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Jonathan Alter Wrestles With How To Create Jobs

Tuesday, August 30, 2011

HH: Joined now by Jonathan Alter of MSNBC, the author of both a wonderful book on FDR and also The Promise, the first year of the Obama administration. Jonathan, how did you survive Hurricane Irene in New York?

JA: Well, we were actually trapped in the Midwest, and we just drove across the country in the last day to get back, and we have some carpet damage in the basement, and a couple of branches down in the yard, but other than that, we’re doing great.

HH: Oh, I’m glad to hear nothing too serious, although it’s never pleasant to get water out of that. How did you judge the United States’ response to this?

JA: You know, I thought it was good. You know, people want to complain now about how it was hyped, but better safe than sorry. There’s a lot of assumption in a lot of quarters, including among, I think, some of your listeners, that the government can never do anything right. I think the government did a pretty good job of mobilizing, and 20 deaths instead of a lot more is something to be thankful for. Now you could say well, you know, it wasn’t as serious a hurricane as a lot of people assumed, but it’s easy to say that when precautions have been taken. And just driving in across New Jersey today to get back to my house, I mean, it was flooding all over the place. There were a couple of people who were killed just a few miles from my house. And so I think it’s easy for people in the rest of the country to say, I understand some talk show hosts, not you, but some others, have been saying this, oh, it was hyped, it was hyped, it was politicians trying to act like they’re doing something. They were doing something. They were taking proper precautions.

HH: You know, whenever Bob McDonnell, Chris Christie, Michael Bloomberg and all the Democrats in the administration, including the President, agree on something, it usually is a pretty good idea to go along with it.

JA: Right.

HH: And that’s just generally not political. So I think they did a find job, and I’m glad it was a category 1. I hope that people don’t stay home the next time. Well Jonathan, the real reason I wanted to talk to you is we’re going back to politics this week. Congress is coming back. The big Gang of 12 gets underway, and the President is going to do a “hard pivot” to jobs. This is like a pirouette, he pivots to jobs so much. He goes around in circles. What’s he going to propose? What is…there’s not any more money to try a second stimulus.

JA: Well, I think, you know, they had a sort of a variation of a second stimulus by extending the payroll tax holiday at the end of this past year. And actually, you know, imposing a payroll tax holiday, and they need to extend that. So that would be for starters. So the idea of Republicans right now, a number of important Republicans, being against a very significant tax cut for millions of Americans just because it happens to be proposed by Barack Obama, I think, tells you something about some of those folks. You know, they like any kind of tax cut, except one that Obama proposes. Now clearly, we have serious problems in the economy, and Obama bears a lot of the blame for that. But the idea of not doing something like a payroll tax holiday in the short term to stimulate demand seems to me to be really almost bordering on ridiculous for people who…

HH: Jonathan, but it didn’t work the last time. I mean, they’ve had the payroll tax cut. It didn’t work.

JA: Well, you know, you can say that it didn’t work. We’re sailing again into very stiff winds. That’s like saying that the stimulus failed, which is not true.

HH: The stimulus did fail.

JA: It didn’t fail. It didn’t fail. Hugh, we were losing 750,000 jobs a month at the time the stimulus was put into place. We’re now in anemic growth of a few thousand jobs a month. But the economy is not hemorrhaging. Rick Perry needed billions of dollars from Washington to balance his budget. He took that stimulus money, because he needed it desperately. Now he can say on the campaign that it failed, but it didn’t fail for him trying to bridge a very severe budget gap like all the other governors have had.

HH: But I’m just going by the administration’s own terms. When Christine Romer said if the stimulus passed, unemployment would not go above 8%. Of course, it’s been…

JA: Well, they screwed that up. But Hugh, you’re…

HH: Well, that’s their own tests. They failed their own test.

JA: Look, you’re a context man. You’re a context man, and so you’re interested, unlike a lot of people, you’re interested in the historical facts. And I’m not trying to excuse them from making a stupid projection, and I’m not trying to say that he has done a splendid job of managing the economy. On the face of it, he has not. But just to give you the background on that 8% figure, because when I was reporting and researching for my book, The Promise, I looked into this, because it was such an off projection. They made that projection at the end of 2008 as they were preparing the stimulus. And the economic figures that they used in making that projection were all third quarter GDP 2008. Now what happened was that in the fourth quarter of 2008, the economy, the American economy, fell off the cliff. And you can look this up. It just was, it was straight down. And suddenly, we were going from losing some jobs at the beginning of the recession to just hemorrhaging jobs. So people say well, you know, unemployment was only 7.4% when Obama took office. That’s a lagging indication. That’s an indication of what employment had been in the middle to later part of 2008. If you looked a couple months later at what the real unemployment rate was at the turn of the year, 2008-2009, it was moving north of 9%, and it got to 10% in the fall of 2009.

HH: Jonathan, two questions before we run out of time, though. The first is the definition of insanity, the old cliché, is continuing to do the same thing and expect a different result. And the payroll tax cut did not bring down unemployment. It stuck up there above 9%. The second thing is this administration continues to prosecute and persecute job creators. I’m going to talk with the CEO of Gibson Guitars after I talk to you, and of course Lockheed, I mean Boeing is being harassed in South Carolina. Why not just shut down the regulatory factories of the Obama administration and let employers employ for a while?

JA: Well, first of all, you know, they have. If you’ve seen what Cass Sunstein did, they have suspended quite a number of regulations that are stupid. Boeing, I agree with you, I don’t like what the NLRB is doing, but there’s been a kind of a canard out there that somehow that’s cost jobs. No jobs have been cost by that decision. You’re right that there’s some harassment there which I don’t approve of, and that’s not by the administration directly, but it’s by a board that Obama appointed. So it’s a fair shot at the Democrats. But if, you know, eliminating regulations were the way to create jobs, it would be easy. It’s not. That’s now how jobs are created. If you ask somebody why are they not creating jobs, it’s either because they’re anticipating the health care plan that hasn’t kicked in yet, or because, as somebody wrote me, oh, they’re not creating jobs because of cap and trade. Well, cap and trade was easily defeated more than two years ago. And this is true of a lot of the other nonsense that you see out there. Maybe they were nonsensical proposals. But they’re not real threats. So those are excuses. The real reason jobs aren’t being created is there’s a huge demand problem. Now Hugh, I know you know a lot about economics. And you know this is true. The problem is demand. So if you don’t want to have a payroll tax holiday extension, and that’s just one of several things that the President is going to propose to stimulate demand, it’s up to you to say how would you stimulate demand? Cutting regulation isn’t going to cut it.

HH: Another day for that. This is Jonathan Alter, author of The Promise: President Obama, Year One. We’re looking forward to the second in that series very soon.

End of interview.

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