wall Street Journal: “Our economy is not a zero-sum game. Regulations do have costs. Often, as a country, we have to make tough decisions about whether those costs are necessary.”

Meanwhile, yesterday, first lady Michelle Obama joined executives from Wal-Mart, the nation’s largest retailer, to promote healthier eating habits.

MICHELLE OBAMA, first lady: When I see a company like Wal-Mart launch an initiative like this, I feel more hopeful than ever before.

RAY SUAREZ: And, earlier this month, Mr. Obama named former Commerce Secretary and J.P. Morgan Chase executive William Daley his new chief of staff.

All of this comes after a series of moves to jump-start private sector hiring, including a tax cut compromise that cheered Wall Street, but angered liberals, and a long-awaited trade deal with South Korea.

But a new Associated Press poll released today shows a public still skeptical of the president’s economic policies. While the president’s personal approval rating improved to 53 percent, more than half of those surveyed disapprove of how he’s handled the economy, and just 35 percent say it has improved on his watch. But nearly three-quarters said it’s unrealistic to expect noticeable improvements after two years.

JEFFREY BROWN: And we look further at all this now with Robert Reich, former labor secretary in the Clinton administration. He’s now professor of public policy at the University of California, Berkeley. His latest book, on the financial crisis, is titled “Aftershock.” And John Makin is chief economist for Caxton Associates, a New York-based investment hedge fund, and a resident scholar at the American Enterprise Institute.

John Makin, I will start with you. What do you make — what do you think of the — of the president’s latest moves to reach out to big business?

JOHN MAKIN, resident scholar, American Enterprise Institute: I have — very positive.

You know, somebody once said — I’m an economist. I’m an economist. Somebody once said, look, an economist is somebody who won’t take yes for an answer.

Look, the president I think had an epiphany on December 3, when we saw that we still weren’t creating jobs. We had an unemployment rate of 9.8 percent. And we really needed to get moving on this. And so now we have the chief executive of General Electric appointed as the head of the commission on jobs and competitiveness.

So, I think the president has got the message that it is really going to be necessary to do some things differently, both in the area of regulatory tax and budget policy, in order to get the economy moving and to generate some jobs. So, it is a good thing.

JEFFREY BROWN: Robert Reich, the emphasis on big business, how do you see it?

ROBERT REICH, former U.S. labor secretary: Well, certainly, politically, it is important for the president, for any president, to maintain good relationships with the business community, and to avoid being tarred as anti-business.

But it is very important that the president not be seduced into thinking that the interests of big business are the same as the interests of the American economy, or, for that matter, the interests of American workers.

Big companies like General Electric and others have made profits recently, indeed, for the last 30 years, but more intensively over the last 10 years, by actually cutting their payrolls, by laying people off, by reducing wages and benefits. That is not going to be helpful to the American work force.

JEFFREY BROWN: Mr. Makin, how does — how does appointing the CEO of a major company address the kind of concerns that the — that the — the relationship had in the past?

JOHN MAKIN: Well, I think, clearly, the president did have an image problem with the business community.

And I think many business leaders met with the president and felt, he just doesn’t get it. The rhetoric on regulation is harming the economy. It’s making businessmen hesitant about investing.

I think the president’s new tone, where he is basically writing an op-ed in The Wall Street Journal, of all places, about how we need to move toward more job creation and competitiveness, how we need to examine our regulatory policies, is basically the right thing to do.

JEFFREY BROWN: And Mr. Reich’s point, that the — that the interests of big business and everybody else aren’t all — aren’t necessarily in sync?

JOHN MAKIN: Look, if the pie gets bigger, then it is a lot easier to discuss how you are going to cut it up. And if the pie gets bigger — and, by that, I mean we create more jobs, then labor is going to be better off.

We can argue about how we are going to divide it up later on. But right now, we have an unemployment rate well over 9 percent. We have virtually zero job growth. We have — we have created a few jobs. Job growth is about less than a percent over the past year. We have got a problem.

And if the president wants to cooperate with the business community and create more jobs, I’m all for it.

JEFFREY BROWN: Well, Robert Reich, you — you wrote recently, looking at the situation, that the president, you thought, was — quote — “legitimizing a Republican narrative on the economy.”

So, fill — fill in your argument here. What do you see happening?

ROBERT REICH: Well, the Republican narrative is essentially that our problems have to do with big government getting too big and too intrusive, and all we have to do is reduce government, and we will all do better.

And, therefore, reaching out to the business community, although politically necessary, freezing federal payrolls, freezing non-defense discretionary spending, having a deficit commission that is coming up with huge proposals to cut the deficit mostly by spending cuts, rather than tax increases, all of this does reinforce that Republican story.

There is another story, though, that I think is more accurate and also very important to be told and acted on. And that is, the biggest reason we are having such a problem right now is the vast majority of Americans don’t have the wages, the salaries, the wherewithal to spend in the economy, to keep the economy going.

And one reason they don’t is, after 30 years of outsourcing, of shaving payrolls, of putting pressure on unions to provide wage concessions and benefit concessions, and also doing all sorts of things that reduce, automate, that use the technologies to get rid of jobs, most Americans just simply are not part of the global economy in terms of American prosperity any longer.

JEFFREY BROWN: And — and, in that story, Mr. Reich, what would — what would you think would be the — what should the president’s posture towards big business be?

ROBERT REICH: Well — well, again, I want to emphasize it’s very important politically to maintain good relationships with big business.

But what the president has to do is lead the charge investing in education, in infrastructure, in job training, having a much more progressive income tax, expanding the earned income tax credit, which is a wage subsidy, in other words, making sure that the vast majority of Americans, who have not benefited from economic growth over much of the past 30 years, actually do start benefiting.

JEFFREY BROWN: So, John Makin, this is a tale of two stories here.

JOHN MAKIN: Right. Right.

JEFFREY BROWN: And in your — in — the way you see it, you can’t do this without big business.

JOHN MAKIN: Well, look, I mean, I just — I just totally disagree with Bob Reich on this. This is not a negative-sum game.

Tax reform would be a great example. If, as the deficit commission has suggested and as the president has hinted, you pare back tax preferences and reduce marginal tax rates, you can make the economy grow faster. Remember, tax preferences are regressive. That is, they are more beneficial to the rich than they are to the poor.

So, there are lots of things you can do which business will like, which will be good for employment, and which will help the economy grow faster.

JEFFREY BROWN: Well, let me — let me ask you. Looking at what he did today and in the recent week…

JOHN MAKIN: Yes.

JEFFREY BROWN: … is — is this enough for the business community, or — or does he have to keep, in a sense, proving himself to — to — to…

JOHN MAKIN: Well, sure. You know, the — the president has — has changed his rhetoric and signaled that he would like to change some policies in a way that will help create jobs.

And, so, that’s a necessary, but not a sufficient, condition. What really has to happen next is that we have to change some policies. And I think we need to start with tax policy. And the president’s giving signals that he is going to start in that area.

If the president does things that annoy liberals, like help cut corporate taxes, cut — cut tax rates, pare back tax preferences, and the economy starts to grow more rapidly, if the unemployment rate is closer to 8 percent a year from now than it is to 9 percent, he’s going to — he’s going to be better off.

JEFFREY BROWN: Mr. Reich, you get the last word here. He is doing things that annoy liberals, right?

ROBERT REICH: I want to — I want to agree with — with John. This is not a zero-sum game.

But I do want to emphasize that we are now experiencing in this country a degree of concentration of income and wealth at the top that we have not seen since 1928. Trickle-down economics has not worked. The median wage, the average wage for the typical American worker, has gone absolutely nowhere.

And we now have more unemployment and more long-term unemployment than we have seen in this country really ever before. If the American business community is going to make jobs, great. But American business is now globalized. GE is making 80 percent of its profits in its foreign operations. It’s closed 14 factories in Ohio over the last 10 years.

We have got to be realistic about what business can and can’t do. Business’ objective is to maximize profits, not maximize the benefits to the American worker.

JEFFREY BROWN: All right, we will leave it there. Robert Reich, John Makin, thank you both very much.

ROBERT REICH: Thank you.

JOHN MAKIN: Thank you.