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How Can Government Improve Job Growth?; Obama's "Year of Action"

Aired January 15, 2014 - 18:28   ET



ANNOUNCER: Tonight on CROSSFIRE, who's blocking good-paying jobs?

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: This has to be a year of action.

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: A year of action sounds good to me.

ANNOUNCER: What can the government do to help?

OBAMA: We can't wait for Congress to solve it.

BOEHNER: The policies from this administration have not worked.

ANNOUNCER: On the left, Stephanie Cutter. On the right, S.E. Cupp. In the CROSSFIRE, Robert Reich, labor secretary under President Clinton; and Tim Pawlenty, the Republican former governor of Minnesota. When it comes to jobs, who's keeping the economy from taking off? Tonight on CROSSFIRE.


S.E. CUPP, CO-HOST: Welcome to CROSSFIRE. I'm S.E. Cupp on the right.

STEPHANIE CUTTER, CO-HOST: And I'm Stephanie Cutter on the left. In the CROSSFIRE tonight, two people who disagree on how to grow the economy. One was a labor secretary. The other was a governor.

Presidents have a long history of taking action when Congress won't move. No one disagrees that we had a stronger -- we had a strong economy under President Clinton, but what people forget is that, when Congress refused to act, Clinton took executive action. And that's just what we saw President Obama do today in North Carolina.


OBAMA: Where I can act on my own without Congress, I'm going to do so. And today I'm here to act, to help make Raleigh/Durham and America a magnet for the good high-tech manufacturing jobs that a growing middle class requires and where it's going to continue to keep this country on the cutting edge.


CUTTER: Of course, we can do more when Congress does act, and the president has a bipartisan legislative proposal to create 45 of those high-tech hubs the president was talking about all over the country. But getting Republicans in Congress to move on it is like asking teenagers to listen to their parents. What the president made clear today is that he's going to do it with Congress or without them.

CUPP: Hey, I welcome the president to the income and equality discussion Republicans have been talking about it for a long time. As far back as Nixon. Then, of course, Bush and all the way through.

Welcome to the party, Mr. President. In the CROSSFIRE, former Minnesota Governor Tim Pawlenty and Clinton administration labor secretary Robert Reich. He has a new movie out. It's called "Inequality for All." Welcome to you both.

Robert, let me start with you. I think everyone would agree that demand for jobs is greater than the supply right now. We all agree that's a problem. I think where we would disagree is on the solutions.

You would suggest that we force employers to raise wages, force union participation, raise taxes on the top job creators and force employers to cut off hiring at 50 employees to avoid Obama care mandates. How is that a recipe for job creation?

ROBERT REICH, FORMER LABOR SECRETARY: Well, first, S.E., the word "force" I heard at least four times...

CUPP: Tell me how it's not.

REICH: Well, it's not forcing. In other words...

CUPP: You want to raise the minimum wage...


REICH: Raising the minimum wage, we've been raising the minimum wage in this country since 1935. Raising the minimum wage is good for the country. It puts more money in the pockets of people. Sixty-five percent of Americans want to raise the minimum wage. Most minimum- wage workers these days are not teenagers. They are breadwinners. If you help them, you are helping the economy overall.

And a lot of employers will benefit from a higher minimum wage. We know empirical studies show that. This is not a matter of government planning. This is a matter of doing what we have done in this country -- in fact, if we had a minimum wage today that was as high as it was in 1968, adjusted for inflation, it would be $10.40 an hour. And if you add in productivity improvements, minimum wage actually would be $15 an hour.

CUPP: Still forcing employers.

REICH: It's not forcing anybody. CUPP: But we can argue about that.

CUTTER: Governor Pawlenty, what's your response to -- to his plan?

TIM PAWLENTY (R), FORMER GOVERNOR OF MINNESOTA: Well, first of all, I think if you want to find out how do you grow jobs and provide jobs in this country, a novel idea. Just out-of-the-box thinking. Ask the people who actually provide the jobs.

Cupp: Sure, right.

PAWLENTY: Guess what? There's a consistent answer from those folks about what they want. And they basically say to government, do things to encourage me, not discourage me. Make the load lighter, not heavier. And that includes things like taxation, like energy policy, like health-care policy and more. But they're basically saying don't do things to make my life more difficult, more expensive, more bureaucratic, more inefficient.

CUTTER: Well, Governor...

REICH: Actually, it's...

CUTTER: Go ahead.

REICH: Stephanie, I'm sorry to interrupt you, but I just want to say that -- that I'm very proud to be part of an administration that presided over the creation of 22 million net new jobs. That was the Clinton administration.

And one thing that we heard from businesses again and again and again was "We create jobs when there is enough demand." When consumers have money in their pockets, when you have a growing middle class. That's the issue: how to get money in the hands of the middle class...

PAWLENTY: I agree. I think we can agree on that part, Secretary.

REICH: Well, the question is -- the question is how to do that.

CUTTER: And, well, here's a question -- here's an answer of how to do that. The president's second-term agenda. And just take a look at some of this. Investing in advanced manufacturing, some of which you talked about today to create those good paying manufacturing jobs that create some of the demand in the economy.

Reforming education so that kids graduate from high school prepared for the high-tech economy. Raising the minimum wage, which the secretary just talked about.

And of course, job training. We know that there are jobs out there. We just don't have the skilled workforce to fill them.

That's the president's economic agenda. There's things left out, like immigration reform. But tell me what is wrong with this economic agenda that Republicans just won't move on it?

PAWLENTY: Sure. Well, Stephanie, conceptually, some of those things sound pretty good. Who's against high paying...

CUTTER: Who's against it? There's legislative proposals sitting there.

PAWLENTY: So how you do that -- how you do that is...

CUTTER: On each one of them.

PAWLENTY: But let's be truthful with each other. This is a holistic problem, and to take a slice and say it's about the minimum wage is, at the very least, not complete.

CUTTER: Is that what you're saying?

PAWLENTY: When I was a governor I signed a minimum wage increase.


REICH: And I salute you for that.

PAWLENTY: Thank you. And I've also vetoed some.

REICH: It actually did have a very positive effect in Minnesota.

PAWLENTY: Well, let me just say, look, we're going to have a minimum wage, I think reasonable periodic increases in it are OK. But jumping from where we are now to a, quote, "living wage" that's over $10 an hour would be quite a shock to the system.

But let me finish. If you ask people -- and I grew up in a meat- packing town, first in my family to go to college, somebody who's seen kind of firsthand what it means to have a living wage situation and a situation where there's components to this. One is there's an income gap that's correlated pretty high to the skill and education gap.

So if you want to have a discussion about how do you get people to earn more money, instead of saying the government's saying, "Thou shall earn more money, let's talk about getting people more equipped to access the jobs of today and tomorrow.

CUTTER: Absolutely.

PAWLENTY: And there's a whole set of issues around education reform. Where are we on dealing with teacher unions? And where are we dealing with getting our public education system where it needs to be, and it's not there?

REICH: I want to agree with you, Governor. Education is a key, starting with early childhood education all the way through affordable public higher education.

PAWLENTY: I knew we could agree on something.

CUTTER: I think we're agreeing a lot.

REICH: Here's the problem. PAWLENTY: All right.

REICH: And I don't want to really criticize Republicans with too broad a brush and sound too partisan. This is a nonpartisan arena, right?

CUPP: Sure.

REICH: But there is a problem. Republicans, when it comes to spending for infrastructure, one of the major job creating initiatives that we've had traditionally in this country. Bipartisan support for infrastructure, our infrastructure is decaying. Republicans say no.

Minimum wage, they say no. Expanding Medicaid for people who need it, they say no.

With regard to extended unemployment benefits for people who need it, because they -- and if they have money in their pockets they can turn around and buy, Republicans say no, again and again. Always hear from your party, now present company excluded, because you've done some great stuff, is just no to job creation.

PAWLENTY: In fairness, Speaker Boehner did not say no to unemployment benefits. He said, "Let's actually pay for it."

CUPP: Right. Which is different than saying no.

PAWLENTY: And look, we could probably agree, at least in my personal opinion, on reasonable increase in the minimum wage. We could probably agree on extending the unemployment benefits if you find a way to pay for it. We could agree on building more roads and bridges and harbors and ports and infrastructure. That's the easy stuff.

The hard part is how do you -- how do you get more people prepared to deal with the jobs of today and tomorrow when the strong-back jobs of my mom and dad's generation are gone? If you don't have a skill or education that's relative to the economy today you're marginalized.

REICH: You say -- you say we can agree on the easy stuff. Those people on the Hill are not agreeing on the easy stuff.

CUTTER: Just like I laid out...

REICH: Talk about extended unemployment benefits for a second, because since 1970, every time we have had emergency extended unemployment benefits, they have -- we've had bipartisan support without demanding budgetary offsets. There has never before since 1970...

CUPP: Mr. Secretary, let me ask you because you laid out all of the Republican opposition. And that is the criticism.

REICH: I have only just begun. That's just the -- the entree. I mean, the Republicans have...

CUPP: What I most often hear from liberals is that we don't have solutions and we have -- we're obstructionists.

Well, last month Indiana Governor Mike Pence announced that 261 companies are coming to India and bringing with them 21,000 jobs over the next few years. He did that. He encouraged those companies to come by cutting regulations, cutting taxes, cutting spending and investing in infrastructure. What's wrong with that? Why isn't that the model?

REICH: Well, that's -- investing in infrastructure is what I started our conversation with a moment ago. That's what we ought to be doing, and Republicans say...

CUPP: But Republicans are doing it. Republicans in the statehouses are doing it. And we're seeing...

REICH: You know as well I do federal infrastructure spending is critically important.

CUPP: So we'll ignore any successes Republicans have at the state level.

REICH: I'm willing to give any success in terms of investing in education, investing in trading. The governor raised the minimum wage. The problem is at the national level all we have from Republicans is no.

PAWLENTY: If I could jump in, let's take some other -- let's expand the discussion a little bit and say, we know there's also a correlation between high-paying manufacturing jobs and things like energy costs. Why can't we do the Keystone Pipeline as part of a jobs package?

We know that insourcing of jobs back from overseas back to the United States in part is around a better workforce here. We know it's also about minimizing transportation costs. But if we take advantage of the energy renaissance holistically, including gas and oil, which is a huge boom. And look at the states that are doing this. It's a huge economic boom.

CUPP: We're going to get to energy in the next segment.

PAWLENTY: All right.

CUPP: I'm glad you brought that up, Governor.

But my problem with the president is I simply don't trust his vision. I'll show you just one reason why next.


CUPP: Welcome back. In the CROSSFIRE tonight, Robert Reich and Tim Pawlenty.

President Obama was in North Carolina this afternoon, pushing his suddenly new idea that good jobs eliminate income inequality. He announced the government will help set up a new high-tech manufacturing hub around North Carolina State University in Raleigh.


OBAMA: We've got to do more to connect universities like NC State with companies like VaCom to make America the No. 1 place in the world to open new businesses and create new jobs.


CUPP: Hey, this all sounds great to me. I'm all in favor of a pilot program that involves the private sector. But flash back two years and listen to the president in Arizona.


OBAMA: I'm here because the factory that's being built behind me is an example of an America that is within our reach, an America that attracts the next generation of good manufacturing jobs.


CUPP: Well, it turns out part of that $5 billion construction project will be left vacant for the time being.

Mr. Secretary, a presidential visit doesn't guarantee job creation. Factories like the one we just saw in Arizona, Intel, closed. Solyndras are bust. We're now debating extending unemployment insurance, because the jobs haven't come.

So why should I trust President Obama's vision for the economy when it seems to be based merely on arrogance and less economics?

REICH: Well, I don't think -- it doesn't sound like arrogance to me. Getting employers together with people who are getting training, figuring out what people need to train for, creating a reemployment system rather instead of an unemployment system. I mean, that sounds like boosting the economy to me. You know, the issue here, admittedly, is turning our safety nets into trampolines and springboards so people have a chance to really get ahead.

I don't know anybody who doesn't want a job and doesn't want to work. I don't know anybody -- and I haven't heard of anybody who's sitting around on unemployment and saying, oh, gee, I love it. I can just sit here.

No, we've got to help the people that fall through the cracks. And right now, we're still in the gravitational pull of the great recession.

And that's why, Governor, I don't understand why your party says no to extended unemployment benefits. It is the most -- it's sort of -- there should not be any issue about this.

PAWLENTY: I know you are baiting me to open the door to give us your pay fors. So, I'll take the bait, OK, Secretary --

REICH: We didn't say no.

PAWLENTY: If we just said, what's the pay-fors? So, go ahead.

REICH: If we have to offset the extended unemployment benefits, it so happens that the cost of the carried interest loophole for hedge fund managers and private equity managers, each year, that loophole costs. And nobody thinks it's justifiable. I mean, they are not making their own investments. They're getting capital gains treatment.

The cost of that loophole is almost exactly the cost of extending unemployment benefits. Why don't we just close that loophole and make sure people who need the unemployment benefits --

CUPP: How long do we need it for, 100 weeks, 300 weeks?

REICH: Well, at the very least do it until the unemployment rate comes down to about 5.5 or 5.8 percent.

CUTTER: Which is traditional.

So, Governor, are you going to answer that?

PAWLENTY: Well, look, there are ways to pay for it. My group, by the way, that I'm involved with now includes hedge funds. So --


REICH: So, you support it. You and I agree on another thing.

PAWLENTY: But, look, as you said, $6 billion gross for three months and if you net out the positive effects on the economy, it might $2 billion or $3 billion. That's not unsolvable. Reasonable people, you and I could sit down in an hour in the back room of the capitol and figure that out.

REICH: Why don't we do that?

PAWLENY: Speaker Boehner said, he's not saying no, he just said pay for it. It shouldn't be that hard. It shouldn't be that hard.

CUTTER: But why do we have to pay for it?

REICH: Wait a minute, wait a minute, wait a minute. There are two issues here. All we talk about why --

PAWLENTY: Secretary, here's the real --


REICH: Since 1970, we haven't. But if we do have to pay for it, I'm serious, why don't we get rid of some of those tax loopholes that benefit the rich and make sure that people who are hard up get the help they need?

PAWLENTY: I think many Republicans including the chamber of commerce and us have said directionally and conceptually if you want to lower rate and shrink exemptions and preferences and otherwise to make it be a not net revenue raise, but have that be directional tax code reform, which is drop rates, get rid of exemptions, references and deductions --

REICH: Using that money to pay for what people need in terms of extended unemployment benefits and a lot of other things like food stamps that are being cut.

Why should the rich have all of not only a low marginal tax rate but also all the tax loopholes that have no economic justification whatsoever?

PAWLENTY: Well, Secretary, we've got to focus on what we can do. So, if you want to talk about what we can get done, Republicans aren't going to raise taxes and Democrats aren't going to, in the near term, cut entitlements. So, those are interesting debates. I can sit here and say why don't we help fix our finances and get our economy in a better spot by really dealing with our runaway health care costs?

REICH: Getting rid of carried interests loopholes from, or big hedge fund --


REICH: -- that is -- that is raising taxes?


PAWLENTY: Yes. That's interesting, but if you want to get something done, these are people who are unemployed right now, the clock is ticking down to zero.


PAWLENTY: And if somebody says to you, we're not doing that, you've got to focus on the art of the possible. You've got to focus on the art of the possible.

REICH: Seventy-two thousand a week are being added to the 1.3 million who don't have --


CUTTER: I want to take this a slightly different direction.

Governor, there is a reason why there is an agreement on what the pay- for is because some are using it for ideological and political purposes. And congress as a whole will concede this -- has trust problems with the American people. But particularly Republicans in Congress with their own party even have trust problems.

There's a new poll out today, 51 percent of Republicans disapprove of the Republican Congress. Explain this to me. These are self- inflicted wounds. They can't even get the easy stuff done. Tell me why their approval rating in their own party is so low. PAWLENTY: Sure. You know, there is a bit of -- not a civil war but at least a split in the Republican Party taking place. So, if you look at the Congress, you've got people further to the right saying they're not conservative enough and you've got traditional or establishment or moderate Republicans saying they're too conservative and too un-pragmatic (ph). So, they're getting shot at from both directions. So, that reflects that number, and it's a reflection of, I think, a bad reputation or bad impression --

CUTTER: So, how are they going to resolve it? How are they going to resolve this civil war that they're having? I mean, you represent one piece of it.

PAWLENTY: Yes, you earn support. You have to get stuff done.

CUTTER: You've got to get stuff done.

PAWLENTY: You don't say trust me and support me, you've got to go earn it.

So, what do most people care about in this country?

They want to have a good paying job. They want to make sure their families and their kids are safe. They want to put their kids in good schools. They want to be able to pay for college, pay for health care. If they've got a little money left over, they may want to go walleye fishing in Northern Minnesota.

CUPP: Yes.

PAWLENTY: That's the bread and butter. All of this crap, you know, this or that -- they just want to know this or that. Are you focused on my meat and potato, bread and butter issues, if not, shut up.

CUPP: I want to ask you like the energy question, though --

CUTTER: Could I ask one question of the governor?

CUPP: Sure, of course.

CUTTER: To reach that level of yes to the American people that believe that Republicans in Congress understand what they're going to and has an agenda to address it, don't you think the Republicans need an agenda?

PAWLENTY: Well, they have an agenda. You know, it's just --

CUTTER: That addresses the needs of reducing costs to college, putting people back to work.

PAWLENTY: For most people in this country, they're pathway to a good life is whether they have a good job.

Now, the secretary has an agenda on how he thinks that should be done. I think it's fair to say Republicans have an agenda. I was with Rob Portman the other night, he's got a big agenda on how you grow jobs. Now, whether he agrees with that or we agree --


PAWLENTY: The holes are the same.

CUPP: I want to get to the energy question.

REICH: I know, but I just want to ask --

CUPP: We're almost out of time.

REICH: I know. But I want to know what the Republican agenda for jobs is. I've asked this.


REICH: Gingrich, I ask everybody, every Republican, what is your agenda? I can't see it? I can't hear it? Where is it? Is it trickle-down economics again?

CUPP: I have a question and I want to get to it. One industry that is booming is the energy sectors, and specifically mining and oil and gas. Wage growth for that industry has risen 18 percent since 2006. That is twice the national average.

Now, I know, Mr. Secretary, you probably want a lot of these people working in solar companies instead. But are you going to those people to take a hike, or those companies to pay less? Why wouldn't this booming industry be something that liberals and folks like you are supporting 100 percent, with things like the Keystone Pipeline?

PAWLENTY: This has got to be popular at Berkeley. I mean, this is a winner at Berkeley.

REICH: No, no, no. Obviously you don't want to sacrifice the environment. I mean, look what's happening in China. They're having a booming economy, they can't even breathe. I mean, you want to -- you want jobs but you don't want jobs at any cost.

CUPP: So, these are jobs that you would turn down or you would lower these wages artificially to keep people from taking jobs that are paying very well.

REICH: No, if they want to have the jobs and the jobs are paying well. That's perfectly fine.

CUPP: Well, yes, there's a job deficit. They're taking jobs --

REICH: The underlying question here is whether you actually want to expand fracking and you want to expand certain kinds of environmentally doubtful energies that are also carbon based that are hurting the environment. I mean, let's be sensible here. We can have a lot of jobs tomorrow if we get rid of all environmental regulations, if we get rid of the minimum wage altogether, if people are working for 50 cents an hour. I mean, this is not -- that's not what we want.

We want a high wage, high quality of life.

CUTTER: After the break. Stay here. All of you.

Next, the final question for both of our guests.

We also want you at home to weigh in on today's "Fireback" question. Can Washington do anything to improve the economy this year? Anything? Tweet yes or no using #crossfire. We'll have the results after the break.


CUTTER: We're back with Robert Reich and Tim Pawlenty.

Now, it's time for the final question -- S.E.

CUPPER: Mr. Secretary, I want you to briefly diagnose President Obama's economic philosophy. Why has income inequality and the gap widened four times more than under Bush in the past five, six years? Why hasn't he been able to close that gap?

REICH: Well, I think part of it's very hard to get to political will to make the changes necessary to close the gap. Right now, he is talking wisely I think about middle out economics. You have to have a strong middle class, have the purchasing power to actually create enough economic growth.

But when you have 95 percent of all of the gains since the recovery began, going to the top 1 percent, the vast middle class doesn't have that purchasing power.

CUTTER: OK. A question over to you, Governor, I can't resist this for the final question. I have feeling you're not going to answer it, you're going to bring it back to the economic agenda.

But you were former governor -- is there any way that you wouldn't know about a major highway lane closure in your own state? Is there any way that would happen?

PAWLENTY: Well, you certainly know about the closure after it happened.

CUTTER: Right.

PAWLENTY: But you wouldn't necessarily know about it ahead of time.

CUTTER: But over three months --


PAWLENTY: I'd take Chris Christie at his word.

What I do want with my 10 seconds, Republican jobs agenda.

CUTTER: Go ahead.

PAWLENTY: Pro-growth, tax reform.


PAWLENTY: You filibuster. You should be in the Senate.

We've got to have education that focuses on the kids not the teacher unions. We've got to have energy reform that does all of the above but allows for natural gas and oil, fracking, and we've got to have market-based health care reform. Those are just some starters, but those things would matter and they would help a lot.

REICH: I'd agree with everything you just said.


CUPP: Thanks to Robert Reich and Tim Pawlenty. What a lively show.

Go to Facebook or Twitter to weigh in on our "Fireback" question. Can Washington do anything to improve the economy this year? Right now, 57 percent of you say yes. Wow, that's high.

CUTTER: That's good.

CUPP: Forty-three percent say no.

CUTTER: That's encouraging.

The debate continues online at As well as on Facebook and Twitter.

From the left, I'm Stephanie Cutter.

CUPP: From the right, I'm S.E. Cupp.

Join us tomorrow for another edition of CROSSFIRE.

"ERIN BURNETT OUTFRONT" starts right now.