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4.18.03
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ANNOUNCER: Tonight on NOW WITH BILL MOYERS... America turns from war in Iraq to the big fight at home. How to get the forces that shape prosperity working again.

MADRICK: We've forgotten that government is about addressing change. We are not building the institution we need.

ANNOUNCER: Jeff Madrick on why economies grow. A Bill Moyers interview.

And she says her goal is to give working women a break.

BIGGERT: My vision of this bill was to help the American worker.

ANNOUNCER: But organized labor sees a Trojan horse.

SWEENEY: This is very clearly an attack on working families.

ANNOUNCER: And the inside story of America's recovery since 9/11. Steve Brill's new book, AFTER.

BRILL: There is no reason why we can't protect ourselves much more than we did on the morning of September 11th.

And Bill Moyers' Journal.

All that tonight on NOW WITH BILL MOYERS, the weekly newsmagazine from PBS.


From our studios in New York, Bill Moyers.

MOYERS: Welcome to NOW. With the brief and simple pronouncement that "the regime of Saddam Hussein is no more," President Bush this week threw himself into the task of saving his own regime here at home.

It's a battle that will be decided on the economic front.

Mr. Bush is reminded often, including by his own political guru Karl Rove, of what happened in 1992, when the elder Bush, having won the war with Saddam, lost reelection because people were hurting at home.

Even now, troops returning from Iraq face headlines like these. The economic news is gloomy across the home front, with states and cities facing financial Armageddon and making deep cuts in basic services.

The President's popularity has enjoyed a bounce from the victory in Baghdad, but memories in politics are short.

Already Congress is balking over the proposed $726 billion tax cut Mr. Bush promised his supporters. One of his own party has drawn a line in the sand.

GRASSLEY: At the end of the day, the tax cut side of the growth package will not exceed $350 billion.

MOYERS: In other words, less than half what the President wants.

Mr. Bush countered with a compromise: he'll settle for tax cuts totaling $550 billion, but that's as far as he's willing to go.

To make his case he went on the road this week to St. Louis and talked about the economy, choosing as his stop a Boeing plant that makes F-18 fighter planes.

BUSH: I sent some suggestions up to the United States Congress about how to stimulate job growth. And it starts with letting you keep more of your own money.

MOYERS: Tax cuts are controversial because the government no longer has enough money to meet its obligations.

When Mr. Bush came to office two years ago, the government was expected to produce a surplus over the next decade of almost $6 trillion.

Now, over that same time under the Bush budget plan, the government is likely to come up nearly $2 trillion short.

That causes even some of the President's party to gulp.

A WALL STREET JOURNAL poll this week reports that while 56% of Republicans think "strengthening the economy" is the top priority, only 7% believe tax cuts are.

MOYERS: We'll talk about all this with the man who recently analyzed America's future finances in the Sunday NEW YORK TIMES. He believes they could lead us down a very dangerous path.

Jeff Madrick is the author of several notable books, including TAKING AMERICA and THE END OF AFFLUENCE, and this latest one, WHY ECONOMIES GROW. Once the financial editor of BUSINESS WEEK, he now writes for The NEW YORK TIMES, edits CHALLENGE magazine, and teaches at Cooper Union here in New York. Welcome to NOW.

MADRICK: Nice to see you, Bill.

MOYERS: Let's start with this perspective. When we are talking about the economy, what are we really talking about?

MADRICK: We're talking about, I think, what is central to America. We're talking about what gives people control over their lives. Obviously, it's about the goods and services we can buy that make us materially comfortable.

But it's about a lot more than that. It's about how we get our esteem, our self-respect. We get a job. It shows us that we can be competent and good at something. We win the respect of our families that way, our peers, society. We get a little control over our lives.

Over the course of the 20th century, we got more economic security into old age. We got more health security. It's the heart of, very much what we think America is.

And in fact, it always was. Because right from the beginning, there was exceptional opportunity, at least by comparison to the Old World. And it helped form our ideology, our national character, the type of government we chose to have.

MOYERS: When we talk about the economy, aren't we also increasingly talking about the upstairs and downstairs of the American household?

MADRICK: Well, it's become that, and it wasn't always that. I think it's very important for people to realize. We've made a lot of progress equalizing incomes. Not equalizing them in a pure sense, but getting them closer together.

I think the notion of equality was always central to America. Not equality of outcomes. Not that some people couldn't be fabulously wealthy. But equality of opportunity that was reflected in an equality of outcomes.

MOYERS: And that's changing?

MADRICK: It's changed remarkably in 20 years. The number of wealthy, this sort of ten to 15 percent at the top, is very much separated from the pack. Now some economists tell you, "Well, it's reflecting education, or talents, or abilities."

But think about it. Are ten or 15 percent of people so much different than the rest of the pack that we have this kind of upstairs-downstairs structure that you're thinking about? It doesn't show that way in IQ tests. It doesn't make sense.

IQ tests are not separated in that sense. Most measures of our abilities aren't separated that way. Something else is going on here.

MOYERS: What is your sense of how bad things really are? Or is this just the working of that old business cycle that we learned about in our college economics courses?

MADRICK: Well no, it's not simply… I don't think it is simply the business cycle. We had five extraordinarily prosperous years at the end of the 1990s. Now we've had equally prosperous, and even more prosperous sets of five year periods in the 1960s, for example, and the 1920s.

But that was quite a good period. We now realize some of it was built on corporate lying. We now realize a lot of it was built on over-speculation. But it was pretty good. That was a cyclical up.

But over the long course of the economic history since the early 1970's, this economy has gone significantly more slowly than it did in the previous 100 years. Economies always go cyclically. But when you average it out over a straight line. It's been slower.

That's meant less growth, lower wages, fewer jobs, fewer job promotion. It's not just a matter of a bunch of people not having jobs. That is an indicator of weakness across the employment market. Less opportunity, fewer entrepreneurial opportunities.

And much harder for a single adult to manage the finances of a family. And that's probably been the most radical change in the last 20 or 25 years.

MOYERS: That's the two-worker family now, right?

MADRICK: It's a two… it's been a social revolution. And you hardly hear about it, really, in Washington among the politicians. You hardly hear about policies to address this.

And yet, the history of America, what government was good at was building new institutions when times changed, when there were new needs, when the nature of the economy changed. We had primary schools, then we built high schools. Then we subsidized colleges, to give an example. We had the little dirt roads, and we had big turnpikes. We had serious institutions, like Social Security, when we realized we cannot tolerate elderly poverty. We solved that problem.

Now the economy's changed again. And we've forgotten that government is about addressing change. We are not building the institutions we need.

MOYERS: I have talked to liberal and conservative groups alike that believe we do need a stimulus in the economy. And President Bush, of course, says that his tax plan will do just that. You've been telling your readers that the tax cuts will only make things worse. Why is that?

MADRICK: We do need a new stimulus. We could even tolerate big deficits right now. But we need deficits that give us a stimulus, pump up the economy immediately, by putting spending into the economy.

MOYERS: Pouring money in.

MADRICK: Pouring money in.

MOYERS: But this is not what's happening.

MADRICK: Goods and services are bought. Part of the Bush tax plan does that. But part of it is about giving tax cuts well into the future that have nothing to do with growth now, that have a serious effect, that further will worsen the inequality of income.

And that relatively few people, relatively few professional economists think will have much benefit down the road by stimulating investment and making the economy grow later. So when you add it up, we now look like we'll have quite a stunning budget deficit for ten years in a row.

MOYERS: At what level do deficits become what you call unmanageable?

MADRICK: This is not science, as much as some economists try to make it sound like science. But we will probably have a budget deficit based on fairly good economic growth of as much as two and a half or three percent, or even more every year. That's two and a half or three percent of GDP…

MOYERS: The gross…

MADRICK: Gross Domestic Product, the amount of goods and services we make each year for ten years. That begins to eat away at our ability to invest in business, and our future growth.

MOYERS: What would a good tax cut look like? I mean everybody agrees some stimulus is necessary. You saw the clipping when President Bush spoke to the workers in St. Louis and said, "I want you to keep your money in your pocket." They cheered. I mean there's support out there for it. What would a good tax cut look like?

MADRICK: Well I think more of it would go to the middle and lower income people who spend it right away. Because we need spending in the economy to make— keep this recession, or this sluggish economy, from getting worse.

So tax rebates, temporary tax rebates, 300, 400, $500 checks per family that go away after one or two years, I think that would be helpful. I think better than tax cuts would be outright government spending. Because that dollar goes right into the…

MOYERS: On?

MADRICK: …aid to the states. States are in very, very bad fiscal shape. They're cutting back on education, health care. If the federal government would give them some money, that would be putting money directly into the government's fund, into GDP.

MOYERS: As of today, who wins and who loses with the President's tax plan?

MADRICK: I think we're all gonna lose. That's really the bad news. Because it's gonna begin to affect economic growth, which affects us all. I think, in particular, lower income and some middle income people will lose, because it's very likely we will not have the money for cherished social programs down the road.

MOYERS: Many of the President's supporters will tell you this is what they want. That by giving big tax cuts to the wealthy, they are shoring up their political constituency. And they're also making it impossible for this dreaded beast, the government, to increase social spending.

Grover Norquist is one of the leading conservative organizers in Washington, sat in this chair recently. He's on the record as saying that their goal is to shrink the government until it can be drowned in the bathtub. So there's a political premise behind this financial situation, right?

MADRICK: Well, I think there is. And I applaud him for at least being explicit about it. The President is not being explicit about it. The President's men, for the most part, are not.

They're saying… they're making, I have to say, wide eyed claims, that that dividend tax cut will promote growth down the road, will somehow pay for itself. The Congressional Budget Office, run by a Republican who used to work in the White House, did an array of analyses, and said, "No way." They use a number of assumptions, a number of different economic models, including assumptions sympathetic to the President's case and they say, "No way is this tax cut gonna pay for itself."

So the bottom line is, hey, well, they're sitting there, in my view, saying, "We know it may not work. Maybe it will work. Maybe there's a growth miracle out there." Almost certainly not. "But if it doesn't work, we achieve our real purpose, which is to cut these social programs, and to give our constituencies, our natural political constituency, what it wants, and also deprive the Democrats of the funds to appeal to their natural constituency."

MOYERS: You wrote recently that the people in Washington today are as much in denial of reality as the people on Wall Street were half a dozen years ago.

MADRICK: Yeah. What worries me is that it — just like it sold on Wall Street a few years ago — my concern is it might sell across…

MOYERS: Well…

MADRICK: …the American electorate. I think people will want it. There are moments in every country's history where people just want to believe in miracles. They want the easy way out. This is the easy way out.

MOYERS: What's the miracle they are believing in here now, that if you cut taxes it will grow the economy?

MADRICK: Yes. That the economy will grow. They'll pay for themselves. We'll all be better off. And you can get that, you know, get government off our backs. It's an easy way out and it's going to be very damaging, I think.

MOYERS: Talk to me about something you said in one of your recent columns. You said that our economic has put growing strains on family life.

MADRICK: Beginning in the early 70's, wages just didn't keep up. And particularly, didn't they didn't keep up with what we consider most important today. Education costs, health care costs, and housing costs. Some expenses fell.

The cost of a PC fell remarkably. But these other key expenses didn't keep up. And we had, what I consider, a social revolution. The two-worker family.

And we didn't begin to provide quality daycare for these people. Companies didn't react sufficiently to provide quality daycare. The government didn't react, as it didn't react when we needed high schools in the early 1900's.

The pressure on families for education, health care, economic security in old age, is quite extraordinary now. And the inequality of education is what really contributes to this most. It's not only a matter of going to college now. It's a matter of moving into an expensive suburb with a high quality school.

Because if you don't, your children are not gonna get an adequate education, and not gonna get a path to a good college. And that's awfully expensive. It's not just the highly expensive prep school. It's the good public school in an expensive neighborhood.

MOYERS: You write, "At the very least, workers need flexible hours to meet family needs, as well as time off for sickness and to attend aging parents." In other words, flexibility in the workplace.

MADRICK: Yeah, and we can have that. You know, that's what's so disturbing. The way the economy has changed, it makes it much easier for people to work at home, much easier for people to push their work off a couple of days, to the weekend.

I think we can build in these changes with a little government help. And yet, it's… you almost heard nothing about this kind of thing in the last Presidential campaign. Family issues were barely discussed. And yet, it's the big social revolution of our time.

MOYERS: We have been… we're covering a debate in Congress over just this issue. And our producer, William Brangham, and my colleague, correspondent Keith Brown, have prepared a report I'd like to show you and our viewers and then we'll come back and talk about it.


BROWN: Judy Biggert used to be a working mom. She raised four kids while running her own legal practice out of her house.

Now she works at the U.S. House of Representatives. She's a Republican Congresswoman from the 13th district of Illinois.

BIGGERT: I've been a working Mom myself. And I know how guilty you feel when you're not at home for some, you know, important event in your child's life. And I think the workplace has just changed, times have changed, and families have changed.

BROWN: So last month, Biggert introduced a bill called "The Family Time Flexibility Act." Thirteen other Congresswomen, all Republicans, were among those who signed on. They hailed it as legislation that would make life easier for millions of hard-working American families.

BIGGERT: My vision of this bill was to help the American worker and to give them the flexibility in their lives, the choice in their lives.

BROWN: There's no denying that Americans are working longer and harder. The average employee in this country puts in about 200 hours more a year than they did thirty years ago. That's equivalent to an additional five weeks of work, every year.

Productivity is at an all-time high but people are increasingly frustrated. Some polls say they want more time, others say they want more money but one thing is for sure. They want some relief.

BRAVO: They're desperate for more time to spend with their families. And what they want is to be allowed to be good parents and good employees, without having to choose either.

BROWN: Ellen Bravo is the director of 9-to-5, an advocacy group for working women. She says the demands of work today put undue stress on families.

BRAVO: You know, we talk to elementary school teachers. They tell us, "We have never seen so many kids coming to school sick, 'cause their parents aren't allowed to stay home with them." Or high school teachers, who say, "We have never seen so many kids miss school 'cause they're staying home with the younger sibling, or cousin, 'cause their parents can't stay home."

BROWN: So the Family Time Flexibility Act seems perfectly timed. It would give employees an option they don't have right now. The bill says if you work overtime, you have a choice: you can get paid time and a half or instead, you can take an equivalent amount of time off later. It's called comp-time.

BOEHNER: The committee will now proceed to the consideration of the bill H.R. 1119 for amendment.

BROWN: But the bill has touched a raw nerve. Reopening a decades-old debate about how the nation balances the needs of business with the lives of workers.

KUCINICH: People who are making $5.15 an hour, they don't need time off! They need a living wage!

BOEHNER: This astounds me, that given the pressures that the American families are under today, the fact that workers, all across America, want more options, they want more flexibility, that we wouldn't empower them and give them that option.

TIERNEY: It's gonna result in less time for people to have with their families and less income to support those families.

BROWN: Both sides say they want what's best for working families. So how could one bill provoke such opposite reactions?

To understand what's really going on here, you need to look back to the early 1900's, to a time in America when workers had barely any rights. There were no laws regulating businesses — they could work employees as long as they wanted, for a little pay as they wanted.

But all that changed in 1938 with the passage of the Fair Labor Standards Act. This law changed the American workplace forever. For the first time, it gave American workers a set of definable rights and protections. It created the minimum wage, it established the 40 hour workweek, and it said if an employee worked more than 40 hours, employers had to pay more.

BRAVO: The Fair Labor Standards Act was a family time flexibility law. It was passed to say, "You know what? Workers are spending too much time away from their family. We're gonna put a break on that. We're gonna say this is a 40 hour workweek. And employers, if you wanna make people work more than that, you're gonna have to pay for it. And that will be a disincentive for you to have people working too many hours."

BROWN: The Fair Labor Standards Act has been amended dozens of times over the years. But Bravo says, what's gotten people so upset about Judy Biggert's bill is this: They say her legislation would now make overtime cheap for employers and if it's suddenly cheaper than it used to be, employers will use it more, and as a result, employees will suffer.

BRAVO: And one of the things that isn't said very much about this bill, but that really is the point: to make it cheaper for employers to force workers to work overtime. That's our objection to it.

BIGGERT: This has nothing to do with the sanctity of the 40 hour week. That's the law, and it still is the law. The only thing that this bill does is to allow employees to choose to take time off at a premium rate, versus overtime pay. So, it doesn't change the 40 hour week at all.

BROWN: But according to Ellen Bravo, that choice of when to take the time off doesn't rest with the employee. Bravo says, take a look at government or salaried employees, who under current law, can choose this comp time option.

BRAVO: I'll give you an example of someone we know who's a paralegal. She has comp time right now. She's always being asked to stay extra. She is desperate to get home to her family. "Oh, no, we need you to do this. We need you to do that." She's accumulated masses of comp time. Whenever she wants to take it, they say, "We're much too busy. You can't take it now." In November, when her kids are in school, and no one else is off, they say, "Hey, things are a little slower now. You can take that comp time." It's meaningless.

BROWN: In that example, the paralegal gets nothing for her overtime while the company holds off giving her comp time. Under H.R. 1119, a company can delay granting comp time for up to twelve months. So workers who've put in their overtime might not see any compensation for it — either money or time off — for up to a year.

Biggert says, don't worry, her bill has plenty of safeguards. For example, if an employee is unhappy with the arrangement, they can just cash out their hours, and get the money. She says the Family Time Flexibility Act is a bill is to help working people.

But critics say, don't believe the friendly sounding title. They say the real rationale for this bill is to make doing business cheaper for corporate America.

BROWN: Is this bill also good for business?

BIGGERT: It's good for business, in the fact that business owners wanna keep their employees happy. You know. They wanna have good employees that work for them, that wanna work there. So, it's just another benefit, just like health care, vacation pay. This is another benefit that makes the employees wanna work there.

BROWN: It seems the sponsors don't want to talk about how this legislation might mean more profit for business yet its biggest promoters are all from the business world. Listen to Randy Johnson of the U.S. Chamber of Commerce. He's one of the bill's champions.

JOHNSON: It's not a bottom line issue for business. It's not going to help the profit line of businesses.

BROWN: Is there a small financial incentive, would you say?

JOHNSON: This isn't a bill about money. It's just a nice little fix to the law that gives it, that it's gonna give some employers another option to work things out with their employees. The arguments of the opponents on this bill, they are just misconstruing what the legislation really does. It's really a tempest in a teapot.

BROWN: But the Economic Policy Institute — a labor policy think tank — crunched the numbers. They calculated that to a big business — say, one with 200,000 eligible employees — this 'little fix' to the law could be the equivalent of a $200 million interest-free loan.

Remember: those 12 months that a company can delay granting comp time is 12 months that they're holding money that workers have earned.

And that has America's most powerful labor leader up in arms.

SWEENEY: It's clearly an attempt to save billions of dollars for employers, and deprive workers of a benefit that they are entitled to.

BROWN: John Sweeney is the president of the AFL-CIO. He says it's not just H.R. 1119 that could undercut overtime protection. He points to legislation currently in the Senate that would basically rewrite the 40-hour work week and, just three weeks ago, the Department of Labor proposed changing the definitions of who's eligible for overtime and who's not. Under these new definitions, he says, millions of employees will lose their overtime protection.

SWEENEY: I believe that this is very clearly an attack on working families. This Administration is not focused on working family issues. This administration is focused on corporations, and on business. And we've seen this in every move.

BRAVO: If there are legislators who say that they support families having more time and flexibility, I say great. We have a number of things you should do. Help limit mandatory overtime. Help adjust and raise the minimum wage, so people don't have to work overtime in order to pay their bills. Helps expand access and affordability for family leave, and support some minimum standard for paid sick leave so parents don't get fired cause they have a sick kid. But for God's sakes, don't take away the little protection workers have around overtime and pay.

BIGGERT: Times have changed. The workplace has changed. Families have changed. But the law hasn't changed since 1938. I think this is one area that should put us into the 21st century with the American family.

OWENS: A more accurate title would be "the employer-interest-free-unsecured-loan-act."

BLACKBURN: This is a bill that will provide for American workers greater flexibility, greater control, more options.

BROWN: Judy Biggert's bill passed out of the House Committee on Education and the Workforce just last week. The vote was split along party lines — 27 Republicans, 22 Democrats. She hopes it will pass out of the House in time for Mothers' Day.


MOYERS: When I watched that I thought at least there is a debate about a real issue there.

MADRICK: At least it makes people aware, there is a serious issue there. This bill seems like it's structured, to enable too many companies simply to get out of paying overtime. In the reality in the workplace, you often can't take… you probably won't be able to take that kind of time off. Just like some people can't take all their vacation time, they are… I'm a little concerned about the way this bill is structured. But at least it's talking about family issues. At least we're getting that problem out there. The two-worker family is squeezed.

MOYERS: You wrote recently that neither political party has been paying serious attention to issues like this. And then, you went on to say that one of the great disappointments in recent decades is that Democrats have more or less swallowed whole the underlying economic theories of their Republican rivals. Why is that?

MADRICK: I think the Democrats have bought into the idea that their constituency no longer seriously believe in government. I think the political constituency has merely shown a great frustration with the lower, the difficult economic times, and truly have since the early 1970's.

But the Democrats haven't come forward with an idea about how the channel that frustration, towards uses of government that I think could be more productive. Government did have to change. Some reforms were necessary. But productive uses of government will be central, integral to the future growth of America. And the future fair growth of America.

MOYERS: But why is there no effective voice, political voice, for people who are getting the short end of the stick?

MADRICK: There aren't that many voices in the Democratic Party that support those people.

I think part of it has to do with the media.

The media has also moved in this direction, and don't question things enough. Don't see themselves any longer as the safeguard of the people. Have moved with the power and the nation and of course, the media are big business, too. There has been a serious change, I think, in the notion of what good journalism is, that you have to somehow appeal to a market, you have to get ratings, you have to get a big audience, you have to keep pumping up the advertising.

Part of that is always true in our kind of economy. And thank goodness that you should be making profits. But I think it's come to dominate. The overwhelming support the business media gave to this thing called the new economy was astonishing.

MOYERS: No hard questions were asked.

MADRICK: No hard questions. Just go along with the pack, create this environment, this fantasy environment. And it's hard to imagine that somewhere in the back of their minds they didn't say, "Hey, more high technology, advertising in the magazines, more viewers on those financial cable shows" that did so well in that period.

MOYERS: What is the fundamental question you think the press should be asking now?

MADRICK: There should be front page stories on how few economists agree that this dividend tax exclusion can provide real economic growth in the long run. They should be harping on that theme frequently. This is pretty irresponsible economics, I think.

MOYERS: You know what surprised me, is in THE WALL STREET JOURNAL poll this week that I referred to in the opening of this broadcast, fewer than ten percent of even Republicans think even tax cuts are a priority. And yet, this is number one on the marquee in Washington right now.

MADRICK: I, you know, I think President Bush talked about tax cuts in the campaign really to fight back Steve Forbes in the primaries. I don't think it was on their political agenda. But once he promised it, he stuck with it, and I think one of his sort of political rules is once you do something, stick with it.

And I think the politicians in the White House still think it's the great political sell. Maybe it's not. Maybe people will start to see it's just too much.

MOYERS: So, how do you put more money in the hands of people who will spend it?

MADRICK: That's tough to do. But you do it by seriously reforming education. You do it over time by changing that progressive tax system, so that we can fund poor people more. By maybe even having earned income tax credit expand a little bit more. Maybe…

MOYERS: …working people at the lowest level.

MADRICK: Right. Maybe it could expand even a little bit higher to give some spending power to people. But probably, in the end, equalizing education, giving everybody that opportunity to ge… because that, it's quite extraordinary, America, if you get into that pipeline. And it may not only be about education.

It may be about networking. About meeting the right people. About having the right resume. About learning how to deal with society. Not just about learning, I shouldn't say "not just about." But not merely learning your ABC's.

MOYERS: You talk about upward mobility. You're talking about upward mobility. And what you say is, what you seem to be saying is that upward mobility has really slowed.

MADRICK: I think there's beginning to be some evidence that it has slowed. Even if it stayed the same, the number of pe… the bottom four-fifths, even if you go from the middle 20 percent to the next level higher, you're not gonna be doing too well in this economy. You've got to vault into the top 20 percent to start living the so-called American Dream.

In the 1950's and 60's, for the first time in our history, the majority of people thought they were middle class. It was an extraordinary development in the history of the world, this group, rose to and they could handle…

MOYERS: I was one of them. The day I went to work in college I made as much money in one week as my father ever had.

MADRICK: That's changed for many people. So, even so that the mobility issue I think is a problem, because even if you move among the lower groups, you're not moving very far anymore. And it's very hard to handle those most important costs, I keep saying it, health, education, and housing.

MOYERS: Is it conceivable to you that ordinary Americans could stop believing in the fairness of the…

MADRICK: Yeah.

MOYERS: …economic system?

MADRICK: You know, people… it's extraordinary, the people keep saying inequality is good. You know, it's amazing how many economists say it, because it gives people that incentive to go after the pot of gold at the end of the rainbow.

That's not what makes people work hard. What makes people work hard is a fair wage. What the American Dream is really about is if I work hard, if I study hard, if I am sincere in my efforts, I will be rewarded. I will be rewarded fairly. And I'll be able to have control over my life, and respect in my society.

In the last 25 or 30 years, that has changed for too many Americans. That's no longer the case. A lot of that has to do with growing inequality. And a lot of it has to do with slow economic growth. And we've got to begin to understand that, and understand the frustration that breeds. And partly accounts for the severe anti-government attitude. And we've got to…I believe we need a government that begins addressing those issues, and starts becoming sensitive to those issues.

MOYERS: The book is WHY ECONOMIES GROW: THE FORCES THAT SHAPE PROSPERITY, AND HOW TO GET THEM WORKING AGAIN. Its author is Jeff Madrick. Thank you for being with us on NOW.

MADRICK: Thank you.


ANNOUNCER: Next week on NOW: the people of the Islamic world are experiencing shock and awe. How will the American footprint in Iraq transform the Mideast?

IBRAHIM: I think it is a time to rebuild this region for peace, for prosperity, for democracy in the decades ahead. And I hope it will succeed.

ANNOUNCER: That's next week on NOW.


ANNOUNCER: And connect to NOW WITH BILL MOYERS online at pbs.org.

More on the American economy and the status of the Bush tax cuts. Track the Family Time Flexibility Act and other overtime legislation. Rebuilding after 9/11: what government, business and private citizens have done.

Connect to NOW at pbs.org.


MOYERS: The images of war in Iraq have gripped us for a month now. So earlier in the week, while searching through the Web, I was startled by some other photographs that took me suddenly back to September 11th, 2001.

Photographer Fred Krughoff lives in the community where the terrorists brought down the World Trade Center, and in those first awful hours, he began recording the agony and response of his deeply wounded neighborhood. He's been at it ever since, and you can see his photographs by going to NOW's web site on PBS.org. This is one I lingered on: the way it looked on September 12, the morning after, the morning when America drew a collective breath and set out to cope with a new order of things.

September 12 is also the starting point for this new book by Steve Brill: AFTER: HOW AMERICA CONFRONTED THE SEPTEMBER 12 ERA.

Mr. Brill is a man of many interests. He founded the AMERICAN LAWYER MAGAZINE as well as cable's Court TV. And he was the creative force behind BRILL'S CONTENT, a magazine that cast a sharp eye on the business and ethics of journalism. But for his new book, Steve Brill put on the gumshoes of a reporter and conducted hundreds of interviews to chronicle America's response to the challenge we faced on the morning of September 12. Welcome to NOW.

BRILL: Thank you, good to be here.

MOYERS: You write in the closing pages of AFTER, quote: "We need to remember where we were that morning." Meaning the morning of the 12th of September, the day after the event, right?

BRILL: Exactly.

MOYERS: Where were we?

BRILL: I'll tell you where I was. I was sitting at the kitchen table with my son who's 14 years old. And I remember saying to him, "How are we gonna do this?" How we're a country that you know, yesterday, you know, the biggest issue that we were thinking about, the issue that dominated the television air waves was the sex life of a congressman that we'd never heard of — Gary Condit.

Congress seemed to be deadlocked. Lobbyists seemed to have a stranglehold on everything. The President was reading to school children. The Attorney General was reading to school children. We didn't really care much about government. We didn't really mind the idea that government was gridlocked.

And suddenly on September 12th we have to depend on government to make it safe for us to go over a bridge. We have to depend on government to get airplanes back up in the air so we can fly. We have to depend on government to reopen the stock market, to start commerce up again, to make us safe, to protect the freedoms that we've always held dear even while we try to make us safe.

And I was really curious and anxious. Can we do all this stuff? What are we gonna do? And that's what this book is about.

MOYERS: You've come up with some small but telling facts that I find very informative. I mean that when Attorney General Ashcroft directed the FBI and the INS soon after the attacks to question anyone they could find with a Muslim sounding name. Agents simply looked for names, sometimes just looked for names in the phone book.

BRILL: That's right. And on the one hand that sounds ridiculous. It does sound ridiculous. On the other hand, it was emblematic of where we were. They didn't have any informants in that community. They had, you know, they didn't have the usual suspects to round up.

And they were also desperate and we were all scared. Remember 19 people who had lived, you know, who had lived among us, who hadn't broken any laws had gotten onto airplanes and killed what we thought on that morning were 10,000 of our citizens.

And we knew that but for the fact of the fourth plane had left an hour late it would have crashed into the Capital of the White House. It would have been successful. It would have crashed into the Capital of the White House. These were scary times and they were especially scary times if you were in the center of the activity that the FBI was, they were just doing anything they could and it wasn't much.

MOYERS: Something almost like the Marx Brothers in picking up the phone book and saying, "Let's see if we can find some Muslim…"

BRILL: Let's just go visit this guy and ask him if he knows something. And you know, it's… it sounds comical but it was, these were desperate times. And in desperate times people do silly things and they do things that also, you know, that threaten our rights and threaten the Constitution.

MOYERS: Another small insight. "We still don't know," you write, "how many foreigners have overstayed their visas and remained in the country illegally."

BRILL: We have no idea. We have no idea.

MOYERS: What do you guess? A million, two million, three million?

BRILL: They think it's — the INS, Immigration Naturalization Service, thinks it's three or four million a year. But it could be 300,000 a year, it could be 10 million.

MOYERS: Then you report that fireman's widows may be entitled to collect an average of some $6 million each. I didn't know that.

BRILL: They are. And in fact, that's about the average they will collect. And that's the result of all the charities that sprung up on behalf of the fireman and their families.

I don't think that's wrong. But it raises a lot of obvious questions. For example a fireman who ran into a burning building the next day or was killed would have been entitled to a death benefit of about $250,000 period. The soldiers who have been killed, you know, overseas in the Iraqi War entitled to benefits of about $9,000 plus, you know, a little more if they have life insurance.

You know, society very rarely confronts that terrible question of how much is a life worth. And what happened on September 11th in a variety of contexts, the charities to the firemen... For example, if you were a New York City police officer you got, you ended up with more money than if you were a Port Authority Police officer's family because more people had heard of the charity for the New York City police officers.

If you were a fireman you got more money as it turned out than the police officers because more people contributed to that charity and because the rules of some of the charities were different. That raises an awful lot of issues. And then there's the federal government which has this Victim's Compensation Fund that I write about that actually published a chart that valued human life. If you were a janitor and you were 63 years old your family might get $600,000 and if you were a stockbroker and you were 31 years old your family might get $4 million.

There are reasons for that. They parallel how the courts deal with those kinds of, quote, "wrongful deaths." But for the government to publish a chart like that really puts those issues, you know, right in front of you. And it makes a lot of people pretty angry. The question is… you can bet that the victims of the next attack and there's gonna be one, are gonna get less money. And the third attack will get less money than the second. And the fourth attack will get less money than the third because it will be less dramatic, less unusual.

MOYERS: You talk as if you seem to think another attack is inevitable. Why is that?

BRILL: It's unrealistic of us to believe that we can prevent other attacks.

I think, and you know, that we've made a lot of progress and done a lot of things behind the scenes that Ashcroft and certainly Tom Ridge and more importantly the people that you've never heard of in the customs service. There are... law enforcement...

MOYERS: There are lots of heroes in here.

BRILL: They had done a great job making us safer and they deserve a lot of credit. But safer doesn't mean safe.

MOYERS: Do you feel safe coming through the Lincoln Tunnel? And you're going to leave the studio soon, in fact…

BRILL: I'm gonna go through the Lincoln Tunnel.

MOYERS: You're gonna go through the Lincoln Tunnel to an airport. Do you…

BRILL: Right, I…

MOYERS: …feel safer today going to through that Lincoln…

BRILL: Yeah, because I know that they have radiation detectors, for example, at both ends. I know that they have better intelligence in terms of what they might be looking for. But I know that, I know — unlike September 10th, when I didn't think about going through the Lincoln Tunnel — I know that it is risky.

I know that the risk is less than it was on September 11th but the risk has not been eliminated and what I'm particularly concerned about are the so called soft targets: mass transit, the subway system, office buildings, shopping malls…

MOYERS: Places where a lot of people congregate.

BRILL: Yeah, because you don't need a terribly sophisticated attack wreak a lot of havoc.

MOYERS: Yeah, I didn't know until I read your book that there are, you say, as many entrances into the subways of New York as there are checkpoints at airports around the country.

BRILL: Exactly. It's one of those fun facts that conveniently has perfect symmetry to it. And the point I try to make by discussing that is that we're now spending $6 billion a year to protect the airports and the airplanes. And that's money well spent. We're doing a very good job. Everybody would agree that the people who are at the checkpoints now look and are more competent.

But we can't spend $6 billion a year to do that in the New York City subway system. And if we do that we can't do it for the 18,000 entrances to all the office buildings in New York or the entrances to the subway system in San Francisco or Chicago. We have to get smarter about what the policy wonks call risk management. And that means some difficult kinds of choices.

MOYERS: Am I at greater risk a couple of hours from now when I get on the subway and go uptown than you are when you leave here, get in a car and drive through the Lincoln Tunnel and go to the airport?

BRILL: Oh, without any question. I mean, the airports are the safest place probably to be in this country. Once you're inside the checkpoint. The…

MOYERS: That's stunning because you say in the book that the most devastating revelation of September 11th was how inadequate the airport security system was.

BRILL: Oh, but the, I mean, it was clownishly stupid. For example, you could buy… it now seems stupid. You could buy a pocket knife at the newsstand that was behind the checkpoint. You know, all those little, you know, where they sell these little travel kits. The travel kits have knives of the kind that the hijackers used.

MOYERS: Do you think the country knows right now that we have no secure system across the northern border with Canada?

BRILL: No. I went and watched people walk over the border.

MOYERS: Yeah, that's one of the most interesting parts of the book.

BRILL: And they are, to Ridge's credit and the credit, I don't want to make this, you know, it's sound like I'm not giving these people the credit that they deserve. They have recently in the last three, four months acted on that. There are now some cameras posted in certain places, motion detectors. Ridge taking over the INS sounds like a bureaucratic shuffle but it will actually matter because the INS historically has been so terrible that it's an excuse to just clean the whole place out and get new leadership in there.

To give you an example, the INS actually told a committee of the House that the reason they hadn't put cameras and motion detectors up on the northern border, as of last summer was it takes them seven to eight months to an environmental impact statement of putting the pole up.

This is an administration that we have not previously thought of as being, you know, that sensitive to the environment. And the environments we're talking about were these poles that would be going up you know, the Detroit River which is, you know, not exactly a wildlife preserve. And so there's a whole bureaucracy that's just ludicrous and they have had no sense of urgency. It's a little different now.

MOYERS: What is the role of journalists? To make sure that the government does the right thing in this difficult time?

BRILL: The role of journalists really has to be to get people to focus on problems before they happen. That's a big part of their role.

Now there are so many issues in what I call the September 12th era that are complicated, that are difficult and that people need to focus on. For example, dirty bombs. The biggest threat of a dirty bomb…

MOYERS: A dirty bomb is a…

BRILL: …is that… a dirty bomb is basically, you know, you can steal some radioactive material from a dentist's office and put it with some dynamite. And you set it off somewhere. When the first responders show up and they do a radiation check, which they now do anywhere, they're gonna get a signal that this is a radioactive bomb.

And the first time that happens in New York or Washington or Kansas City, there's gonna be total panic. The fact is that bomb won't be terribly dangerous. Probably it won't be dangerous at all. It's just gonna panic people.

And one of the reasons it's gonna panic people is that we haven't talked about that enough. We need to talk about that. People need to be educated.

MOYERS: But if we do a piece on dirty bombs, people say, "Well, you're rubbing our noses in it. You're panicking us. You're making us go around…"

BRILL: The whole point of the piece would be not to get panicked. And that the terror, that weapon, that terrorist weapon is a pure panic weapon. It really doesn't cause damage. It's pure pan… it's the ultimate psychological weapon.

MOYERS: You report in the book that right after the attacks, President Bush pulled the Attorney General aside and said to John Ashcroft, "John, don't let this happen again." Is that possible?

BRILL: It's not possible. And more important it is a totally different job that the President has just given the Attorney General with a zillion ramifications. The Attorney General's job heretofore had been to prosecute crimes that had been committed. Therefore he's got to worry about evidence and trials and treating defendants in a way that preserves their rights.

If your new job is preventing crime, what you become is basically the domestic general that's, you know, the equivalent, you know, you become the Tommy Franks of the United States. And that in fact is the way Ashcroft has seen his job, which is, "I'm part of a war. I'm the Commander in Chief. I have powers delegated to me by the Commander in Chief in the war theater called the United States."

And he's basically said that to Congress. And said that to a bunch of judges which is, "Questioning me about how I'm dealing with these people is almost the equivalent of trying to haul Tommy Franks into court and say, you know, 'What did you do with that guy that, you know, that you caught in Baghdad yesterday?'

"Or you know, 'You pushed him around or you questioned him. How come you did that?'" Well, he sees himself that way and that creates a lot of issues, to say the least.

MOYERS: And isn't that a threat to democracy? Doesn't it make all of us conscripts in a kind of quasi-military society?

BRILL: It's a significant threat. And it's a threat that Republicans in the Congress have recognized. And Republican judges have recognized. And in fact members of the President's own cabinet, who frankly don't get along with John Ashcroft, have recognized.

MOYERS: We have 7500 miles of border in this company… country. We have tens of thousands of facilities storing or shipping chemical supplies. We have countless points where food and water supplies could be interrupted. We have an infinite number, as you say, of public places where people gather. I mean, this is a porous, large, complex society. Can we be both free and safe in America in a time of terror?

BRILL: You can make two choices. You can look at all those numbers and think about that and say, "Well, you know, what the heck. Let's not even try 'cause we can never achieve full safety without becoming a police state. And even if we became a police state you still can't put barbed wire around 7500 miles of border. So, let's not even try."

Or we can say, "You know what? We're not gonna be victims. We're not gonna be victims of either our circumstance or our geography or of the terrorists. And we are gonna be smart about this. And we're gonna get safer. If we get smarter, we'd be freer and we'd be safer.

MOYERS: The book is AFTER: HOW AMERICA CONFRONTED THE SEPTEMBER 12 ERA. I learned a lot from it. Thank you for being with us, Steven Brill.

BRILL: Thank you.


MOYERS: Earlier in this hour Jeff Madrick talked about how inequality is changing the country. Politics determines economic outcomes and campaign contributions give the edge to those who can afford the entrée. It goes even deeper. What's emerged full-blown is the military-industrial complex famously predicted and feared by President Eisenhower fifty years ago.

It's no longer possible to tell where the corporate world ends and government begins. The poster boy for this new elite is Richard Cheney. As the head of Halliburton, he made a fortune from the influence and access gained through his earlier service in government.

Then Halliburton Corporation gets favored and confidential treatment soon after Mr. Cheney becomes George Bush's vice president. This week the big construction company Bechtel receives a contract that could pay three quarters of a billion dollars for work in postwar Iraq. Bechtel gives lots of money to politicians, mostly to Republicans. On its board is George Schultz, who ran Bechtel before he became President Reagan's Secretary of State. One of Bechtel's Senior Vice Presidents is a former general who serves on the Defense Policy Board along with other hawks like Richard Perle and James Woolsey who wanted war with Iraq and got it. They advise the Pentagon and then turn around and make money out of their defense contacts.

These fellows are all honorable men, I'm sure, but they call for war with all the ferocity of non-combatants and then turn around and feed on the corpse of war. Illegal? Not in our system. Unsavory? No matter how you slice it. But the main point is this: America's corporate and political elites now form a regime of their own, and they are privatizing democracy. All the benefits — the tax cuts, policies, and rewards — flow in one direction: up. And the people Jeff Madrick talked about, whose faith in the fairness of the American way of life is the bulwark of our country, are left outside looking in.

That's it for NOW. Thanks for watching. I'm Bill Moyers.


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