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Thomas Ferguson is Professor of Political Science at the University of Massachusetts, Boston and a Senior Fellow of the Roosevelt Institute. He received his Ph.D. from Princeton University and taught formerly at MIT and the University of Texas, Austin. He is the author or coauthor of several books, including Golden Rule (University of Chicago Press, 1995) and Right Turn (Hill & Wang, 1986). Most of his research focuses on how economics and politics affect institutions and vice versa. His articles have appeared in many scholarly journals, including the Quarterly Journal of Economics, International Organization, International Studies Quarterly, and the Journal of Economic History. He is a long time Contributing Editor to The Nation and a member of the editorial boards of the Journal of the Historical Society and the International Journal of Political Economy.
PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I'm Paul Jay in Washington. And in Washington on Monday, President Obama gave a press conference where he spoke about the fight with the Republican Party over raising the debt ceiling. And here's a little bit of what he said.~~~ BARACK OBAMA, US PRESIDENT: I have been hearing from my Republican friends for quite some time that it is a moral imperative for us to tackle our debt and our deficits in a serious way. I've been hearing from them that this is one of the thing that's creating uncertainty and holding back investment on the part of the business community. And so what I've said to them is let's go, and it is possible for us to construct a package that would be balanced, would share sacrifice, would involve both parties taking on their sacred cows, would involve some meaningful changes to Medicare and Social Security and Medicaid that would preserve the integrity of the programs.~~~JAY: Now joining us to dissect President Obama's press conference and this battle over the debt ceiling is Tom Ferguson. Tom is a senior fellow at the Roosevelt Institute in New York. He also teaches at the University of Massachusetts in Boston. Thanks for joining us, Tom.THOMAS FERGUSON, POLITICAL SCIENTIST, AUTHOR: Hi, there.JAY: So just before we get started, let me play you just one other little clip, which is a question that was asked at the news conference. Here it is.~~~CHIP REID, CBS NEWS: Latest CBS News polls show that only 24 percent of Americans said you should raise the debt limit to avoid an economic catastrophe. There are still 69 percent who oppose raising the debt limit. So is it the problem that you and others have failed to convince the American people that we have a crisis?~~~JAY: So, Tom, 24 percent say raise the debt ceiling, 69 percent say don't do it. Where are you? In the 69 or the 24?FERGUSON: I think I'm sort of like John Kerry on the war on Iraq; that is to say, I might be against it before I was for it. That is to say, look, in practical terms, you don't have any alternative but to raise it, it seems to me. On the other hand, there's no doubt that you could do changes in the US budget situation that would probably obviate the need for that. But, you know, they're not going to do it. You know. Now, I wouldn't do what the president's proposing. It's certainly not what the Republicans are doing. But they--.JAY: Well, before you go there, let's quickly--I know we've said this before in some of our other interviews, but let's say what's it. I mean, in theory, if President Obama wanted to go and fight for a different vision, I mean, how would you deal with the debt situation without raising the debt ceiling? I mean, I know it's imaginary, but what if we went back to the days not long ago when the Democrats controlled both houses?FERGUSON: Well, you could simply start--I mean, he's already announced plans to withdraw 33,000 American troops from Afghanistan over a relatively long period. Pull them all out, not just the 33,000, but everybody else. Everybody in effect is around the place, is saying none of this--keeping the war going there doesn't make sense if you're doing those withdrawals on that scale anyway, and that, you know, they're not going to achieve anything. If they dump another 100,000 in Afghanistan, they could widen the perimeter around Kandahar. When they pull them out, it will narrow again. You could do things like that to stop some of--. You could also, as ridiculous as it sounds, though it wouldn't solve your problem in one month, you could try stimulating the economy, getting people back to work, and getting tax revenues up. But the White House long ago decided not to do that. So, you know, I actually think, Paul, as I say, they're going to have to do it in the very short run, but there is just no justification for the type of package the president is proposing.JAY: Okay. I'm just going to say once really fast, 'cause we've done it in other interviews, but three things you and I have talked about and we've talked about on The Real News, three things that could have been done and were not. Number one, serious cuts to the military budget. Number two, real health care reform that actually would actually reduce in a more significant way the cost of health care, which would have been at the very least some form of public option. And number three, tax the wealthy. So if you put all those three things together, that 69 percent of people that say you don't need to do this aren't wrong. But as we know, none of that was done. So we are where we are. Does Obama have real choices now?FERGUSON: It won't solve the problem by August 2, either. But, you know, you're absolutely right. In particular, you know, if you just let the government bid down the prices of pharmaceuticals in health care, you could save literally, you know, trillions of dollars over the next ten years. I mean, that's an easy step these guys could take. And, you know, you know that neither the president nor the Republicans is going to do that.JAY: Well, actually, on that particular point, that's something President Obama gave away early in the negotiations on the health care bill. He made a deal with pharma early on not--exactly not to do that, so they wouldn't buy TV ads attacking his reforms.FERGUSON: Alas, yes.JAY: Okay. We've done the context. So now we are where we are. So, first of all, what choices does President Obama have now? I mean, he's clearly saying that he's willing to put on the table--. I have to--I'm supposed to just be a more straight interviewer here, but I can't. When I hear him say, I have to give up some of my favorite programs, you know, what he's talking about is giving up things that are going to cause such suffering. It's not about his, you know, wishes being violated in some way.FERGUSON: Look, there in particular, the one that sticks in everybody's craw that has any general knowledge of the real economics of the program is Social Security. I mean, even the president's supporters concede that, say, out to the year 2050, Social Security's contribution to the deficit is--unreform might add up to 1 percent or something like that. They nevertheless make the--as a percent--debt as a percentage of GDP. And yet they nevertheless insist on cutting it now, claiming to save the program. But, actually, when you read their fine print, what they actually say is, well, we just have to prove we can do this to prove to finance--signal financial markets that we're not Greece.JAY: Yeah, but, I mean, President Obama says that specifically in the press conference. He was asked directly and about Social Security. He says Social Security's not the cause of this crisis. But then he goes on to say, but now's a good time to reform it, 'cause when will we if we don't do it now.FERGUSON: Yeah. I mean, that really is hard to swallow. I mean, the essentially two-faced character of the White House assertions here are just--you know, they're outrageous. It's why a lot of Democrats in Congress simply can't stomach that one. And the truth is, in medical care--you know, we mentioned the pharmaceutical bidding business. A serious effort on antitrust, a large chunk of the growth in medical spending comes from the fact that you've got just one island of oligopolies after another in that place, and that, you know, despite the nonsense about how patients are somehow supposed to control their doctors, they can't in most cases. It's--you're not in a position to second-guess somebody who says you need an MRI, say, or whether--you know, or two MRIs. And you need there some serious antitrust. This is not anything the White House has ever been interested in.JAY: But let me ask you something specific more about Obama's press conference. Here's a little segment from one of his answers to the journalists.~~~OBAMA: What we can do is to solve this underlying debt and deficit problem for a long period of time, so that then we can get back to having a conversation about, alright, since we now have solved this problem, that's no longer what's hampering economic growth, that's not feeding business and uncertainty, everybody feels that the ground is stable under our feet, are there some strategies that we could pursue that would really focus on some targeted job growth, infrastructure being a primary example?~~~JAY: What do you make of the logic?FERGUSON: Alice in Wonderland. I mean, they don't need targeted jobs growth. They need a massive jobs program. I mean, this--you know, we're now three years into this thing, and unemployment is 9.2 percent. All of their claims that, you know, green shoots, the summer of recovery, all that stuff they were saying, none of that has proven out as--you know, Paul, forgive me if I remind you that I and others told you this on camera over the last couple of years that this was all going to be nonsense and, you know, this is not a problem of targets and narrow spending. They need a massive jobs program. That's--I mean, you are stuck here. This--look, let's just--despite all the claims. You know. And the president had really no business validating that claim that, oh, it's uncertainty that's holding back business.JAY: Well, yeah, that was what I was getting at with this quote is that he's essentially giving, almost word for word, the same argument the Republicans give, that we need to deal with the debt side in order to get business investing again.FERGUSON: Yeah. The only--I mean, the other element of uncertainty they often adduce is regulatory uncertainty there. You know. And, look, in the late '30s--or, rather, in the mid '30s, when the government moved vigorously on unemployment, that is, up till 1937, there was plenty of uncertainty. There were huge numbers of folks in the business community who actually believed, as distinct from merely saying, 'cause I think most of them know better now, that the president was--that the president, who was then Franklin Roosevelt, was a socialist. They nevertheless invested as aggregate demand rose because the government primed the pump. If they did that again, that's what would happen now. This regulatory uncertainty business is basically nonsense. It's not the problem. The problem is is that the economy is dead in the water and nobody is going to take on, you know, any more people to hire than they can see for sure that they can keep for a while. And right now--.JAY: Okay. So let me ask you a question here. So if he buys into the debt stuff, which he has, and he comes to some kind of compromise where--apparently what they're going to come to, all the pundits are speculating, is the Republicans will find some disguised way to allow a certain amount of tax increases like closing loopholes and things. What they do get on the side of the Social Security and Medicare and Medicaid, which are on the table, are things that everyone thought were supposedly unimaginable, because Obama had previously said he wouldn't go there. So let's say they do all of that, no stimulus really on the table whatsoever. How the heck does President Obama go into an election with this kind of economy, which is clearly going to tank into even deeper recession after all this?FERGUSON: Now, look, this is a serious problem. Nobody I know who looks at this problem seriously can be--is anything other than really quite scared, 'cause it's not just the US; it's just about everywhere in the world is headed down. And, I mean, even China's showing signs of the sort of slowing down. And, yeah, I mean, you've got a fairly--you know, it has a scary resemblance to 1931 in the Great Depression, you know, two years after the collapse of Wall Street. You know, Central Europe collapsed and took down the rest of the world. That sound familiar? That's sort of what's happening right now. And the White House signed on to this sort of business about worldwide austerity back in Toronto, right [crosstalk] JAY: At the G-20.FERGUSON: Yeah. And, you know, they need to give this stuff up, and they've got to do it as fast as possible. You know, otherwise you're going to be stuck at 9 percent-plus unemployment for a long time and in a situation where fuel prices are going to remain very high.JAY: Well, they're heading very fast further down the austerity path. Thanks very much for joining us, Tom.FERGUSON: Okay.JAY: Thank you for joining us on The Real News Network.
End of Transcript
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