Robert Pollin: Based on a “normal” pace of recovery, it could be 2018 before unemployment hits 4%
Story Transcript
Robert Pollin Interview (Part 2 of 3)
PAUL JAY, SENIOR EDITOR, TRNN: Welcome back to The Real News Network. We’re joined again by Robert Pollin. He’s the cofounder/codirector of the PERI institute in Amherst, Massachusetts. Thanks for joining us again.
ROBERT POLLIN: Thank you, Paul.
JAY: So the first part, we talked about the extent of joblessness and one of your proposals about how to free up some of the $650 billion sitting in the banks as government credit, or other ways to lower interest rates. Let’s talk about some of the other—which ends up with loans for small business. First of all, let’s just talk a little bit about political will here, because another one of your proposals seems to be a no-brainer, which is refurbish, retrofit government buildings.
POLLIN: Easy.
JAY: Make them green—
POLLIN: Yeah.
JAY: —and energy-conservationist. (Is that the word for it?) It’s a no-brainer. He even talked about it in the campaign. But they’re not doing it. I mean, many of the proposals in your article are kind of no-brainers.
POLLIN: Thanks! No, no.
JAY: What I mean by no-brainers is, when you read them, it makes so much sense that you would just say, well, why wouldn’t you just do it? So talk about the issue of political will here, because is the hidden secret of all of this is that the kind of financial and political elite are going to learn to live with 10 percent unemployment? In other words, they ain’t the ones that are going to suffer. And are they just getting their heads around to maybe we’re into a decade of structural 8, 9, 10 percent unemployment, and so be it?
POLLIN: Well, I don’t usually discuss these things with the people that think that way, but, I—you know, just hearing the kind of talk, I think that the Obama-leading economists, they probably think, look, you know, we always have downturns and we always come back, and last quarter the economy grew by 5.7 percent. So as long as we start to get growth going—. So we had a recession, we got out of the supersevere crisis through the bank bailouts and the stimulus, and in a couple of years we’re going to be better off.
JAY: Yeah, just in your article, it ain’t a couple of years. You’re saying to get to 4 percent unemployment and kind of a natural—whatever that is—natural cycle, we could be looking at 2017 or 2018.
POLLIN: That’s right.
JAY: Which also could mean the end of any Democratic control of the White House.
POLLIN: That’s the point that they’re not understanding. And all I did was calculate the last three business cycles as how long does it take to get back to, say, 5 percent unemployment given the normal pace of the last three recessions; how long would it take to get to 4 percent. And that was conceding a lot, ’cause this recession is more severe. And so if we took the normal pace to get to 5 percent, yeah, we’re looking at 2017, somewhere in 2017. To get to 4 percent, who knows? And this is assuming we avoid all the landmines that are sitting there in front of that.
JAY: Yeah, that’s assuming there’s any natural curve/arc to this recession.
POLLIN: Well, I’m saying let’s take the best case and assume there is. And we’re still in a—you know, the recession was so severe and the unwillingness of businesses to start hiring again is so strong that it’s—you know, yeah, we’re looking at seven, eight years under a normal process to get back to—.
JAY: So that goes to another part of your proposal. And then the question I have is: isn’t this the only real short-term fix, especially given the real politics in Washington, where the Republicans seem to want to block just about everything, because it’s probably in their electoral interest that unemployment carries on as long as possible? Which is: direct programs, which means government loans money directly to small business, government hires millions of people to retrofit buildings and build roads, and so on and so on, I mean, is there really any choice other than that, given all the realities here?
POLLIN: Well, you know, if we’re talking about political reality, I mean, we already have a $1.5-$1.6 trillion deficit, so I think we’ve got to keep a big level of government deficit spending. But we are sitting on, you know, something close to $1 trillion that we can mobilize in the private market. So, realistically, I think the best political story is to say, yes, let’s get the credit system working for ordinary people; let’s get it working for small businesses; let’s unlock that $850 billion that’s sitting there. And that to me seems like a realistic story. And you can say, look, we want loan guarantees: we’re going to lower the risk for banks and for businesses and we’re going to create jobs. Who could be against it? So to me that’s—.
JAY: But let me ask you a technical point. When a bank goes to the Fed and gets this zero percent money—which is supposed to be like emergency loan money, but they’ve been getting billions of it—is it a fixed rate of whatever they got it at, or is it a floating rate?
POLLIN: Fixed.
JAY: It’s fixed. So even if rates go up 3 or 4 percent, they’re still paying next to nothing for the $600 billion. Well, if that’s the case, then, I mean, if you’re going to blue-sky this, why not tax it back? I mean, what the hell do they need $600 billion in public money for?
POLLIN: Yeah, that’s the other proposal. If the loan guarantees don’t work, I would say yes. But you have to define something that we would called excess reserves that they’re sitting on, and then we say those excess reserves should be taxed. Now, that’s probably unrealistic as a political proposal. But I do think that the loan guarantees is realistic, ’cause it’s a carrot, it’s not a stick, to say, look, go make loans, and we’re going to help you, ’cause we’re going to lower the level of risk for everybody because we want to create jobs. Again, how could Republicans say no to that? What’s the argument against it? It’s a way to—if everybody says the problem is there’s too much risk—.
JAY: Well, the argument against it is they’re going to say that one way or the other it’s going to wind up some kind of public subsidization and we don’t want more debt, which leads to another one of the major points in your piece is that the Iraq War and the Afghan War supposedly are both supposed to be closed down, but the whole issue of the military budget doesn’t ever get discussed in this context. And can you really ever deal with this in a realistic way without facing up to that?
POLLIN: Well, you can. Of course it’s better. And for other reasons we should stop the wars, as Obama promised, in Iraq and Afghanistan. And they’re costing, you know—and next year, by the time we add up everything, it’ll be $200 billion. You take out that $200 billion; you put it into state and local governments; you have solved their deficit crisis, at least for this year. So that’s the best way to go, and I talk about that in the article. But if that weren’t—you know, I don’t want use that as an excuse and say you must do that or else there’s no solution. Right now the easiest solution, the least politically difficult solution, is [to] just say the government is going to help and guarantee loans for small businesses to get back on their feet, for banks to connect with them, and let’s get the thing moving again.
JAY: The numbers that aren’t $30 billion but start approaching $600-$800 billion.
POLLIN: That’s right. That’s the level that we need.
JAY: Okay. Thanks for joining us. And we’ll look to see whether any of this happens, because if it doesn’t happen, this idea of another seven, eight, nine years of, you know, close to 10 percent unemployment is probably what we’re all facing.
POLLIN: Right.
JAY: Thanks for joining us.
POLLIN: Okay.
JAY: Thank you for joining us on The Real News Network.
Story Transcript
Robert Pollin Interview (Part 2 of 3)
PAUL JAY, SENIOR EDITOR, TRNN: Welcome back to The Real News Network. We’re joined again by Robert Pollin. He’s the cofounder/codirector of the PERI institute in Amherst, Massachusetts. Thanks for joining us again.
ROBERT POLLIN: Thank you, Paul.
JAY: So the first part, we talked about the extent of joblessness and one of your proposals about how to free up some of the $650 billion sitting in the banks as government credit, or other ways to lower interest rates. Let’s talk about some of the other—which ends up with loans for small business. First of all, let’s just talk a little bit about political will here, because another one of your proposals seems to be a no-brainer, which is refurbish, retrofit government buildings.
POLLIN: Easy.
JAY: Make them green—
POLLIN: Yeah.
JAY: —and energy-conservationist. (Is that the word for it?) It’s a no-brainer. He even talked about it in the campaign. But they’re not doing it. I mean, many of the proposals in your article are kind of no-brainers.
POLLIN: Thanks! No, no.
JAY: What I mean by no-brainers is, when you read them, it makes so much sense that you would just say, well, why wouldn’t you just do it? So talk about the issue of political will here, because is the hidden secret of all of this is that the kind of financial and political elite are going to learn to live with 10 percent unemployment? In other words, they ain’t the ones that are going to suffer. And are they just getting their heads around to maybe we’re into a decade of structural 8, 9, 10 percent unemployment, and so be it?
POLLIN: Well, I don’t usually discuss these things with the people that think that way, but, I—you know, just hearing the kind of talk, I think that the Obama-leading economists, they probably think, look, you know, we always have downturns and we always come back, and last quarter the economy grew by 5.7 percent. So as long as we start to get growth going—. So we had a recession, we got out of the supersevere crisis through the bank bailouts and the stimulus, and in a couple of years we’re going to be better off.
JAY: Yeah, just in your article, it ain’t a couple of years. You’re saying to get to 4 percent unemployment and kind of a natural—whatever that is—natural cycle, we could be looking at 2017 or 2018.
POLLIN: That’s right.
JAY: Which also could mean the end of any Democratic control of the White House.
POLLIN: That’s the point that they’re not understanding. And all I did was calculate the last three business cycles as how long does it take to get back to, say, 5 percent unemployment given the normal pace of the last three recessions; how long would it take to get to 4 percent. And that was conceding a lot, ’cause this recession is more severe. And so if we took the normal pace to get to 5 percent, yeah, we’re looking at 2017, somewhere in 2017. To get to 4 percent, who knows? And this is assuming we avoid all the landmines that are sitting there in front of that.
JAY: Yeah, that’s assuming there’s any natural curve/arc to this recession.
POLLIN: Well, I’m saying let’s take the best case and assume there is. And we’re still in a—you know, the recession was so severe and the unwillingness of businesses to start hiring again is so strong that it’s—you know, yeah, we’re looking at seven, eight years under a normal process to get back to—.
JAY: So that goes to another part of your proposal. And then the question I have is: isn’t this the only real short-term fix, especially given the real politics in Washington, where the Republicans seem to want to block just about everything, because it’s probably in their electoral interest that unemployment carries on as long as possible? Which is: direct programs, which means government loans money directly to small business, government hires millions of people to retrofit buildings and build roads, and so on and so on, I mean, is there really any choice other than that, given all the realities here?
POLLIN: Well, you know, if we’re talking about political reality, I mean, we already have a $1.5-$1.6 trillion deficit, so I think we’ve got to keep a big level of government deficit spending. But we are sitting on, you know, something close to $1 trillion that we can mobilize in the private market. So, realistically, I think the best political story is to say, yes, let’s get the credit system working for ordinary people; let’s get it working for small businesses; let’s unlock that $850 billion that’s sitting there. And that to me seems like a realistic story. And you can say, look, we want loan guarantees: we’re going to lower the risk for banks and for businesses and we’re going to create jobs. Who could be against it? So to me that’s—.
JAY: But let me ask you a technical point. When a bank goes to the Fed and gets this zero percent money—which is supposed to be like emergency loan money, but they’ve been getting billions of it—is it a fixed rate of whatever they got it at, or is it a floating rate?
POLLIN: Fixed.
JAY: It’s fixed. So even if rates go up 3 or 4 percent, they’re still paying next to nothing for the $600 billion. Well, if that’s the case, then, I mean, if you’re going to blue-sky this, why not tax it back? I mean, what the hell do they need $600 billion in public money for?
POLLIN: Yeah, that’s the other proposal. If the loan guarantees don’t work, I would say yes. But you have to define something that we would called excess reserves that they’re sitting on, and then we say those excess reserves should be taxed. Now, that’s probably unrealistic as a political proposal. But I do think that the loan guarantees is realistic, ’cause it’s a carrot, it’s not a stick, to say, look, go make loans, and we’re going to help you, ’cause we’re going to lower the level of risk for everybody because we want to create jobs. Again, how could Republicans say no to that? What’s the argument against it? It’s a way to—if everybody says the problem is there’s too much risk—.
JAY: Well, the argument against it is they’re going to say that one way or the other it’s going to wind up some kind of public subsidization and we don’t want more debt, which leads to another one of the major points in your piece is that the Iraq War and the Afghan War supposedly are both supposed to be closed down, but the whole issue of the military budget doesn’t ever get discussed in this context. And can you really ever deal with this in a realistic way without facing up to that?
POLLIN: Well, you can. Of course it’s better. And for other reasons we should stop the wars, as Obama promised, in Iraq and Afghanistan. And they’re costing, you know—and next year, by the time we add up everything, it’ll be $200 billion. You take out that $200 billion; you put it into state and local governments; you have solved their deficit crisis, at least for this year. So that’s the best way to go, and I talk about that in the article. But if that weren’t—you know, I don’t want use that as an excuse and say you must do that or else there’s no solution. Right now the easiest solution, the least politically difficult solution, is [to] just say the government is going to help and guarantee loans for small businesses to get back on their feet, for banks to connect with them, and let’s get the thing moving again.
JAY: The numbers that aren’t $30 billion but start approaching $600-$800 billion.
POLLIN: That’s right. That’s the level that we need.
JAY: Okay. Thanks for joining us. And we’ll look to see whether any of this happens, because if it doesn’t happen, this idea of another seven, eight, nine years of, you know, close to 10 percent unemployment is probably what we’re all facing.
POLLIN: Right.
JAY: Thanks for joining us.
POLLIN: Okay.
JAY: Thank you for joining us on The Real News Network.
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