Mother Jones: What do you predict will be President Bush’s legacy?
Robert Reich: A legacy of economic disaster. The Bush administration has created a dangerous brew: We’ve experienced a mountain of mortgage defaults, a near record of $900 billion in trade deficits, oil prices higher than ever, and a dollar so weak that even upper-middle-class Americans can’t afford to go abroad for vacation. People with incomes over a million dollars got a tax cut more than 30 times larger than the tax cut received by the average American, compounding inequalities that are larger than this nation has seen since the Roaring ’20s. The war in Iraq has cost the nation something around $2-3 trillion, depending on how you measure the costs, while the national debt has grown 70 percent. Can you imagine what we could have spent this money on if we hadn’t spent it on warfare? Oil markets are roaring upward partly because of the unrest we’ve created in the Middle East. And the world’s confidence in America has declined—the value of the dollar has plummeted some 40 percent against the euro since the start of this administration.
MJ: Do some of these problems have easier solutions than others?
RR: Easy solutions? All of these problems are connected. Because everything is related to everything else, there’s no simple solution. The challenge is going to be to completely refashion economic and foreign policy in a way that not only reverses the dangerous, or dreadful I should say, legacy of the Bush administration, but also puts the country back on a positive, progressive path. It’s not going to be easy.
MJ: Will Bush leave behind any problems that are irreparable?
RR: No. Nothing is irreparable. If we rebuild confidence in America and reassert the moral authority this nation used to have, we’re rewarded with triple dividends: America’s power to do good in the world is enhanced, the dollar is strengthened, and we can collaborate with our allies on a whole host of problems ranging from global warming to terrorism. Rather than think of particular policies that need to be reversed, it’s more helpful to think about clusters of policies that are closely related and reinforce one another. If we tilt the economy back toward widespread prosperity and greater equity, Americans thereby have more purchasing power. That means we can create more jobs, and that creates in itself a virtuous cycle. If we enhance public investment in infrastructure and in schools and health care, the labor force becomes more productive. That contributes to sustainable growth. If we invest in green technologies and so-called green-collar jobs, we also stimulate the economy, help reduce climate change, and at the same time seed the next middle class, the future middle class.
MJ: You’ve called on the next president to establish a “national capital budget” to increase spending on infrastructure. How would this help our economy recover?
RR: A fiscal stimulus can be helpful. It’s certainly one step. With our gigantic indebtedness to the rest of the world, coupled with a trade deficit, the Federal Reserve Board is stymied. It can’t reduce interest rates to stimulate the economy for fear that global investors will divest out of the United States, causing the dollar to drop even further and spurring inflation. In this situation, fiscal policy [as opposed to monetary policy, the Fed’s purview] becomes more important. A big fiscal stimulus focusing on infrastructure, especially public transportation, might be one aspect of the solution. I say public transportation because with gas at $4 a gallon, we now know the tipping point for getting people out of their cars—millions of Americans are switching to public transportation, yet ironically, public transit is shrinking because there’s not enough money for it. So this would pay triple dividends: It would help stimulate the economy, it would help get people back to work, and there’d be the energy and environmental savings.
MJ: And you believe such policies will ultimately help to repair America’s standing?
RR: Absolutely. So instead of thinking about individual policies, we need to think more boldly. What Bush has done is caused the nation, in almost every respect, to regress. He has thereby given new meaning to the term “progress” and progressivism. People may have been unclear about what progressive thinking and policy meant before Bush. Now there’s no question—it’s simply the opposite.
MJ: Will that be part of Bush’s legacy in 50 years—will he have actually bolstered the progressive movement?
RR: Let’s hope so. That’s the best we can hope for. Pessimists would say that he has put the nation on an irreversible, negative, regressive path. Kind of emboldening the worst aspects of this country—its crass materialism, mindless misuse of natural resources and the environment, belligerence and bullying toward the rest of the world, disrespect for civil rights and liberties, and xenophobia, nativism. I’m an optimist. I view history in terms of a giant pendulum. America is very resilient—of all the nations of the world, perhaps the most resilient. We’ve had some bad presidents. James K. Polk comes to mind, Ulysses S. Grant, Warren G. Harding. We’ve bounced back from all of them. It’s going to be harder to bounce back from George W. Bush because he’s been in office eight years and done some terrible things. But we will bounce back.
MJ: Despite Bush, you see America as a liberal society on a progressive trajectory?
RR: If you clear away the current political labels that people put on themselves, I think at our base we are a liberal, progressive society. Whatever people call themselves, we share some basic progressive values. Almost all Americans believe that people who work everyday should not be in poverty; that everyone should be able to make the most of his or her God-given talents and abilities; that if you get into trouble for no reason of your own, you should be helped; that if you are working at a profitable company, you should not be sacked. The list is quite long and it comprises a sort of social contract.
MJ: Any thoughts on the economic policy team that Barack Obama picked out recently?
RR: Well, I’m an economic adviser, so…I think we are a great team.