PAUL JAY: Welcome to The Real News Network. I'm Paul Jay in Washington. And in Washington
on Monday, President Obama gave a press conference where he spoke about the fight with the Republican
Party over raising the debt ceiling. And here's a little bit of what he said.
BARACK OBAMA: I have been hearing from my Republican friends for quite some time that
it is a moral imperative for us to tackle our debt and our deficits in a serious way.
I've been hearing from them that this is one of the thing that's creating uncertainty and
holding back investment on the part of the business community. And so what I've said
to them is let's go, and it is possible for us to construct a package that would be balanced,
would share sacrifice, would involve both parties taking on their sacred cows, would
involve some meaningful changes to Medicare and Social Security and Medicaid that would
preserve the integrity of the programs.
JAY: Now joining us to dissect President Obama's press conference and this battle over the
debt ceiling is Tom Ferguson. Tom is a senior fellow at the Roosevelt Institute in New York.
He also teaches at the University of Massachusetts in Boston. Thanks for joining us, Tom.
THOMAS FERGUSON: Hi, there.
JAY: So just before we get started, let me play you just one other little clip, which
is a question that was asked at the news conference. Here it is.
CHIP REID: Latest CBS News polls show that only 24 percent of Americans said you should
raise the debt limit to avoid an economic catastrophe. There are still 69 percent who
oppose raising the debt limit. So is it the problem that you and others have failed to
convince the American people that we have a crisis?
JAY: So, Tom, 24 percent say raise the debt ceiling, 69 percent say don't do it. Where
are you? In the 69 or the 24?
FERGUSON: I think I'm sort of like John Kerry on the war on Iraq; that is to say, I might
be against it before I was for it. That is to say, look, in practical terms, you don't
have any alternative but to raise it, it seems to me. On the other hand, there's no doubt
that you could do changes in the US budget situation that would probably obviate the
need for that. But, you know, they're not going to do it. You know. Now, I wouldn't
do what the president's proposing. It's certainly not what the Republicans are doing. But they--.
JAY: Well, before you go there, let's quickly--I know we've said this before in some of our
other interviews, but let's say what's it. I mean, in theory, if President Obama wanted
to go and fight for a different vision, I mean, how would you deal with the debt situation
without raising the debt ceiling? I mean, I know it's imaginary, but what if we went
back to the days not long ago when the Democrats controlled both houses?
FERGUSON: Well, you could simply start--I mean, he's already announced plans to withdraw
33,000 American troops from Afghanistan over a relatively long period. Pull them all out,
not just the 33,000, but everybody else. Everybody in effect is around the place, is saying none
of this--keeping the war going there doesn't make sense if you're doing those withdrawals
on that scale anyway, and that, you know, they're not going to achieve anything. If
they dump another 100,000 in Afghanistan, they could widen the perimeter around Kandahar.
When they pull them out, it will narrow again. You could do things like that to stop some
of--. You could also, as ridiculous as it sounds, though it wouldn't solve your problem
in one month, you could try stimulating the economy, getting people back to work, and
getting tax revenues up. But the White House long ago decided not to do that. So, you know,
I actually think, Paul, as I say, they're going to have to do it in the very short run,
but there is just no justification for the type of package the president is proposing.
JAY: Okay. I'm just going to say once really fast, 'cause we've done it in other interviews,
but three things you and I have talked about and we've talked about on The Real News, three
things that could have been done and were not. Number one, serious cuts to the military
budget. Number two, real health care reform that actually would actually reduce in a more
significant way the cost of health care, which would have been at the very least some form
of public option. And number three, tax the wealthy. So if you put all those three things
together, that 69 percent of people that say you don't need to do this aren't wrong. But
as we know, none of that was done. So we are where we are. Does Obama have real choices
now?
FERGUSON: It won't solve the problem by August 2, either. But, you know, you're absolutely
right. In particular, you know, if you just let the government bid down the prices of
pharmaceuticals in health care, you could save literally, you know, trillions of dollars
over the next ten years. I mean, that's an easy step these guys could take. And, you
know, you know that neither the president nor the Republicans is going to do that.
JAY: Well, actually, on that particular point, that's something President Obama gave away
early in the negotiations on the health care bill. He made a deal with pharma early on
not--exactly not to do that, so they wouldn't buy TV ads attacking his reforms.
FERGUSON: Alas, yes.
JAY: Okay. We've done the context. So now we are where we are. So, first of all, what
choices does President Obama have now? I mean, he's clearly saying that he's willing to put
on the table--. I have to--I'm supposed to just be a more straight interviewer here,
but I can't. When I hear him say, I have to give up some of my favorite programs, you
know, what he's talking about is giving up things that are going to cause such suffering.
It's not about his, you know, wishes being violated in some way.
FERGUSON: Look, there in particular, the one that sticks in everybody's craw that has any
general knowledge of the real economics of the program is Social Security. I mean, even
the president's supporters concede that, say, out to the year 2050, Social Security's contribution
to the deficit is--unreform might add up to 1 percent or something like that. They nevertheless
make the--as a percent--debt as a percentage of GDP. And yet they nevertheless insist on
cutting it now, claiming to save the program. But, actually, when you read their fine print,
what they actually say is, well, we just have to prove we can do this to prove to finance--signal
financial markets that we're not Greece.
JAY: Yeah, but, I mean, President Obama says that specifically in the press conference.
He was asked directly and about Social Security. He says Social Security's not the cause of
this crisis. But then he goes on to say, but now's a good time to reform it, 'cause when
will we if we don't do it now.
FERGUSON: Yeah. I mean, that really is hard to swallow. I mean, the essentially two-faced
character of the White House assertions here are just--you know, they're outrageous. It's
why a lot of Democrats in Congress simply can't stomach that one. And the truth is,
in medical care--you know, we mentioned the pharmaceutical bidding business. A serious
effort on antitrust, a large chunk of the growth in medical spending comes from the
fact that you've got just one island of oligopolies after another in that place, and that, you
know, despite the nonsense about how patients are somehow supposed to control their doctors,
they can't in most cases. It's--you're not in a position to second-guess somebody who
says you need an MRI, say, or whether--you know, or two MRIs. And you need there some
serious antitrust. This is not anything the White House has ever been interested in.
JAY: But let me ask you something specific more about Obama's press conference. Here's
a little segment from one of his answers to the journalists.
OBAMA: What we can do is to solve this underlying debt and deficit problem for a long period
of time, so that then we can get back to having a conversation about, alright, since we now
have solved this problem, that's no longer what's hampering economic growth, that's not
feeding business and uncertainty, everybody feels that the ground is stable under our
feet, are there some strategies that we could pursue that would really focus on some targeted
job growth, infrastructure being a primary example?
JAY: What do you make of the logic?
FERGUSON: Alice in Wonderland. I mean, they don't need targeted jobs growth. They need
a massive jobs program. I mean, this--you know, we're now three years into this thing,
and unemployment is 9.2 percent. All of their claims that, you know, green shoots, the summer
of recovery, all that stuff they were saying, none of that has proven out as--you know,
Paul, forgive me if I remind you that I and others told you this on camera over the last
couple of years that this was all going to be nonsense and, you know, this is not a problem
of targets and narrow spending. They need a massive jobs program. That's--I mean, you
are stuck here. This--look, let's just--despite all the claims. You know. And the president
had really no business validating that claim that, oh, it's uncertainty that's holding
back business.
JAY: Well, yeah, that was what I was getting at with this quote is that he's essentially
giving, almost word for word, the same argument the Republicans give, that we need to deal
with the debt side in order to get business investing again.
FERGUSON: Yeah. The only--I mean, the other element of uncertainty they often adduce is
regulatory uncertainty there. You know. And, look, in the late '30s--or, rather, in the
mid '30s, when the government moved vigorously on unemployment, that is, up till 1937, there
was plenty of uncertainty. There were huge numbers of folks in the business community
who actually believed, as distinct from merely saying, 'cause I think most of them know better
now, that the president was--that the president, who was then Franklin Roosevelt, was a socialist.
They nevertheless invested as aggregate demand rose because the government primed the pump.
If they did that again, that's what would happen now. This regulatory uncertainty business
is basically nonsense. It's not the problem. The problem is is that the economy is dead
in the water and nobody is going to take on, you know, any more people to hire than they
can see for sure that they can keep for a while. And right now--.
JAY: Okay. So let me ask you a question here. So if he buys into the debt stuff, which he
has, and he comes to some kind of compromise where--apparently what they're going to come
to, all the pundits are speculating, is the Republicans will find some disguised way to
allow a certain amount of tax increases like closing loopholes and things. What they do
get on the side of the Social Security and Medicare and Medicaid, which are on the table,
are things that everyone thought were supposedly unimaginable, because Obama had previously
said he wouldn't go there. So let's say they do all of that, no stimulus really on the
table whatsoever. How the heck does President Obama go into an election with this kind of
economy, which is clearly going to tank into even deeper recession after all this?
FERGUSON: Now, look, this is a serious problem. Nobody I know who looks at this problem seriously
can be--is anything other than really quite scared, 'cause it's not just the US; it's
just about everywhere in the world is headed down. And, I mean, even China's showing signs
of the sort of slowing down. And, yeah, I mean, you've got a fairly--you know, it has
a scary resemblance to 1931 in the Great Depression, you know, two years after the collapse of
Wall Street. You know, Central Europe collapsed and took down the rest of the world. That
sound familiar? That's sort of what's happening right now. And the White House signed on to
this sort of business about worldwide austerity back in Toronto, right [crosstalk]
JAY: At the G-20.
FERGUSON: Yeah. And, you know, they need to give this stuff up, and they've got to do
it as fast as possible. You know, otherwise you're going to be stuck at 9 percent-plus
unemployment for a long time and in a situation where fuel prices are going to remain very
high.
JAY: Well, they're heading very fast further down the austerity path. Thanks very much
for joining us, Tom.
FERGUSON: Okay.
JAY: Thank you for joining us on The Real News Network.