Job creation versus spending cuts. Wanted: jobs not cuts. Economists: forget cuts, spend to solve job crisis. Cenk Uygur MSNBC TV June 13, 2011 video and transcript with Robert Reich.

Transcribed by Accountants CPA Hartford, Connecticut, LLC

UYGUR: Today, there‘s a growing debate in Washington over whether job creation is more important than spending cuts. Finally, the debate we‘ve been waiting for. Before all we ever heard was about spending cuts and how desperately we need them. The GOP played that broken record again over the weekend.


UNIDENTIFIED MAN: I believe that we need to get our fiscal house in order.

UNIDENTIFIED MAN: We have a big spending problem in Washington.


UYGUR: But now, finally, the battle is joined. Folks on other side of the debate are chiming in over the last week. Economists have begun pushing a key piece of economic wisdom. Cuts won‘t solve the jobs crisis. Spending will. You have to actually higher people. Jarrod Bernstein, former Economic Adviser to Vice President Biden wrote about a recently and then talk about it with me on this show. Even Larry Summers, a former economic advisor to President Obama generally concerted a lot more conservative, agreed on a Washington Post editorial that concentrating on spending cuts is going in the wrong direction.

And Robert Kuttner of “The American Prospect” did an excellent job summarizing the perils of concentrating a spending cuts in an article out today. He said, quote, “but watch for the bipartisan gang of six and their conservative allies at Tim Geithner‘s Treasury Department, to snatch defeat out of the jaws of victory. In the most likely budgets compromise, that saves the country from defaulting on the national debt. The differences between the parties will collapsed in a largely conservative direction. It the current script is followed, the Republicans will be the big winners, they will win on gutting social spending, aborting a fragile recovery, humbling the president and undercutting his reelection chances.”

But the man who‘s going to settle all this of course is President Obama. He is on a two-day jobs tour. But will he listen to that progressive message that is now finally resounding throughout the country? That‘s what we really have to see.

Joining me now is one of those economists pushing the pro spending approach for job creation. That‘s Robert Reich, he‘s now professor at UC Berkeley and former labor secretary under President Clinton.

Secretary Reich, great to have you here. I want to start with a Kuttner quote, I know you bring about this topic as well, obviously, because I think he gets the hard of it. It looks like, you know, the Democrats have the Republicans on the run on Medicare, et cetera. If they come in and the gang of six that includes Democrats and it obviously come in. Tim Geithner‘s Treasury Department seems to be pushing for spending cuts. And they say, all right, great, let‘s do the spending cuts. Have they done great damage both of the economy and to the president chances of re-election?

ROBERT REICH, PROFESSOR, UC BERKELEY: Unfortunately, I think they will do damage, Cenk. I mean, the frame of reference right now in the capitol, and you‘re right, it is beginning to change. But the frame of references established by the Republicans is we‘ve got to cut spending. If you cut spending, we get the balance, the budget back towards balance, that‘s good for the economy, that‘s good for jobs, that‘s good for everybody. Well, that frame of reference is totally irrelevant right now given that consumers are holding back and businesses are holding back and we are flirting with a double-dip recession. We‘ve got to. I mean, the government has got to spend more. At least in the short term.

People are beginning to see that but that gang of six on the hill. There are a lot of conservatives still hanging around. Tim Geithner in the Treasury Department, there are many people who are whispering into Democrats ears including the president‘s ears. Saying, well, we really do have to worry most about cutting spending and getting an agreement on—getting the budget deficit capped. That is the total ceiling on the debts. Going upward. You see, we are right in a poise, the very, very difficult spot. The president has got to decide. And I hope he will decide that job creation is the number one issue, the number one goal and his number one responsibility.

UGYUR: I can‘t understand how he can‘t see it. He is supposed to be a good politician. I mean, I care about the economy. I care about creating jobs. I care about the American people. I hope the president cares about the same thing. But I know he also that has to care about getting re-elected. And at nine percent unemployment, how are you going to do that? I mean, have you heard of any economic theory that says, you do spending cuts and somehow magically when you already have inflation really low, it will create more jobs by time of November, 2012. Doesn‘t that seem crazy?

REICH: No, but it is a border line crazy, Cenk. We know, I mean, if there is one thing we‘ve learned over the past 75 years, is that when you have high unemployment, when you‘ve got a lot of people out of work. When you have such underutilized total capacity, the government has got to be the spender of last resort. Now, if you call it stimulus, it doesn‘t matter. Call it liver worst. I don‘t care what you call it. I mean, government has got to make up the difference somehow and has got to do something. I mean, a WPA, you know, like we had during the depression, to give jobs to so many of the long-term unemployed or civilian conservation corps. To give jobs to so many of young people who are sitting around doing nothing.

UYGUR: You know, I‘ve been saying this for so long. And finally, Bursy (ph) is start writing about it this week as well. Saying, hey, how is this for an idea? Why don‘t we hire people? Why doesn‘t the government actually say, I‘m going to hire extra number of people. And that could be a gigantic number. So, the Republicans will fight it. OK. Good. They are against job creation. I mean, I don‘t get it. So, but it looks like, common sense, economic wisdom, all of the progresses in the world, combined are not as strong as Tim Geithner. I mean.


REICH: Well, I don‘t—I‘m not going to play personality here. I mean, the issue is, and you put your finger on it just now, it‘s common sense. And the question is, will common sense and political pressure prevail? I mean, most Americans are in very, very tough shape right now. This is not just a matter of politics. It‘s a matter of pain. The degree of public pain, of suffering, of anxiety out there in the country should not be underestimated. Now, Washington is a little bit of an echo chamber as we know, so is New York. A lot of this pain does not get through. But if these people, including the president, want to be re-elected, they have got to come up with a very bold jobs plan. And they got to come up with it soon. Because if you were the vacuum there, if there is nothing there, if the Democrats and the president are not putting out anything specific, anything bold to stimulate and boost demand, what are you going to have? That vacuum is going to be filled by Republicans who say cut taxes, cut spending, the old republican play book, which has nothing whatever to do with creating job cuts.

UYGUR: Secretary Reich, I know, you say, (INAUDIBLE), so leave that to me. Tim Geithner is the worst. He is a former republican. All he has is republican ideas. He‘s never been a democrat, never claimed to be a democrat and he is pushing all these incredibly conservative ideas to the great detrimental of the president and of the country. I think that‘s a huge part of the problem. I think the president‘s biggest mistake as we‘re listening to Tim Geithner all along on every front. But my views on that are clear. You have the more professorial.

REICH: Look, I‘m not—I don‘t mean to duck from any individual criticism. I‘m just saying, look, the issues are very, very clear. And I think that the president would be very wise, just get out there, use the bullet pulpit and says to Republicans, here is my job plan, if you don‘t like it, I‘m going to fight for it. I‘m going to fight for it.

UYGUR: That would be good. We got to live it right there. Secretary Reich, thank you so much. We‘ll be right back.

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About William Brighenti

William Brighenti is a Certified Public Accountant, Certified QuickBooks ProAdvisor, and Certified Business Valuation Analyst. Bill began his career in public accounting in 1979. Since then he has worked at various public accounting firms throughout Connecticut. Bill received a Master of Science in Professional Accounting degree from the University of Hartford, after attending the University of Connecticut and Central Connecticut State University for his Bachelor of Arts and Master of Arts degrees. He subsequently attended Purdue University for doctoral studies in Accounting and Quantitative Methods in Business. Bill has instructed graduate and undergraduate courses in Accounting, Auditing, and other subjects at the University of Hartford, Central Connecticut State University, Hartford State Technical College, and Purdue University. He also taught GMAT and CPA Exam Review Classes at the Stanley H. Kaplan Educational Center and at Person-Wolinsky, and is certified to teach trade-related subjects at Connecticut Vocational Technical Schools. His articles on tax and accounting have been published in several professional journals throughout the country as well as on several accounting websites. William was born and raised in New Britain, Connecticut, and served on the City's Board of Finance and Taxation as well as its City Plan Commission. In addition to the blog, Accounting and Taxes Simplified, Bill writes a blog, "The Barefoot Accountant", for the Accounting Web, a Sift Media publication.
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