The former labor secretary and Beyond Outrage author discusses the upcoming unemployment report and his sense of mistakes made by the past two presidential administrations.
Former U.S. Secretary of Labor Robert Reich
Tavis: Robert Reich is the former secretary of labor under President Bill Clinton, now a professor of public policy at UC Berkeley. His latest text, out just this week, in fact, is called “Beyond Outrage: What Has Gone Wrong with Our Economy and Our Democracy and How to Fix It.” He joins us tonight from Berkeley. Mr. Secretary, good to have you back on this program, sir.
Robert Reich: Hi, Tavis, thank you for having me.
Tavis: Let me start by jumping ahead and then we’ll come back. On Friday of this week we expect the jobs numbers to come out. Next week, I believe, we are waiting for the official poverty numbers to be released from the U.S. Census Bureau.
Obviously, there’s a link between poverty and joblessness, but what’s your sense of what the nation ought to expect within the coming days with these jobs numbers and poverty numbers on top of each other?
Reich: Well, we’re slowly crawling out of a very, very deep recession. The recovery has not been nearly as fast as it needs to be, and poverty is moving upward. This is a national problem. It’s even a national disgrace, because we continue to be the richest country in the world, Tavis. There’s no reason we should have so many Americans who are either jobless or in poverty or both.
Tavis: So why are we hearing so little about poverty? We’re hearing, of course, conversation about the economy, about jobs; we’ll come back to that in a moment. But why so little from either side about poverty in America?
Reich: This is nothing new. Generally speaking, our politicians do not talk about poverty because generally speaking, the poor do not vote. They are a very weak constituency. When it comes to voting, it is the wealthy and much of the middle class who votes.
The largest party in America is neither the Democrats nor Republicans; it’s actually the party of non-voters. About 52 percent of Americans, 53 percent, depending upon your presidential election or whether it’s a presidential election or a non-presidential election, most of them do not vote.
Tavis: But if the new poor in many ways are the former middle class, why not talk about it from that perspective?
Reich: I think the middle class language that the Democrats primarily – Republicans are not really talking class at all. In fact, they want to pretend that everybody can become rich. That is not the case, unfortunately – not in America today.
The Democrats, when they talk about an inclusive middle class, they tend to talk about, and hopefully they will be talking and the president will be talking about this – a middle class that continues to grow larger and larger, so the poor can move up into the middle class. As people fall out of the middle class they’re caught by not so much safety nets but trampolines that allow them to push and move back into the middle class.
That’s what we need. We used to have that. The first three decades after the Second World War, we had a middle class that kept growing. Many of the poor moved up to the middle class, and even when you fell out of the middle class, you could get back into it because the economy was doing so well for everyone, not just for the rich.
Tavis: So what would those trampolines, to use your phrase, as opposed to safety nets, what do those trampolines look like today? What would they look like?
Reich: Well, instead of having an unemployment insurance system that is full of holes – 40 percent of Americans who are unemployed don’t even get unemployment benefits today because they don’t qualify – we would have a reemployment insurance system that meant that people would have job counseling, job training.
They would have access to good jobs, community colleges. We would integrate education with access to jobs, and they would know that there were specific jobs out there that they were training for.
In every community we would have not just community colleges and training programs, but employers who were actively stating that if somebody passes and gets through a particular training program, there will be a job on the other side waiting for them.
We would have a minimum wage that was higher, so that when you got a job you actually could turn around and buy stuff, which would help other people get jobs, because the only way employers are going to hire more people is if those employers have more customers who have money.
Tavis: If you were talking to someone who had just a high school education and were put on the spot and asked to explain to them the primary difference between how Mr. Obama and Mr. Romney want to approach rebuilding the economy, you’d say what?
Reich: There are two approaches. One is from the ground up, and that is the Obama approach. You invest in people, invest in education, make sure there are safety nets, and in my language, trampolines, so people can get into the middle class as quickly as possible.
What the Republicans believe in is top-down – trickle-down economics. Make the rich richer, cut their taxes. By the same token, cut many programs that the poor depend on, and somehow their wealth will trickle down to everybody else because the rich will have more incentive to create more jobs.
I don’t believe, frankly, Tavis, that the Republican program of trickle-down economics has proven itself to work. We saw George Bush have major tax cuts, mostly for the rich. What happened? Well, we had fewer jobs after those Bush tax cuts, and the median wage for Americans started to drop, ultimately ending in the great crash of 2007/2008.
No. What we’ve seen, and again, not just after the Second World War but also in the Clinton administration, of which I was very proud to be secretary of labor, that when you raise taxes on the top, when you expand investments in education and infrastructure, when you actually build the economy from the bottom, you get sustained recoveries and you also get a larger middle class with upward mobility.
Tavis: “The New York Times,” as you I’m sure saw a few weeks ago did a front page story about the Clinton administration when you were secretary of labor; specifically, the Welfare-to-Work program.
What the “Times” found in their research was that 15 years later, more women and children are falling into poverty than ever before, primarily because that Welfare-to-Work program didn’t work out so well, and that Peter Edelman, ultimately, was right about coming against his own administration and stepping down because he disagreed with that approach.
Your thoughts about that welfare program, since we’re hearing so much these days about welfare once again?
Reich: Peter was right. I was very much against the president signing that bill. I thought – it was the third bill that the Republicans had sent to him. I thought he should hold out for a much better bill.
The problem with that Welfare-to-Work bill is that it only provides a limited amount of time – in most cases, five years in a lifetime that somebody can collect supplemental benefits or welfare – and if the economy is doing fine, or if you have a normal pattern of recessions every eight or nine years that last maybe a year, a year and a half, that five-year lifetime coverage is probably going to be enough for most people.
But if you have, as we have had, a very deep, once-a-generation depression or near-depression that lasts for many years, imposing itself with the greatest burden on the poor, then that five-year limit is going to take a huge, huge toll with regard to some of the poorest people in this country.
That’s exactly what has happened. So I think it was a bad bill. I think the president should not have signed it. Unfortunately he did, and we saw the results.
Tavis: So Romney and Ryan have finally gotten around – I’m surprised it took them this long – they’ve finally gotten around now, strategically, at least, to asking that Reaganesque question, are you better off now than you were four years ago.
The Obama administration, to my read, initially stumbled on that answer. I suspect this week they’re going to do their best to answer the question. But I guess I’m wondering whether or not a strategy of it could have been worse is what the American people want to hear.
So how do you answer the question are you better off now than you were four years ago?
Reich: Well first of all, I think you have to remind people where they were in 2008. Most people were much worse off than they are now, but you’re right, it’s not enough. You have to paint a picture of where we are going, why we’re going there, and how we get there that’s going to be even better than today, because too many Americans are hurting today.
We have too high an unemployment rate, too much poverty. Americans are still underwater in terms of their homes. We have about one out of every three or four Americans owes more on their homes than their homes are worth.
So this is not an economy to celebrate. The direction that we are going in is still a positive direction, but it’s not nearly good enough. What I hope Obama does, President Obama, is tell the American people exactly how we are going to get from here to where he wants to go.
We know the Republican plan is not a plan at all. There’s nothing in it. In fact, the only thing we really see is payments – that is, tax cuts to the rich, cuts in programs that are vital to the middle class and the poor, and really no promise of more employment because you are cutting the budget too early, when we still have a lot of unemployment.
You don’t want to cut the budget deficit when we still have high unemployment, because that is going to mean less demand for goods and services in the entire system. It’s the same thing that the Europeans have done inappropriately. They have created a kind of austerity trap for themselves.
But what the president needs to do is tell the American people how he is going to continue to make things better, and much better than they are now.
Tavis: Is that what you expect if Romney and Ryan are successful in winning this election, that we’re going to get on more aggressively on an austerity track in this country?
Reich: Unfortunately, yes, because that is what Mitt Romney stands for. He has said – he has left out a lot of details, all of the important details. How is he going to broaden the tax base? That is, fill the loopholes? He doesn’t say. How is he going to give the wealthy in this country about a $4 trillion tax cut over the next 10 years and also bring down the budget deficit? He doesn’t say.
How is he going to restore military cuts and yet at the same time cut the rest of the budget without imposing huge burdens on the middle class and the poor? He doesn’t say.
But Paul Ryan, the presumptive vice president and the vice presidential candidate – he’s not presumptive; he is the vice president candidate – has provided detailed budgets. Sixty-two percent of the cuts in the budget under the Ryan budget plans are in programs for the lower middle class and the poor.
A huge percentage come out of Medicaid, which is the program for poor people in this country, and also Medicare, which is the primary program for seniors. Their program – and it is Romney’s program as well as Ryan’s program and the Republican program – also does not respect women’s reproductive rights.
It is anti-gay. It is also the kind of exclusionary program that this country is not comfortable with. It violates the major tenets of equal opportunity in this country, so I think that the American public will ultimately reject it when they understand what the budget program, the economic program, and the social programs are coming out of the Romney-Ryan campaign.
Tavis: Since you mentioned Medicaid, Mr. Secretary, let me ask you again in layman’s terms to explain what this debate is all about. Most Americans now after Labor Day are just now starting to tune in, of course, to this, as I call it, this sprint from Labor Day to Election Day, when everybody pretty much pays attention.
We’ve got these four upcoming debates, but there’s going to be a lot of back-and-forth about Medicaid. The Romney people, Romney-Ryan accusing Obama/Biden of stealing, taking, borrowing $700 million from the program, so these charges are going back and forth between the two camps.
Give me your view of what this debate, specifically about Medicaid, is about.
Reich: Well, there are two programs – Medicare, which is the program for seniors; Medicaid, which is a program primarily for poor people but also for many seniors who have lost basically all of their assets and need Medicaid.
Here, in essence, is what it’s all about. With Medicare, what Paul Ryan and presumably Romney – everything he’s said is consistent with the Ryan plan – want to do is turn Medicare into vouchers. The value of the vouchers does not keep up with expected increases in healthcare costs. That means that more and more of the burden of saving the costs of Medicare is going to be on seniors.
With regard to Medicaid, what they want to do is put it into block grants – basically turn it over to the states, reduce federal funding by $800 billion over 10 years for Medicaid, so the states don’t have any money. If the states have very, very rigid budget constraints, by their own state constitutions they cannot run deficits, which means Medicaid, the program for middle class, elderly people who’ve lost their assets, and for everybody else who’s poor, that health insurance program, that Medicaid program is going to shrivel into a very small fraction of what it is today.
So both of those programs under the Romney and Ryan plan, Medicare and Medicaid, are going to suffer, and the people who rely on them are going to suffer.
Under Obama’s plan, the way you save Medicaid and Medicare is you put the squeeze on. You reduce the amount of payments to providers – that is hospitals, drug companies and other providers – and at the same time you get serious about preventive care. You help people avoid getting sick with regard to cancer, diabetes, heart disease and all the major killers.
You improve efficiencies in the system because you don’t rely as much on private insurers, who have 30 percent of their administrative costs go into just simply the transactions that put money into people’s pockets who have nothing to do with medical care.
Tavis: The president chose to spend his political capital, once elected, on the issue of healthcare. In retrospect, did he make a mistake by not spending that capital and spending more energy and more time on jobs, jobs, jobs with a living wage before he got to healthcare?
Reich: Tavis, I think they’re interrelated. I think that the Affordable Care Act will prove to be a major milestone with regard to extending coverage to people in this country. Thirty million more people will now have healthcare coverage because of the Affordable Care Act and we can build on it and make it better and use it as a vehicle for constraining and restraining healthcare costs.
A lot of our unemployment problem is related to the fact that healthcare costs have been going up so fast that employers cannot afford to hire additional people, and many families have either given up healthcare altogether or they can’t afford the incredibly fast-increasing healthcare costs that are being imposed on them.
So you can’t separate entirely healthcare from the job situation. I think the president needed to do healthcare. I think that the bill he got was probably the best he could get. I personally would rather have a single-payer system or at least a public option, but he did about as well as he could, and I think we can build on the Affordable Care Act.
Tavis: To the allegation that the president has been far too kind and been too favorable to Wall Street, to the elites, and has not focused enough attention in this first term on Main Street or for that matter the side street, you’d respond how?
Reich: Well, there’s part – I would say that I partly agree with that. That is, he did not have as part of his Wall Street bailout program that he inherited from George W. Bush, he didn’t have enough help for homeowners, and therefore we have a problem in the economy right now.
One of the central problems is so many people, as I said a moment ago, who are underwater, owing more on their homes than their homes are worth. Secondly, he did not put constraints on the banks.
Now, George W. Bush didn’t either, but what President Obama could have done and I think should have done is say to the banks, look, if you get our bailout, then you have got to help homeowners, you’ve got to restrain executive salaries, you’ve got to make sure that you banks do not lobby against Wall Street reform. You agree to, for example, get the Glass-Steagall Act resurrected that separated investment banking from commercial banking.
I think finally what I would have recommended to the Obama administration is that when they bail out Wall Street they also make sure that there is no repeat of the too big to fail problem with regard to the biggest banks, and break up the biggest banks, or set a limit, a cap, to the size of the biggest banks.
So I think part of the charge, that Wall Street and the Obama administration got a little bit too close, is valid, but of course Wall Street doesn’t believe that. Wall Street thinks that the Obama administration is its worst enemy and much of Wall Street is now supporting the Romney-Ryan plan to get rid of the Dodd-Frank regulation altogether.
That is, the reform of Wall Street, and basically Wall Street has come around now to believing that Romney and Ryan will be better for Wall Street than was President Obama. We are seeing many of the same practices that we saw before 2008 on Wall Street once again.
Tavis: These books continue to be written drawing a direct link, a straight line, between the economic mess and malaise that we are in now back to the Clinton years and the issue of deregulation.
With hindsight now, with a rearview mirror in front of you, what say you now in hindsight about what the Clinton administration did vis-à-vis deregulation that’s caused so much of the mess that we’re enduring now?
Reich: Well, the biggest mistake that the Clinton administration made was to go along with Congress and get rid of the Glass-Steagall Act. That was a mistake promoted by Republicans in Congress, but nonetheless the Clinton administration signed on. They should never have signed on.
What you want to do is resurrect Glass-Steagall, and that again is that act that separates investment from commercial banking.
Tavis: With regard to George Bush, it’s been fascinating and actually kind of funny for me, because the Clintons, the Democrats, rather, bring out Mr. Clinton this week, put him in prime time and people can’t wait to see what Bill Clinton has to say.
The Republicans did not mention George Bush’s name one time from the podium. They act like eight years of the guy just did not exist. What, then, are we to make of the fact that Mr. Clinton is front and center this week and Mr. Bush last week was the invisible man?
Reich: Partly because the Clinton economy was an economy that worked for most people. It was the longest stretch of economic growth we’ve had since the Second World War. Unemployment plummeted; 22 million net new jobs were created.
I was there through most of that time. It wasn’t that Bill Clinton created the jobs, but he presided over an economy that created those jobs, and by investing in people, by raising taxes slightly on the wealthiest members of our society, by maintaining an economic policy that built from the ground up, he generated prosperity.
George W. Bush, well, the Republicans want to erase the eight years of the Bush administration because Bush’s policies did not work. The tax cut that went mostly to the wealthy did not work. We had more unemployment, fewer jobs; median wages go down after that Bush tax cut, than we had before.
Also, the weapons of mass destruction were never found in Iraq. His entire foreign policy, centered on going into Iraq and getting rid of those weapons of mass destruction, was a fallacy, a lie.
His administration showed remarkable callous indifference to the plight of most Americans. What happened in New Orleans and Katrina is a good example. “Heck of a job, Brownie.” Do you remember George W. Bush saying that?
Reich: Well, what Mitt Romney and Paul Ryan and the Republicans would like to do is just pretend that that administration did not happen. The spending of that administration, taking a $5 trillion, 10-year surplus that was bequeathed to it by the Clinton administration and turning it into a giant budget deficit, basically having regulators turning their backs on Wall Street and saying to Wall Street, “Do whatever you want, we’re not going to look at you.”
All of that cumulatively makes the case against Mitt Romney and in favor of Obama and Clinton.
Tavis: In your book out now, “Beyond Outrage,” you talk about how it is that we have to avoid cynicism, which is so easy to get caught up in these days, but how do we avoid cynicism and engage what you call active citizenship?
Reich: Tavis, this, to me, is the most important thing that I can possibly say on your program. Americans today, many of them, have given up on politics. They say nothing can change. A pox on both your houses, with regard to Democrats and Republicans.
But if we get into that kind of cynicism, then the special interests, the money interests, win everything. The only way we can get our economy back and our democracy back for ordinary people is if we as citizens understand that we’ve got to be active.
It’s not just paying our taxes and serving on juries and showing up. We’ve got to be engaged, mobilized, energized. We’ve got to demand that this economy and this democracy work for us as ordinary people, as average working Americans, or average Americans who need an economy that is working for us. Not working for the people at the top, but working for us.
Every time in our history we’ve had a need for that, people have mobilized. Franklin D. Roosevelt in 1936, the 1936 election, somebody came up to him and said, “Mr. Roosevelt, if you’re reelected, I want you to do A and B and C and this and this.” He turned to her and he said, “Ma’am, I want to do all of those things, but you must make me. You must make me.”
What Roosevelt said, implied, in that “You must make me” is exactly the same lesson today. No matter how good the people are in Washington, we can elect the best people, but unless good people outside Washington are mobilized and energized and force good things to happen in Washington, nothing good will happen. The special interests will continue to prevail. They are that powerful.
Tavis: The new book from the former labor secretary during the Clinton years is called “Beyond Outrage: What Has Gone Wrong with Our Economy and Our Democracy and How to Fix It.” Secretary Robert Reich, good to have you on this program. You’re welcome back any time. Take care of yourself.
Reich: Thanks, Tavis.
Tavis: That’s our show for tonight. You can download our new app in the iTunes app store. See you back here next time on PBS. Until then, good night from L.A., thanks for watching, and as always, keep the faith.
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