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PAUL JAY: Welcome to The Real News Network. I'm Paul Jay in Baltimore.
In Washington on Tuesday night, President Obama delivered his State of the Union speech.
And the fundamental idea of the speech: it's time to restore the basic bargain. Here's
what the said.
BARACK OBAMA: [T]ogether, we have cleared away the rubble of crisis, and we can say
with renewed confidence that the state of our union is stronger.
But we gather here knowing that there are millions of Americans whose hard work and
dedication have not yet been rewarded. Our economy is adding jobs--but too many people
still can't find full-time employment. Corporate profits have skyrocketed to all-time highs--but
for more than a decade, wages and incomes have barely budged.
It is our generation's task, then, to reignite the true engine of America’s economic growth--a
rising, thriving middle class.
It is our unfinished task to restore the basic bargain that built this country--the idea
that if you work hard and meet your responsibilities, you can get ahead, no matter where you come
from, no matter what you look like, or who you love.
It is our unfinished task to make sure that this government works on behalf of the many,
and not just the few; that it encourages free enterprise, rewards individual initiative,
and opens the doors of opportunity to every child across this great nation.
JAY: Now joining us to give us their take on President Obama's speech is, first of all,
Jennifer Taub. She's an associate professor of law at Vermont Law School. She researches
and writes in the area of corporate governance and financial market regulation.
And joining us from Toronto is Leo Panitch. He's the Canada research chair in comparative
political economy and a distinguished research professor of political science at York University.
He coauthored the book The Making of Global Capitalism.
Thank you, both of you, for joining us.
LEO PANITCH: Hi, Paul.
JAY: So, Leo, why don't you kick us off? What did you make? It's time to restore the basic
bargain.
PANITCH: Yeah. Well, I found it a typical and, for that reason, very disappointing speech,
entirely vague in terms of the basic bargain, and misleading in terms of what that applies,
but worse, symbolically touching on all the things that need to be done, above all, massive
public expenditure on infrastructure, without really providing any of the financial muscle
or the direct government employment that would make these things happen, without taking on--and
understandably, given the way he praised free enterprise out of the same side of his mouth
that he attacked the wealthy and the people who are able to escape taxation by using high-powered
accountants--you know, he didn't take on any of the interests. Sure, he took a shot at
the banks for not allowing people to renew their mortgages at lower interest rates, but
indicated he would do nothing to actually force them to do it. This has been on the
agenda now since the beginning of the crisis.
So I found it in every sense a typically symbolic speech and really, really very, very disappointing
[inaud.]
JAY: Jennifer, what do you think? It seems to have been effective. Some of the people
I've been talking to are happy that he just mentioned these things. What did you think?
JENNIFER TAUB: I was also very disappointed, and glad that you zeroed in on that particular
phrase he used, which was that we've together "cleared away the rubble" of the crisis. That's
simply not true.
And I think that if you compare what he said to what Rubio said in terms of the crisis
in his response, Rubio said a major cause of our recent downturn was a housing crisis.
So that part is true. What was not true in what Rubio said was that the housing crisis
was due to reckless government policies. Of course, instead it was due to regulatory failure
and due to recklessness and predatory behavior of banks.
And by the president failing to remind us and place in the proper historical context
where we are today in terms of this very anemic recovery, he won't really get the public's
support for what we've already heard needs to be done, which is massive infrastructure
spending. We have a problem of lack of aggregate demand. It's not about training people for
jobs. It's not about them lacking skills.
What we have now are massive unemployment--we're still at 7.9 percent, and when you include
the people who are working part-time, who are discouraged, according to vice chairman
of the Fed, Janet Yellen, who spoke just yesterday on this topic, we're over 14 percent.
And she was bold enough, unlike the president tonight, to talk about the real causes of
this. And by the way, it's not just about blaming the banks or blaming regulatory failure,
but it actually ties into why the recovery's been so weak, which is this problem that housing
has not been able to lead the recovery. And the fact that the president mentioned housing
is picking up, we shouldn't look to that as an indicator of growth. Robert Schiller [unintel.]
speaking about this recently.
So I was discouraged in that, for the reasons we've already talked about, but also particularly
discouraged by the failure to really look at who's to blame for this and how we can
move forward.
JAY: Now, he did--Leo, he did talk about the need for this infrastructure program. He talked
about we need to create employment through rebuilding bridges and rebuilding roads. I
mean, why isn't that what you're looking for?
PANITCH: Well, it is what one should be looking for. He just isn't--having stated the objective,
isn't providing the means. And while it's certainly true that he's dealing with a ridiculously
recalcitrant Republican Party in Congress, it's also true that American business is fed
up with the kind of role they're playing. And he should be leading a massive campaign
to get American business behind, Wall Street behind a massive program of borrowing for
infrastructure spending, for direct government infrastructure spending. And, you know, one
can borrow--governments can borrow now at virtually zero interest rates. The kind of
stuff that he's proposing is so minimal, if you compared it to anything that the Work
Projects Administration did in the New Deal, it's almost laughable.
But more than that, I think it's this triangulation problem that he has--and he shares, by the
way, with all of the European social democrats who were enveloped in the middle way, admiring
Clinton--he speaks in a way that is at the same time trying to cater to big business
and not point, as Jennifer says, to the role that they play in causing the crisis--and
even worse, causing the stagnation and the inequality that goes with it--while at the
same time throwing out a few symbolic words about things not being fair, but without taking
any leadership with regard to getting behind the kind of massive, massive government spending
and direct public employment that alone could solve these problems.
JAY: Jennifer, there seems to be two contradictory principles here. One is: restore the basic
bargain, which--in other words, build the foundation of success or future of the American
economy on a restored middle class, and don't add a dime to the deficit. I mean, are these
contradictory ideas? And which one does he seem to believe in more?
TAUB: I don't know what he actually believes in, but what he was expressing were contradictory
ideas. And I think that it's a shame that he didn't use this opportunity to break down
these false narratives. You know, if anyone looks at the equation for calculating GDP,
they can see right in it is government spending and government and the private sector complimenting
each other. And I think by privileging or putting forward this idea that it's--you know,
that it's only the private sector that should lead a recovery, he may think he's just using
rhetoric to get people to support his agenda here. But I think it's a lost opportunity
to make people understand how things really operate.
And I agree with Leo: I think government jobs here are important and that he needs to use
the word spending. I listened to this speech carefully and then went back and looked at
the transcript, and he mentioned jobs over 30 times, and he mentioned spending only on
three occasions--twice was about cutting spending, and the third time was about military spending
that would be reduced. And nobody is going to be fooled by this idea that we can cut
the deficit, cut spending, and somehow end up in a situation we don't--that we can move
forward and grow the economy. So it's not going to work if that's what his plans are.
JAY: Leo, right from the beginning of his presidency, President Obama has been adamant
that the solutions are going to be found through the private sector, when during his stimulus
plan, which was--you know, in terms of American history, it was a big stimulus plan--not as
big as a lot of people thought it should have been, but it was wedded that it had to be
done through the private sector. Now, a lot of that money did in fact go to state and
city governments because they were desperate and going bankrupt, but all his rhetoric was
private sector, private sector.
PANITCH: And he repeated that tonight. He said that in order to have spending on schools
and highways and ports, that he would be mobilizing the private sector to invest in these. Now,
that's a recipe for privatizing stuff that is not yet privatized or, at best, for private-public
partnerships, which turn out to be far more costly, because what governments then do is
underwrite corporate borrowing at higher rates of interest than the governments could borrow
themselves.
But this is all about this triangulation with the enormous power--one has to admit this--of
the capitalist class in the United States.
And, you know, look, I think to some extent one needs to say it's not just Obama's failures.
What we are seeing here is the increasing impossibility of securing anything like equality,
let alone justice, in societies that are driven by private property and the power of capitalist
classes. The hope that people have that we could get to a social-democratic type of mixed
economy, where capitalist crises would be contained by Keyesian spending and whereby
you'd get a gradual set of reforms that would equalize class relations, we are now, into
the second decade of the 20th century, clearly seeing that those types of goals are no longer
realizable in the framework of contemporary capitalism. And the tragedy of people who
start out with those kinds of goals, like Obama or like European social democrats, is
they end up reinforcing the current structure of power. And I can only hope that eventually
people will come to see that one needs much more fundamental change than Obama or indeed
others like him are prepared to mobilize people behind.
JAY: Alright. Thank you both for joining us.
PANITCH: Good to talk to you, Paul.
JAY: And thank you for joining us on The Real News Network.