http:\/\/krugman.blogs.nytimes.com\/<\/a><\/p>\nRough Transcript: <\/strong><\/p>\nKolhatkar<\/strong>: So, how much do you know of the plan, and just looking at it\u2014broadly speaking, before we get into the details\u2014do you think that it has the makings or the potential for something that will actually address this recession we\u2019re in?<\/p>\nHenwood<\/strong>:\tIt started out better than it\u2019s becoming in the last few days; it started out looking like a very large spending program\u2014mostly concentrated on infrastructure, with also some assistance to state and local governments and extended unemployment benefits… and for the longer term some spending on subsidies and research and development for clean energy. These were all very good things, but we\u2019ve heard in the last couple of days\u2014in order to appease Republicans\u2014that a very large portion, perhaps as much as forty percent of the proposed plan, will go to tax cuts, which are a much less effective way of stimulating the economy. <\/p>\n\tEven some of the kinds of tax cuts that are being proposed\u2014the business tax cuts\u2014are extremely ineffective, like investment tax credits, which are given to companies that make capital expenditures. Companies invest because they think they\u2019re going to make money, and they\u2019ll do it if they have\u2014will make the investment\u2014if they have the cash or can borrow it. Right now, it\u2019s very hard to borrow it. Company profits are down, so they really don\u2019t have the means to make investments, and their outlook is not very bright. So, just giving them a tax credit is not going to work. Tax credits are, in better times, an investment tax credit is just a gift to a company that makes an investment that it would have anyway\u00ac\u00ac\u2014so, this is a very, very ineffective form of stimulus spending.<\/p>\n
Kolhatkar<\/strong>:\tAnd, so, the three hundred billion dollars of the seven hundred seventy-five billion, I understand, would be to essentially extend the tax cuts that Bush put in place?<\/p>\nHenwood<\/strong>:\tNo, it would be oriented more toward middle and lower income people, so, which is a better thing from both an economic stimulus and a social justice point of view.<\/p>\nKolhatkar<\/strong>:\tOkay, so there\u2019s the one thing for businesses and then one for individuals\u2026<\/p>\nHenwood<\/strong>:\tYeah\u2026<\/p>\nKolhatkar<\/strong>:\tExplain the difference between the two.<\/p>\nHenwood<\/strong>:\tWell, the business one is the one that\u2019s especially ineffective. They\u2019re actually talking about even giving credits to companies that have made losses in recent years. Now, that doesn\u2019t make any sense to me, that kind of rewarding failure\u2026 <\/p>\nKolhatkar<\/strong>:\tI mean, that would just basically help them perhaps not go bankrupt, but it wouldn\u2019t necessarily create new jobs.<\/p>\nHenwood<\/strong>:\tNo, it certainly wouldn\u2019t; and it just could be a dying operation anyway, so it\u2019s throwing good money after bad. But what really stimulates the economy most effectively is infrastructure spending, and that kind of thing. And the more we learn about the plan, the less of it there seems to be. <\/p>\n\tAnd what the politics behind this are very mysterious to me. It\u2019s obviously designed to appease Republican opposition\u2014but the Democrats have fifty-nine votes in the Senate, a large House majority, Obama won with a fairly large popular vote margin\u2014they have some political capital to spend. George Bush barely squeaked into office a couple of times and acted like he owned the world. And with much more of a mandate and a great deal of enthusiasm behind him, Obama is eagerly compromising with the Republicans\u2014it doesn\u2019t make any political sense to me. Okay, if you can\u2019t get it through Congress and you have the Republicans start to filibuster, then maybe you start thinking about compromise; but if you start out compromised, what kind of political thinking is that?<\/p>\n
Kolhatkar<\/strong>:\tAnd, so, basically, the Republicans\u2014even as an unpopular minority\u2014are still carrying so much clout. But, then, what about the argument that Wall Street supported Obama hugely, wholeheartedly, when he was running for President, is this perhaps also not a nod to Corporate America?<\/p>\nHenwood<\/strong>:\tWell, to some degree, but Wall Street is very happy with the idea of big stimulus spending\u2026 <\/p>\nKolhatkar<\/strong>:\tRight, because that means contracts for them\u2026<\/p>\nHenwood<\/strong>:\tWell, not just that\u2014I think they\u2019re really very concerned about the state of the economy. I read, for example, the Goldman Sachs daily economic commentaries and they\u2019re very enthusiastic about a very large stimulus program. You have the IMF talking about very large public spending programs\u2014this is orthodox economic thinking right now.<\/p>\n\tRepublicans, I think, really represent a kind of provincial, small-business mentality that really doesn\u2019t deserve the time of day. We\u2019ve got big business\u2014certainly big capital, big Wall Street capital\u2014would go along with whatever Obama and Congress came up with, so I just don\u2019t see the point in appeasing Republicans. <\/p>\n
\tI think this is part\u2026 let me see\u2026 I think there are two things involved. One, the Republicans have a coherent theory\u2014it\u2019s nonsense, but they have a coherent theory about tax cuts\u2014it\u2019s your money, you should keep it, the government shouldn\u2019t take it, the government doesn\u2019t know what to do with your money. The Democrats really have nothing to compete with that. They don\u2019t have an ideology, they don\u2019t have a real philosophy\u2014they\u2019re just pure pragmatists. And, on top of that, we have Obama\u2019s dedication to this post-partisanship\u2014he\u2019s going to end conflict in Washington. But politics is about conflict; there are different interests, different philosophies involved. You can\u2019t have politics without conflict. So this seems to me bankrupt at every level, both the purely political level and also the philosophical\/ideological level\u2014and, also, the economic level at this period\u2026much less economically effective turn this program has taken the last couple of days.<\/p>\n
Kolhatkar<\/strong>:\tSo, Doug, let\u2019s talk about numbers, if you know any. I mean, the whole plan is supposed to be worth about seven hundred seventy-five billion dollars\u2014even that amount is something that Republicans are unhappy about\u2014but of that amount, what proportion is now going to go toward infrastructure spending, and things like a green economy, and what proportion to what you think are ineffective solutions?<\/p>\nHenwood<\/strong>:\tWell, the tax cuts are about, I think, three hundred billion or forty percent of the total, which I think is mostly ineffective. Certainly, lower and middle-income people need some help, but tax\u2014these sorts of tax cuts\u2014don\u2019t really mean all that much.<\/p>\nKolhatkar<\/strong>:\tSo, when you say that, basically people would be getting five hundred, a thousand dollar checks in the mail, and then that\u2019s supposed to help stimulate the economy from that sort of trickle up economic theory?<\/p>\nHenwood<\/strong>:\tYeah, and we had these\u2026 remember, a year ago the Bush Administration mailed out some rebate checks\u2014that had, it rose\/increased retail sales by a couple of tenths of a percentage point for a couple of months and then disappeared, totally forgotten\u2014it was a totally ineffectual gesture. And the economy wasn\u2019t as weak then as it is now. This is just, you know, teaspoonsful into the ocean\u2014it\u2019s not going to do very much at all. It\u2019s quite possible that people will use it to pay the mortgage or pay down debts, which will have no stimulative economic affects at all.<\/p>\nKolhatkar<\/strong>:\tSo, instead of getting one check, one sort of loan check as a way to stimulate the economy, somebody who is jobless would much rather get a regular paycheck, which means a job, which would be more likely to come from infrastructure spending\u2014things like building up roads, bridges, fixing the infrastructure of the country.<\/p>\nHenwood<\/strong>:\tYeah, I mean, if you do the math, about a three hundred billion dollar infrastructure plan\u2014which is where I think it is now, two to three hundred billion dollars\u2014that could lower the unemployment rate by one and a half to two points probably, just using the conventional numbers. That\u2019s pretty significant. And the larger numbers you talk about the greater the affect on the economy would be. <\/p>\n\tThat\u2019s where all of the\u2026 roughly there\u2019s a concept in economics called the multiplier effect\u2014for every dollar you spend on something, it generates additional activity. You know, if you build a highway, spend a dollar building a highway, it generates spending on bulldozers and concrete and electricity and oil and all kinds of other things\u2014so that multiplier effect is the key to the bang for the buck of stimulus spending. Infrastructure spending generates another fifty to seventy-five cents for every dollar that\u2019s spent; the tax cuts, just maybe twenty cents additional, or less even. So that\u2019s the kind of\u2026 that\u2019s what we\u2019re talking about. \tYou get a lot more bang for the buck out of infrastructure spending. And it\u2019s necessary. Much of our country is falling apart, bridges are falling down\u2026<\/p>\n
Kolhatkar<\/strong>:\tIt\u2019s time for an upgrade, basically, on a lot of our infrastructure\u2026<\/p>\nHenwood<\/strong>:\tIt certainly is, I mean it\u2019s crumbling schools, but also for the longer term. Larry Summers\u2014who is a top advisor to Obama\u2014is a man that I\u2019ve had lots of problems with over the years, but he\u2019s been saying some good things recently. And he had been saying that they weren\u2019t just interested in a short-term economic stimulus just to get us out of the recession, but something that\u2019s going to lay the groundwork for a longer term, sustainable economic growth. <\/p>\n\tAnd I think spending money on clean energy and other green projects is a very, very good way to do that. It\u2019s absolutely necessary\u2014to save life on earth, for one thing\u2014but the other thing, I think it can generate a really long-term boom out of the transformation of energy and other kinds of technologies to be more environmentally friendly. It would be a very good thing to do from a social and environmental point of view and a very good thing to do from an economic point of view. But, it looks like Republican opposition to that kind of thing is very high, and we\u2019re going to see that chipped away, and it\u2019s the kind of thing that\u2019s really essential for a longer-term strategy.<\/p>\n
Kolhatkar<\/strong>:\tI mean, this is amazing, given that Republicans lost the White House because people were more interested in seeing a Democratic approach to (and Democratic with a big D) approach to fixing the economy; so, I mean, essentially voters, American voters, have turned down the Republican mentality and their ideas for fixing the economy\u2014and they\u2019re still defiant. That\u2019s just incredible.<\/p>\n\tI want to turn to the issue of jobs once more, Doug. December\u2019s job losses will be\u2014the report from the Labor Department detailing how many jobs were lost in December\u2014will be released in three days, and many are predicting half a million jobs lost. And if that is tallied for the entire year of 2008, we\u2019re looking at a year that would have been the worst for job losses since 1945. Now, Obama has pledged creating three million new jobs through this package. How much of his compromising with Republicans is going to affect this number\u2014three million? Is he still planning three million jobs created with compromising with the Republicans?<\/p>\n
Henwood<\/strong>:\tWell, it\u2019s going to be harder to do. Like I say, the more the mix is shifted toward tax cuts, the less likely he is to hit that three million goal. If we did seven hundred billion in infrastructure spending and maybe some aid to state and local governments, then that would come close to producing the kinds of numbers he\u2019s talking about. But if we do the tax cut route, then we\u2019re not going to get there. But, you know, I think a lot of people\u2026 when you said that people voted for a Democratic approach to the economy\u2026 they voted for what they thought might be a Democratic approach to the economy! <\/p>\nKolhatkar<\/strong>:\tTrue.<\/p>\nHenwood<\/strong>:\tObama made it very clear during the campaign that he was going to be bi-partisan, he\u2019s going to compromise with Republicans, he\u2019s going to end the culture of competition in Washington\u2026 he praised Ronald Reagan in a very famous video during the campaign. So, a lot of what people voted for was a fantasy. He made it clear, and you look at the economic advisors he\u2019s surrounded himself with, like Austin Goolsbee\u2014who is a University of Chicago guy, wrote a gushing obit for Milton Friedman\u2014a very orthodox, careful, mainstream guy. So, Summers certainly was talking about big and bold infrastructure spending, but a lot of the other people he\u2019s surrounded himself with are not those kinds of people. And, I think a lot of people didn\u2019t really scrutinize what Obama said and the kinds of appointments he made.<\/p>\n\tEven now, we\u2019re seeing people who look at his foreign policy appointments\u2014a lot of these guys are neo-cons, or very close to it\u2014yet some people are saying well, it\u2019s just a clever ruse to produce a new kind of policy, this is like Nixon and China all over again. The capacity for self-deception never ceases to amaze me. This guy has made it very clear that he\u2019s a moderate centrist and is going to govern that way. And the kind of boldness that a lot of people would like to see is not going to come from him spontaneously, it\u2019s going to take a lot of pressure from popular movements\u2014and economic difficulties also will do it.<\/p>\n
\tBut, you know, the encouraging thing is that Franklin Roosevelt was a very similar guy, very orthodox, campaigned against deposit insurance when he was running in 1932 and ended up creating the FDIC. So, once in office, people change. But, it\u2019s going to take popular pressure to do that, and not the kind of self-deception and self-centering that we\u2019re seeing from a lot of people on the progressive side of the spectrum.<\/p>\n
Kolhatkar<\/strong>:\tWell, Doug, obviously popular movements are crucial to this, but in the short term, I mean, we\u2019re talking about a timeline of a few weeks to get this plan passed. And the timing is crucial; the economy is just plummeting. In Obama\u2019s own words, it\u2019s important to slow down the momentum of this recession. What about listeners trying to post what they think needs to happen on the web forums and the web feedback, online feedback, that Obama\u2019s campaign is collecting in his lead up to the inauguration? I mean, they are trying to be probably more transparent\u2014at least they seem to be trying to be more transparent\u2014than any presidential transition in history, trying to get feedback from across the spectrum from Americans about what they want to happen. Do you think that that is, at the very least, something that listeners could do to urge Obama to back off on the tax cuts and to emphasize the infrastructure spending?<\/p>\nHenwood<\/strong>:\tOh, I think that would be a very, very good idea. I also think the old-fashioned approach of calling your Congressperson, e-mailing or writing letters to your Congressperson, that can have an effect. It doesn\u2019t take many calls to get the attention of Congress. So, if people started calling in large numbers and saying this is nonsense\u2026 stop compromising with the Republicans\u2026 Democrats have a large Congressional majority; they don\u2019t need to start out so compromised. I think if people made that point to their Congress people, and also make the point that the public is hungry for something bold that\u2019s going to reverse this sense of economic collapse, then that might have an effect as well. <\/p>\nKolhatkar<\/strong>:\tIt\u2019s amazing! Even when they\u2019re winners, they act like losers!<\/p>\nHenwood<\/strong>:\tI don\u2019t get the politics of compromising even before you start the fight; that makes no sense to me at all.<\/p>\nKolhatkar<\/strong>:\tGood point. Doug Henwood, any websites you\u2019d like to recommend for listeners to try to figure out the details of this plan as it evolves?<\/p>\nHenwood<\/strong>:\tWell, I should say Paul Krugman has been writing some very good stuff in his column in the New York Times, his blog on the New York Times website, so he\u2019s been taking apart the numbers and doing good political analysis and agitation, so it\u2019s a good place to start.<\/p>\nSpecial Thanks to Lisa Petras for transcribing this interview.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"| the entire program President-elect Barack Obama hopes to sign an economic stimulus plan as his first action after he takes office on January 20th. The $775 billion \u201cAmerican Recovery and Reinvestment Plan\u201d includes, among other things, tax breaks for businesses and middle class Americans, investing in infrastructure development, and offering direct aid to states […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","footnotes":""},"categories":[2,11],"tags":[],"class_list":["post-5383","post","type-post","status-publish","format-standard","hentry","category-daily-program","category-transcripts"],"_links":{"self":[{"href":"https:\/\/uprisingradio.org\/home\/wp-json\/wp\/v2\/posts\/5383","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/uprisingradio.org\/home\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/uprisingradio.org\/home\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/uprisingradio.org\/home\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/uprisingradio.org\/home\/wp-json\/wp\/v2\/comments?post=5383"}],"version-history":[{"count":0,"href":"https:\/\/uprisingradio.org\/home\/wp-json\/wp\/v2\/posts\/5383\/revisions"}],"wp:attachment":[{"href":"https:\/\/uprisingradio.org\/home\/wp-json\/wp\/v2\/media?parent=5383"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/uprisingradio.org\/home\/wp-json\/wp\/v2\/categories?post=5383"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/uprisingradio.org\/home\/wp-json\/wp\/v2\/tags?post=5383"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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President-elect Barack Obama hopes to sign an economic stimulus plan as his first action after he takes office on January 20th. The $775 billion \u201cAmerican Recovery and Reinvestment Plan\u201d includes, among other things, tax breaks for businesses and middle class Americans, investing in infrastructure development, and offering direct aid to states to help preserve crucial social services. Despite their unpopularity among Americans, some Republicans are already declaring they will block the measure if the House tries to pass it. Obama yesterday pledged to consult with Republican lawmakers in discussing the details of his plan. The president-elect plans to deliver a speech this Thursday to outline his economic recovery plan, the details of which are still vague. But, from what we do know of the plan, just how adequate is it? Will it really help ordinary Americans? And will it be enacted soon enough?<\/p>\n