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  • Big Question is The State of The States

    Bob Pollin and Bill Fletcher: State of the Union featured clean energy but didn't address funding states and cities on verge of bankruptcy -   January 26, 2011
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    Robert Pollin is Professor of Economics and founding Co-Director of the Political Economy Research Institute (PERI) at the University of Massachusetts, Amherst. His research centers on macroeconomics, conditions for low-wage workers in the U.S. and globally, the analysis of financial markets, and the economics of building a clean-energy economy in the U.S. Most recently, he co-authored the reports �Job Opportunities for the Green Economy� (June 2008) and �Green Recovery� (September 2008), exploring the broader economic benefits of large-scale investments in a clean-energy economy in the U.S. Bill Fletcher, Jr. is a columnist, activist, author and labor organizer. He is the Executive Editor of The Black Commentator and his newest book, cowritten with Fernando Gapasin, is entitled "Solidarity Divided: The Crisis in Organized Labor and a New Path Toward Social Justice". He is the a cofounder of the Center for Labor Renewal, has served as President of TransAfrica Forum and was formerly the Education Director and later Assistant to the President of the AFL-CIO.


    Big Question is The State of The StatesPAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I'm Paul Jay in Washington. Tuesday night in Washington, President Obama delivered his State of the Union speech. Here's a few excerpts of what he had to say.


    PRES. BARACK OBAMA: This is our generation's Sputnik moment. Two years ago I said that we needed to reach a level of research and development we haven't seen since the height of the Space Race. And in a few weeks, I will be sending a budget to Congress that helps us meet that goal. We'll invest in biomedical research, information technology, and especially clean energy technology, an investment that will strengthen our security, protect our planet, and create countless new jobs for our people.


    JAY: How does President Obama plan to pay for all of this? Well, here's one proposal.


    OBAMA: And to help pay for it, I'm asking Congress to eliminate the billions in taxpayer dollars we currently give to oil companies.


    JAY: President Obama went on to talk about important infrastructure projects that he plans.


    OBAMA: We'll put more Americans to work repairing crumbling roads and bridges. We'll make sure this is fully paid for, attract private investment, and pick projects based [on] what's best for the economy, not politicians. Within 25 years, our goal is to give 80 percent of Americans access to high-speed rail.


    JAY: So, again, how's he going to pay for all this? Well, here comes, I guess, the punchline of the speech.


    OBAMA: Now that the worst of the recession is over, we have to confront the fact that our government spends more than it takes in. So tonight I am proposing that starting this year we freeze annual domestic spending for the next five years. Now, this would reduce the deficit by more than $400 billion over the next decade. This freeze will require painful cuts. I propose cuts to things I care deeply about, like community action programs. The secretary of defense has also agreed to cut tens of billions of dollars in spending that he and his generals believe our military can do without.


    JAY: Now joining us to give their take on President Obama's speech is, first of all, Bob Pollin. He's the codirector of the PERI institute, at the University of Massachusetts, Amherst. And Bill Fletcher. He's on the editorial board of Thanks for joining us.

    BILL FLETCHER, BLACKCOMMENTATOR.COM: Thank you for having me.

    JAY: So, Bill, why don't you go first? What's your--first of all, your overall take on what was said tonight?

    FLETCHER: Well, you know, every time I hear President Obama speak I have these mixed feelings. He is a brilliant speaker. It was an optimistic speech. He certainly downplayed things like the Afghanistan War. He acted as if the recession is basically, if not over, on its way out, and thereby ignoring the fact that we still have an unemployment rate close to 10 percent. I guess a couple of other things were interesting. One was that he stood by Social Security.

    JAY: Why do you say he stood by it? Because the specific proposal to reform Social Security is to raise the age limits, and he didn't specifically say he wouldn't go along with that.

    FLETCHER: Well, he didn't say anything about that.

    JAY: But isn't that the point, that he didn't say anything about that?

    FLETCHER: But the point was that he made this comment about not falling prey to the stock market, which was clearly a reference to those that have suggested to get rid of social security and replace it with more 401(k)'s.

    ROBERT POLLIN, CODIRECTOR, POLITICAL ECONOMY RESEARCH INSTITUTE: I agree with basically what Bill was saying. If you pick out what, you know, the most central ideas are in the speech--. And it's true that he didn't give a lot of details, but really what were they? The kind of the thrust for innovation, investments in new technology, industrial policy, very positive, especially--his major focus was on the clean energy economy. I mean, basically what he was saying is our goal, our number one goal in this whole optimistic spirit of our post-Sputnik, our new post-Sputnik moment, is to build a clean-energy economy. That was number one. Number two, he did talk about deficit reduction, long-term deficit reduction, and it was, yes, pretty vague. But the number one thing he did highlight was something I agree with, was that we have to take it out of our exorbitant health-care costs. Now--and the way he said it was Medicare and Medicaid. I would say it--let's take it out of the private health insurance industry. And there's about $1 trillion sitting there that we could squeeze out through some kind of a reasonable reform of health care. So those were all very positive. He also said that though, yes, he agreed to extending the tax cuts for the rich for now, that he's not going to keep doing that. So in terms of paying for it, again, pretty vague. I agree with Bill: not a whole lot of discussion of how we get out of the recession. I would say he put too much emphasis for my tastes on out-competing the rest of the world. That means that we are going to raise our exports. That means that other countries are going to have to live with fewer imports from the United States.

    JAY: What he said about R&D, what he says about education, what he said about clean energy, we heard all that in the election campaign, yet during two years where the Democrats controlled both houses, very little was done, and the only really concrete thing--really concrete thing--in the speech was a five-year spending freeze. And then you say that you also have to attack long-term debt, you barely talk about unemployment in the entire speech. And then you talk about innovation. How are these words any different than just campaign rhetoric?

    POLLIN: I don't agree that nothing was done on clean energy. As I've said on your show before, I am a consultant to the Department of Energy on implementing the programs out of the stimulus. A hundred billion dollars was put into that. That is not nothing. Now, the fact is it wasn't implemented adequately, and it's not reasonable to expect that it would be implemented adequately in two years. But if it is--if the program is continued seriously over time--now, whether it will or not is another matter, but it was highlighted in the speech, it was highlighted very, very prominently. I would suspect that the things that I've seen slow down in the last six months might well pick up again. Money is sitting there. On the spending freeze, now, again, he is talking about spending freeze on the 12 percent of discretionary, non-defense spending. If we really want to cut the deficit, I agree. Number one, he did talk about Medicare and Medicaid. How that translates is a matter over which we have to fight. Number two, we have to cut defense spending. Defense spending--he talked about tens of billions getting cut over a matter of years, but the defense budget is $700 billion. A reasonable cut would be the range that Barney Frank has proposed, 25 percent. That would bring the defense budget down to where it was under Clinton as a proportion of GDP.

    JAY: Which is certainly not being talked about.

    POLLIN: No, it's not. It's being talked about by Barney Frank, but--.

    JAY: Not by President Obama.

    POLLIN: No, not by President Obama. The third thing is he did pick up on the theme of raising taxes on the rich. Now, how much he intends to do that is another matter. The real way to raise taxes on the rich that could haul in a lot of money is to tax Wall Street transactions. That's something that some Democrats are supporting. Of course, it's not going to pass a Republican House, but it is certainly something to keep up in the discussion.

    JAY: If you put so much emphasis on education, and we know we're at a moment where states are going bankrupt or talking about going bankrupt--they're certainly in great fiscal crisis--and many states are cutting funding to municipalities, and thus laying off teachers. I mean, the educational system's in enormous crisis. It's not primarily, at least in the most urgent sense, a crisis of quality of teaching; it's a crisis of defunding, is it not?

    FLETCHER: The point that he would not talk about, that we remain in this great recession, that we have millions of people out of work--. As you said, the states are facing the fiscal crises that are going to lead some to declare bankruptcy as a way of getting out of pension obligations and destroying unions. There was none of that urgency contained in his speech. It was as if that was not happening. So it was a speech that was, I think, aimed at making us feel that--particularly in the aftermath of Tuscon, that we actually can come together as a country and walk forward and figure out ways of problem-solving. That's sort of what I think that this, the objective of the speech, was. It was not about the kind of policies that we need fundamentally in the middle of this profound economic and [environmental] crisis.

    JAY: But isn't that part of the problem, that if what they cooperate on (meaning "they", the Democratic leadership and the Republican leadership) is essentially a freeze in spending, more talk about debt cutting, and that the recession, the back of the recession's been broken, he says, very little talk about unemployment--I mean, if that's what the collaboration's about, then why is that good for the rest of us, Bob?

    POLLIN: You're both absolutely right that the thing that was missing was discussion about solving the recession, which is still--may even be entering its most severe phase. When we talk about, as Bill just did, these reports that are coming out that state governments are contemplating declaring bankruptcy and breaking their pension fund obligations--which, by the way, in my view, is probably the worst outcome of the recession that I've heard about so far, if that's how far our political leaders are willing to go, as opposed to raising taxes on the rich. Now, there is a simple way to prevent that, which is to fund state governments, which is what we've been doing for the last two years. Revenue sharing to state and local governments have prevented these kinds of severe cuts thus far, including from my own institution where I'm sitting right now, UMass Amherst, which got a $50 million stimulus check. We need another one. And the alternative of cutting pensions and busting public-sector unions, which is a big story, right, was not discussed. And that's something that, you know, progressives in government and fighting in Washington are going to have to focus on quite strongly in the future. And it's true Obama left that out entirely from his discussion.

    JAY: But isn't that the whole point of what's facing us now is that the economic crisis, the recession that, as you say, could be getting even worse--. I mean, this speech seemed to me designed to get a maximum amount of applause from both sides of the aisle.

    FLETCHER: And the decision of this administration, particularly in the aftermath of the November elections, is to basically create a government of national unity. And this is exactly the wrong path that needs to be taken. It--even if Fox News is saying that they approved of the speech, that's what they're saying now, and in 12 hours they'll find something else to go after. The point is that the people that are watching this program and others need to realize that nothing short of mass movements is going to make any difference in terms of this, because this, the direction, the comfort level, the comfort level of this administration, is focused on trying to build some sort of rapprochement with the Republicans. And we're going to have to shake that up.

    POLLIN: Now, are the Democrats willing to sit there and watch pension fund contracts get broken? I don't really know the answer to that, and I don't think any of us know that. The severity of the state and local budget crisis is just starting to happen because up to now the federal government has funded it through stimulus funds. But if we're going to start seeing cuts in pension funds, cuts to teachers, cuts to firefighters and cops, cuts to health-care workers immediately, and then the implications of that flowing through the community, I think we're going to see very quick sharpening of the debates around the things that really do matter in terms of the recession.

    JAY: Thank you both for joining us.

    POLLIN: Thank you.

    JAY: And thank you for joining us on The Real News Network.

    End of Transcript

    DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.


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