Downsizing Robert Reich, page 2
With Buchanan now forcing politicians of all stripes to confront the plight of American workers, it seemed a good time to visit Secretary Reich and hear his side of the story. Reich has made news in recent months by aggressively pressuring The Gap, Eddie Bauer and other large clothing retailers to stop relying on overseas suppliers who pay workers sub-minimum wages and impose inhuman working conditions. He has successfully cracked down on companies who have illegally raided their workers' pension funds. And throughout Clinton's presidency Reich has demanded that attention be paid to the human consequences of an economy that is fantastically enriching the upper crust while crushing the poor and turning America's once-confident middle class into what Reich calls "the anxious class."
But Reich has wielded relatively little influence over Clinton's larger economic policy, which has instead reflected the Wall Street perspective of Federal Reserve chairman Alan Greenspan, former Treasury Secretary Lloyd Bentsen and Bentsen's successor, Robert Rubin. Might this change, now that Clinton is running for reelection? Clinton has reportedly fretted in private that he must deliver "something for the common man" if he is to "crawl through to reelection." Is it time, then, for Clinton to bring Reich off the bench and into the game?
Physically, the Labor Secretary stands a mere four-foot-ten compared to Pat Buchanan's six-foot-two, but when it comes to workers' issues, Reich's giant brain and stout heart would seem to make him the administration's best possible match-up against the hulking Irishman's pseudo-populism. Reich knows how to sell his ideas. In television appearances (including a CNN face-off with Buchanan last Labor Day in which he more than held his own), he invariably speaks in the quick, witty sound-bites producers love. In books and newspaper articles, he writes with a verve and directness uncommon among government officials.
For some reason, though, Reich spoke at a slow, deliberate pace in the interview for this article, as if he were dictating to a secretary. He stayed relentlessly "on message" and loyal to his president, skirting questions about what specific steps, if any, Bill Clinton might take to stand up for workers and regain the initiative from the Republicans in the economic debate. His one flash of spontaneity came when I mentioned that his ideas for encouraging socially responsible corporate behavior had been attacked from both the left and the right. "Then I must be doing something right," he chuckled.
Reich politely rejected any suggestion that the administration had been caught flat-footed by Buchanan. "In his State of Union address, long before Pat Buchanan scored well in the New Hampshire primary, the president called on corporations to share with their employees not just the downside burdens and risks of economic change but also the upside benefits and profits," said Reich. Not only has Clinton "been talking about this issue for many years," Reich added, he has tried to do something about it: by raising the minimum wage, expanding the earned income tax credit, providing universal health insurance, reforming the pension system, and supporting low-interest student loans, school-to-work apprenticeships and other education and job training programs.
To some, this list of initiatives may sound rather bloodless, especially when compared to Mr. Buchanan's hellfire attacks on corporate privilege and callousness. Reich counters that, "Casting blame and indulging in the politics of resentment may draw loud applause, but it's irresponsible. There's no magic bullet for the insecurities, stagnating wages and widening income disparities this country has been experiencing for the last 15 years. And anyone who suggests otherwise isn't being honest with the American people." A second problem is that many of the initiatives Reich listed, such as the efforts to broaden health coverage and raise the minimum wage by 90 cents an hour, remain unfulfilled, victims of congressional Republicans' opposition. Still, says Reich, "We've accomplished a great deal, though there's far, far more to do."
Reich's current favorite idea is a controversial one: offering tax cuts to encourage corporations to treat their workers better. Reich first broached the concept in the wake of AT&T's announcement in January that it was firing some 40,000 workers; IBM, Boeing, Sears, GM and many other blue-chip companies had previously executed similar cutbacks. Lamenting these job losses in an Op-Ed article in the New York Times, Reich pointedly asked, "Do companies have obligations beyond the bottom line?" Reich argued they did and made his case by exploiting a favorite theme of Bob Dole and other Republicans: If entertainment companies are expected to forego the profits of lewd and violent programming in the name of social responsibility, "what about a corporation's duty to its employees and its community? The sudden loss of a paycheck can be more damaging to family values than a titillating screen performance."
The problem, continued Reich, is that under the rules of the marketplace, AT&T "may have done exactly the right thing by its shareholders." If government wants companies to honor their social responsibilities, Reich added, it must give them an economic reason to do so. Hence, Reich's idea of reducing, or even eliminating, corporate income taxes for firms that provide workers with decent wages and benefits, upgrade their skills and remain in their communities.
"The great transformation of the American workforce from the old (manufacturing) economy to the new (information) economy is difficult and costly," Reich added in our interview. "Right now, individuals are bearing most of the cost themselves, and government is picking up part of the tab. Why shouldn't the private sector bear some of the responsibility as well?"
Secretary Reich is not the only Democrat ventilating such ideas. Senators Jeff Bingaman of New Mexico and Edward Kennedy of Massachusetts and Representative Richard Gephardt of Missouri have each advanced similar proposals. Reich told me he hopes all these proposals will serve as "a departure point for a national debate about corporate citizenship," a debate similar to the one over the role of government that has occupied American politics the past 15 years.
Of course, no one has more sway over the national political conversation than the president. Yet it is unclear whether Bill Clinton will take the lead on this issue. While Reich is pushing his old friend in one direction, Clinton's most senior economic policy-makers, Treasury Secretary Rubin and Council of Economic Advisers chief Laura D'Andrea Tyson, have argued that the focus must remain on Clinton's current economic agenda -- in other words, a continuation of the centrist consensus.
Any steps in Reich's direction would undoubtedly antagonize the corporate community. The very idea that corporations have responsibilities beyond producing profits and dividends is anathema to the Wall Street Journal crowd. Conservative columnist William Safire, who has been remarkably quiet about his former White House colleague Buchanan's corporation-bashing, nevertheless pounced on Reich's tax incentive proposal with hysterical vengeance, dubbing it "The New Socialism." From the American Enterprise Institute, a Washington research group funded by big business, tax expert Diana Furchtgott-Roth argues that telling corporations they shouldn't fire people is "the height of industrial policy" -- a self-evident evil, apparently. Besides, she adds, aggregate U.S. employment is steadily increasing (even if the newly created jobs pay workers far less), so "downsizing is not a national problem."
At the same time, critics on the left question why taxpayers should subsidize the very corporations who are putting so many people out of work. "A good start on getting companies to do the right thing is to stop rewarding them for doing the wrong thing," says AFL-CIO spokesman David Saltz. Adds MIT economist Lester Thurow, "Essentially what they're saying is, 'We'll bribe you to be good guys."
The fact is, corporate tax rates have already been lowered substantially in the United States. The corporate tax rate was 52 percent in the early 1960s; today, it is 35 percent. Corporate taxes provided 25 percent of federal revenues in the 1960s; they now account for 10 percent. When I asked Secretary Reich whether additional corporate tax breaks made sense when previous cuts had not produced the socially exemplary behavior he desired, he replied that the alternative approach was to impose more regulations on corporations; this he opposed because it "could be enormously inefficient. The virtue of a tax incentive is that corporations do not have to seek it if they don't want to." He added that the revenue losses from his tax cuts would be recouped by "cutting corporate welfare," a step recently promoted separately by a bipartisan group of Senators led by Ted Kennedy and John McCain of Arizona.
"Pat Buchanan may fade, but not the anger that fuels him," wrote Reich in late February. Bill Clinton is a smart enough politician to recognize he must deal with that popular anger. After all, it was mass economic discontent that enabled him to defeat George Bush in 1992, and Americans are hurting much more today than they were four years ago. Reich and his congressional allies want to address Americans' anger by promoting corporate responsibility. But will common folk struggling to keep their heads above water really accept a strategy of using carrots rather than sticks against job-cutting corporations? For his part, will Clinton endorse Reich's proposal, thereby risking retaliation from the business elite he has courted so faithfully? Given Clinton's allegiance to the centrist consensus, says Jesse Jackson adviser Robert Borosage, the most likely scenario is that the president "will talk more about this stuff as the campaign heats up but do little and forget it entirely after Election Day."
What does Clinton himself say? From the White House, spokesperson Mary Ellen Glynn says the president will soon travel to California, where he will visit the Harmon corporation, a family-friendly company that tries to keep its workers employed during hard times. "This is something the president has been talking about for years and years," Glynn says. "And you'll hear more about it in the next few weeks."
Who is to blame for the plight of the "anxious middle"? And what should be done about it? Join the conversation in the Issues & Politics area of Table Talk.
