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Despite Bipartisan Push, Parties’ Differences Linger Over Spurring Growth

January 26, 2011 at 5:32 PM EDT
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Republicans and Democrats agree on the need for growth -- but seem to perpetually disagree on how it can be achieved. Ray Suarez takes a closer look at the debate and the differences with Massachusetts Gov. Deval Patrick and Douglas Holtz-Eakin of the American Action Forum.
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GWEN IFILL: Republicans and Democrats managed to sit together at last night’s joint session, but a fundamental divide remains between the president and congressional Republicans on the role of government.

Ray Suarez picks up that part of the State of the Union story.

RAY SUAREZ: From the president’s annual address, and from the Republican Party response, America saw two very different answers to a fundamental political and economic question: What’s the best role for the government in spurring innovation, driving development in the U.S. economy overall?

The president used examples from the country’s past and from today’s global competitors to make his point. And Wisconsin Representative Paul Ryan insisted government intervention was likely to make things worse.

U.S. PRESIDENT BARACK OBAMA: Our infrastructure used to be the best, but our lead has slipped. South Korean homes now have greater Internet access than we do. Countries in Europe and Russia invest more in their roads and railways than we do. China’s building faster trains and newer airports.

Meanwhile, when our own engineers graded our nation’s infrastructure, they gave us a D.

REP. PAUL RYAN (R-Wis.): Depending on bureaucracy to foster innovation, competitiveness, and wise consumer choices has never worked, and it won’t work now. We need to chart a new course.

Speaking candidly, as one citizen to another, we still have time, but not much time. If we continue down our current path, we know what our future will be. Just take a look at what’s happening to Greece, Ireland, the United Kingdom and other nations in Europe.

RAY SUAREZ: We have our own debate now about the merits of these two approaches from leading thinkers affiliated with both political parties, Democratic Gov. Deval Patrick of Massachusetts and Republican economist Douglas Holtz-Eakin, former director of the Congressional Budget Office. He advises Republicans in Congress currently and served as a key adviser to John McCain during the 2008 election year.

Gov. Patrick, let me start with you.

How would you describe the best way the federal government would participate, or not, in the national economy?

GOV. DEVAL PATRICK (D-Mass.): Well, I think that the president’s strategy, like our own here in Massachusetts, based on education, on innovation and on infrastructure is a strategy that works. It’s worked historically. It will work right now, and it will play to our strengths.

I don’t think any of us Democrats believe that government should try to solve every problem in everybody’s life, Ray, but we do think government has a role to play in helping people help themselves in advancing the American dream.

And that is a fundamental difference with some Republicans but not with all. Most Republicans, I think, do understand that government does have a role in expressing those things that we, as a national community, ought to try to do together.

And that’s where the unity, I think, has to be sought in this country and what the president, I think, is trying to do for us.

RAY SUAREZ: Douglas Holtz-Eakin, same question. What does the right relationship between government and the economy look like?

DOUGLAS HOLTZ-EAKIN, former Congressional Budget Office director: Well, certainly government has a role.

But I think the fundamental message of Congressman Ryan was that we need to identify that role and — and put the government back in those limited functions where it does things best. And I thought the most interesting contrast we saw last night was Rep. Ryan taking on the biggest issue the United States faces, the debt load that will, in fact, endanger our prosperity and identifying a role for government as a way to decide what it does and doesn’t do.

In contrast, the president was essentially silent on this big issue, the most pressing thing that even his own fiscal commission has identified, and he said nothing more than a figurative freeze on a tiny fraction of the federal budget and took a pass on the rest. So, he didn’t show the government stepping out of anything.

And, when it got the particulars, he said the right things about, we can’t predict the — the way that the industries will develop and what the fundamental forces will be 30 years from now, but then turned right around and provided exactly the things we should do from the government’s point of view.

We’re going to do clean tech, we’re going to do biomedical — not a vision of the government responsive to the citizens’ needs, but one directing where we should go.

RAY SUAREZ: Directing where we should go, Governor?

GOV. DEVAL PATRICK: Well, I…

RAY SUAREZ: Go ahead.

GOV. DEVAL PATRICK: I don’t think that’s — I don’t think that’s entirely fair.

I think it’s very interesting to hear about Republicans saying one thing and doing another. Remember, it was — it was President George Bush who embarked on two wars on a credit card, who did the prescription-drug benefit without paying for it, and, indeed, cut taxes when we were at war, I think the first nation in the history of the world not to ask its citizens to sacrifice at a time of war.

I think that what the president is talking about and talked about last night is not government trying to solve every problem in everybody’s life, as I said a minute ago, but those things that create the conditions that play to our strengths and that lift this economy and get growth going again.

I don’t think the president was silent on the question of — of the deficit. But I think that there — there are — in fact, he did reference the bipartisan commission, which talked about both cutting spending, which is important, and doing that in wide and targeted ways, and also raising revenue, that combination of which is the only way that we’re going deal with that problem.

But we must have growth. And we don’t get growth without a strategy for growth, not just leaving it every — leaving it to chance, but — but a strategy. And that strategy based on education, on innovation and on infrastructure is a winning strategy. And you can look to Massachusetts just to see an example of it.

RAY SUAREZ: Doug Holtz-Eakin, you heard the government — governor mention investment a couple of times. Earlier in the program, Eric Cantor described investment as a synonym for more government spending.

Do we make a — is there a distinction to be made? Should one be made between just government spending, as simple as that, and the things that have to be built and have to be done in order for growth to happen down the road?

DOUGLAS HOLTZ-EAKIN: Well, obviously, there’s always been a traditional role for the government in basic research, in national defense, in infrastructure, which is a shared productive resource.

And the key has always been to make sure that you get genuine productivity grains — gains out of those investments. I think the disenchantment you hear on the conservative side is that that word has been used as cover for all sorts of expansion of government that doesn’t really meet those litmus tests.

And when it does meet that litmus test, we have wasted those dollars. We have 100 transportation programs, none of which identify a genuine national interest in productivity and connectivity in our transportation system. And yet we see again a call to pour more money into it.

That’s not a route to success. And I think that’s the divide that you’re seeing right now. Conservatives want efficiency in the appropriate roles for government, and they want the government out of things that aren’t appropriate.

RAY SUAREZ: Governor, how do you limit the — the tasks and limit the spending, and just make sure you’re spending in the right places?

GOV. DEVAL PATRICK: Well, I want to agree Doug’s point about the importance of efficiency. I think taxpayers ought to demand simplification and a straightforward spend of their money. It is their money.

And, by the way, that’s not a challenge that is — that is timely. That’s a timeless challenge. Any organization, private or public, has to be about constant improvement.

But on the point about whose money it is, you know, Democrats don’t lose sight of the fact that it’s the taxpayers’ money we’re talking about. What we just do is finish that thought, because it’s also your roads, your broken schools, your broken neighborhoods, your broken neighbor, for that matter.

And, sooner or later, we are all going to have to start taking responsibility for that. What — when we take that responsibility, that is what government is called.

I believe that we should have a small and as simple and as straightforward a government as possible. I think any consumer, if you will, of government services, more to the point, any citizen, would want that.

But, sometimes, I — you know, it frustrates me a little bit to hear this point from conservative Republicans who, during the George Bush administration, were responsible for the largest run-up in the size of the federal government in history.

So, let’s look not just at who says what, but who does what. And this president is about trying to bring us an efficient, effective, forward-looking government as a way of reflecting the best of our American ideals and ambitions.

RAY SUAREZ: Douglas Holtz-Eakin, since the governor has brought it up twice, I should give you a chance to respond — go ahead — on the recent past and the Bush years in particular.

DOUGLAS HOLTZ-EAKIN: Oh, that — you know, we can put aside the political attacks.

This is a debate about the future. And I think the key here is the divide between conservatives who recognize that the future really is dependent on individuals having a job, and that there will be no government program, however much empathy is poured into it, that is a substitute for that job, and that when you ask the question, what are we going to do about the broken roads, you don’t answer it with, well, I would like to beat high-speed rails. Let’s not fix the road program.

We have got to fix what the government is supposed to do right first before we start launching into big new spending programs.

RAY SUAREZ: But, Doug Holtz-Eakin, the president spoke specifically about medical research, about transportation, about the digital future.

Absent government investment, would the private sector take on some of these big infrastructure projects?

DOUGLAS HOLTZ-EAKIN: As I said before, there’s a role for the government in infrastructure. There’s always been a role for the government in basic research.

What gets slippery is when you say the right thing, but then you turn a call for basic research into targeted top-down investments, in particular with clean techs and biomedical, when, in fact, if we just built the knowledge base and turned the entrepreneurs loose, we’d get the right industries in 30 years, rather than betting the taxpayers’ dollars in ways that we just don’t know if it will work.

RAY SUAREZ: Governor, what about that? That’s a frequently heard critique, that government often tries to pick winners. And I think that’s what Douglas Holtz-Eakin just described: overstepping.

GOV. DEVAL PATRICK: Well, first — first of all, we don’t have 30 years. And I think Doug would agree with that.

We have got to be about the here and now. We have got to face what our global competitors are doing. And, around the world, government is working in partnership with the private sector to invest in those growth industries.

And we have an edge here because we have a generally well-educated work force. We need to step that up. We have a tradition of innovation. We need to step that up and concentrate on it and invest in it, yes, not to the exclusion of the private sector, but in ways that create conditions where the private sector wants to invest, because that’s where our competitive edge is going to be.

So, I don’t think that our objectives about where economically we want to go and how we want to preserve and enhance the American dream are that different, frankly, between Democrats and Republicans. I think we’re talking about means.

And I don’t think any of us really believe that the cartoon versions of Democrats and Republicans are accurate — are accurate. I believe that Democrats believe that government has a role to play, not the role to play, not the central role or the only role to play, but a role to play, in creating conditions that play to our strengths and get us maximum growth, maximum job opportunities.

RAY SUAREZ: Very quickly, Doug, before we go, are you as optimistic as the governor is about whether these divides are bridgeable?

DOUGLAS HOLTZ-EAKIN: Oh, absolutely.

The American people have always shared those aspirations. This is a debate about the best means to an end. The clock is ticking. The debt bomb is growing. And I do believe it needs to be addressed. And I’m saddened that we haven’t moved quickly on that.

But it’s also true that there’s agreement on things like education, which really is not about money. We pour lots of money into education, and we don’t get results. So we can take on the great competitive challenge with the kinds of reforms that get our money’s worth. And I think we will be successful.

RAY SUAREZ: Gentlemen, thank you both.

DOUGLAS HOLTZ-EAKIN: Thank you.

GOV. DEVAL PATRICK: Thank you.