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Wednesday, July 27, 2011

Robert Reich: Budget Cuts Could Make Job Crisis Worse

Robert Reich, Labor Secretary during the Clinton administration, gives his commencement speech during the graduation ceremonies at California State University, Fullerton IN 2008. (AP/California State University, Fullerton)

President Clinton's former labor secretary Robert Reich gives his commencement speech during the graduation ceremonies at California State University, Fullerton in 2008. (AP/California State University, Fullerton)

Former Labor Secretary Robert Reich is among the liberal economists and political activists who have been critical of President Obama’s emphasis on budget cuts to reach a deal on the debt ceiling.

He’s asking why spending, in the form of a new stimulus package, is not on the table.

Reich told Here & Now‘s Robin Young that government spending would revive the economy and put more people to work.

“[When] you’re in a recession or a depression… the government becomes the spender of last resort,” he said.

Reich writes in his blog that Americans are now living in parallel universes.

The first, he writes, is “where almost 15 million are unemployed, wages are declining, and we’re locked in a vicious economic cycle.”

But the problem, says Reich, is that the other parallel universe, Washington D.C., is focusing only on budget cutting.

Republicans are leading the push for spending cuts, and Reich says everyone, including Congressional Democrats and the President, is playing an “I can cut the deficit more than you” game.

Reich says the deficit does need to be brought down in the long term, by targeting military or agricultural subsidies, and by asking the wealthy to contribute more.

“The top one percent of Americans by income are now taking home almost a quarter of all national income. We haven’t seen this in 80 years. And at the same time their marginal tax rates are lower than they’ve been in about 70 years, so it seems entirely fitting that if someone’s going to sacrifice, the very wealthy should… But in Washington we can’t even begin that conversation.”

Reich says that the increasing inequality has lessened the purchasing power of the middle class, further hampering the economy.

“That widening inequality is making efforts to stimulate the economy much more difficult,” he said.

Guest:

  • Robert Reich, professor of public policy at University of California at Berkeley. He’s author of “Aftershock: The Next Economy and America’s Future”

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  • M. Leonard

    Cut spending?  Introduce market uncertainty?  I thought the name of the game was economic recovery, not high stakes  “pin the tail on the donkey”

  • Bowlmaker1

    why don’t we beginn to borrow from ourselves as they do in Japan and in this country inthe state of North Dakota so that we don’t have to be beholden to the Wall St casino operatorsto finance REAL programs to benefit our citizenz!

  • JHC

    I was thrilled to hear this conversation today.  It was as if you had overheard the questions with which I was pelting my husband just this past weekend.  I was asking why FDR and the WPA weren’t ever even coming up in public conversation during this budget debate and our national struggle to break free of economic quagmire.  I realize that we live in a very different economy now and that World War II was an epic factor in post-Depression recovery, but it does seem like such grand past models should be discussed (especially those that seemed successful) as we figure out how to move forward.   Prof. Reich was wonderful in response to Robin’s good questions.  Please have him back.  Please keep this conversation going, engaging additional experts who can continue to explain how past may be prologue here….. 

  • http://www.facebook.com/shouldersr Robin Shoulders

    The GOP wants cuts alone because they simply do not care about the average family. Spend like drunken sailors when they are in power and very little  on the middle class and none on the poor. Any time the dems are the government then the republicans want to cut programs for the working and disadvantaged.

    • kary

      Lies…if the republicans are drunken sailors, then the democrats have died of alcohol poisoning.

  • JOhn81

    Here’s what I want to know:: if I have to pay $1.oo more in interest to my bank, where does the $1.00 go?? Doesn’t it go to my dad who has a CD who will now be earning more interest? Won ‘t that $1.00 be spent by someone else?

  • John Harshfield

    Educator In Chief? I’d like to assign that duty to Robert Reich – whenever he’s on the radio, I try to listen!

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