From last night's MSNBC show Joining us now is Simon Johnson. He`s the former chief economist for the International Monetary Fund. He`s now a professor of economics at MIT, as well as a contributing business editor at "The Huffington Post." In other words, he`s way, way over-qualified for a discussion that started with a really bad long cheese metaphor.
Professor Johnson, thank you very much for joining us tonight. SIMON JOHNSON, MIT ECONOMICS PROFESSOR: Nice to be with you. MADDOW: Am I right that from what we know about this deal that none of it is offset, this is just $900 billion added to the debt? JOHNSON: Absolutely. As far as we know, it goes straight into the debt. It expands the deficit. It`s completely irresponsible. MADDOW: Give us a perspective on how big adding $900 billion to the debt is. Nine billion dollar is obviously a big number. All the debt and deficit number seem sort of equally big from a human distance. How big a deal is this in terms of adding to our debt problem? JOHNSON: It`s a very big deal. Look, contrary to almost every other country in the world, we are continuing to run a big deficit. We`re ignoring the pressure from financial markets around the world. We are continuing with these very irresponsible policies put in place by President Bush, and this is asking for trouble. We are going to get trouble because of these tax cuts. MADDOW: The White House says, yes, this does add $900 billion to the debt, but it will have some stimulative effect on the economy. The president making the case today that the best thing anybody can do for every sector of the economy is that the economy grows overall. Do you see this as good bang for the buck in terms of economic stimulus? JOHNSON: No, it`s not good bang for the buck. You do get some stimulus, but it`s a small amount of stimulus. There are much better ways to stimulate the economy, if that`s your goal, in return for the increased deficit and the increased debt, which is the cost I`m afraid of those policies. MADDOW: If you could be economic dictator for a day, if you had $900 billion to devote to trying to make the economy better, trying to bring down unemployment in particular, what would you spend that $900 billion on? JOHNSON: Well, I would pay teachers. We got states and local governments laying off employees, particularly teachers. That really hurts us immediately and over the long run across the country. That`s devastating. I would expand community colleges. That`s where the unemployed go to get retrained, go to get the new skills they need in the modern economy, skills they don`t have. And, of course, I would properly extend unemployment benefits. Unemployment benefits, by the way, are going to remain at this 99-week limit. So, in Nevada, for example, there`s 96,000 people who are about to run out of benefit, the agreement today does nothing for those people. They`re still out of benefit. MADDOW: What about the GOP argument that they really, really, really want tax cuts for the richest people in the country because rich people are the job creators? What about that sort of trickle-down, supply side argument? JOHNSON: Look, I have nothing against rich people. Some of them are a great entrepreneurs, I`m sure. But there`s no evidence that this kind of tax cut is going to generate jobs of that kind. In fact, the people who study carefully the spending habits of those very same wealthy Americans are saying very clearly the evidence is this will not generate new jobs. Businesses are constrained by the lack of demand right now more than anything else. These taxes or the income tax and the estate tax, and so on, are not at all what is holding back employment and why we have record unemployment. MADDOW: In terms of the -- in terms, of the U.S. situation with tax rates right now, when you hear people who are arguing for tax cuts, they talk about the country as if we have unreasonably high taxes compared to other major economies in the world. When you talk about people who are willing to see tax rates go back up. People talk about them as if they`re contextualizing them as relatively reasonable. What is your view in terms of the overall size of the U.S. tax burden right now? Do we have high taxes? JOHNSON: No, we have low taxes as a percent of GDP compared to almost any other country at our income level. We have a pretty inefficient tax system. We should reform it. That`s without question. If you reform the tax system, you will get more revenue and less distortion. So, that`s good. Unless, of course, you don`t want the extra revenue, unless you don`t want to pay for two foreign wars, 11 aircraft carrier groups, and a lot of other commitments that the government got itself into over the past decade. MADDOW: Professor Johnson, one last question for you. We`re going to speak with Senator Sherrod Brown of Ohio in just a moment. And one of the things I wanted to discuss with him is how much wiggle room there is in this framework. The White House is describing this as a framework, which implies that the deal is not totally nailed down, although the basics of the agreement they expect to remain in place. You described a radically different approach to spending $900 billion on trying to improve the economy spending on teachers and community colleges. Is there something that within this basic framework could be done to significantly improve it? To make it more stimulative? To make it worth more in terms of what we`re spending here? Or is the overall framework just too toxic to do any good? JOHNSON: I`m afraid this framework will not substantially help stimulate the economy. It will not significantly bring down unemployment. If that is your goal, and it`s a very legitimate goal, and if you`re willing to incur some extra deficit to bring down unemployment, which I think is entirely reasonably, you should spend those dollars wisely. You should not blow it all on yet another irresponsible and from this purpose, ineffective tax cut that increases the deficit, increases the debt and makes us more vulnerable to a financial market attack, the kind now being seen in Europe. MADDOW: Simon Johnson, professor of economics at MIT, contributing business editor at "Huffington Post" -- thank you very much for your time tonight. It`s very good to have you here. (later on in the show) MADDOW: There is a quote that is attributed to Gandhi. That was probably not said by Gandhi, but I don`t know who did say it. So since everybody thinks he said it, he`s maybe still the best reference. It goes like this, "First they ignore you. Then they laugh at you. Then they fight you. Then you win." I always found this very inspirational as a kid who felt like I was always going to be part of the world that at best would be laughed at and a typical day would be ignored. The idea was that this is how you, as an outsider, you as somebody who is initially dismissible, you can eventually, if you are persistent and if you do your work well, you can achieve great things. You can, in fact, defeat the people who would dismiss and laugh at you and fight you. We are seeing right now the reverse of this. We are seeing quite literally this process playing out backwards with the presidency, this historic presidency that came about because of a brilliant and country- changing campaign. So, this is the Gandhi quote backwards for this presidency. First, in this case, for this presidency - first, you win. This presidency was not a culmination of a grand career in politics for Barack Obama. He was catapulted to the presidency by the brilliance of his campaigning and by a country that desperately wanted something dramatically different from what we`d had before. So, first he won. Then, they fight you. Then, after he won, they fought him. (BEGIN AUDIO CLIP) SEN. JIM DEMINT (R-SC): If we`re able to stop Obama on this, it will be his Waterloo. It will break him. (END AUDIO CLIP) MADDOW: That, of course, is Republican Senator Jim DeMint of South Carolina charmingly plotting last year to po-litically destroy President Obama over health reform. Turns out health reform was not Barack Obama`s Waterloo. No one thing has been Waterloo for this president. But Republicans have adopted the Jim DeMint Waterloo strategy for every fight, for every single piece of legislation of any significance. The goal is to stop it and stop it at any cost because any political advancement is advantage for this president and this president must be destroyed. It`s not surprising - these are not surprising tactics. If you were a Republican Congressional leader you probably would have done the same thing. The way they decide to fight the president was by unified opposition to everything he pro-poses or that can be linked to him. And why do they want to do that? Because they want to defeat him. (BEGIN VIDEO CLIP) UNIDENTIFIED MALE: You told "The National Journal," quote, "The single most important thing we want to achieve is for President Obama to be a one-term president." (END VIDEO CLIP) MADDOW: So, first he won. Then they fought him. He got a lot of legislation passed in his first two years as president. But by fighting him in this way, the Republicans destroyed him in the midterms. And in the first big test of whether those midterm losses had seriously wounded the president, or whether he was going to come back stronger after that defeat, the president face-planted, calling a hastily- arranged press conference to try to defend an inexplicable capitulation, even before his opponents have taken power, even with public opinion on his side. So first he won. Then they fought him. And now, with the way he lost this fight, we have arrived at the part you would hope would be the worst of this process, but it isn`t. What is happening now is that this presidency is at risk of becoming a punch line. It`s not that he has lost a fight or two or three or four. It`s that the very idea that he knows how to win or even wants to win has become a joke. (BEGIN VIDEO CLIP) UNIDENTIFIED MALE: He said I will fight again in two years for these tax cuts to expire for the richest Americans. Was there a fight that the American public missed? (END VIDEO CLIP) MADDOW: Started off by winning. Then they fought him. Now, it`s punch line time. But the worst stage, the one that cannot be reversed, is when this president starts to be ignored, when what he wants, his political vision becomes irrele-vant. Is not just a face-value harm for this president`s political power. It is actually a substantive harm for the presidency itself. Either the president of the United States matters or he doesn`t. And if the president cannot win when his party is the majority in Congress, if no one can even conceive of the president winning fights when his party is in the majority, let alone the minority in Washington, then the presidency itself starts to atrophy. It starts to disappear. The White House either figures out how to reverse this now, how to start winning now, how to assert the president`s relevance now - they either do that or fill in the blank. In the metaphor, when you transition from them, ignoring you to them fighting you, to you winning, what you`re doing is moving from irrelevancy. You`re moving from the wilderness into a place where you are in power. When you do that in reverse, you are starting in power and you are ending up irrelevant. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
