The Downsizing of Robert Reich

For nearly four years, the Clinton administration has locked away its Labor Secretary, Robert Reich -- and his progressive ideas about how to get corporate America to practice better "citizenship." Has Reich's time finally come?

Published March 9, 1996 6:00PM (EST)

Before Pat Buchanan, there was Robert Reich.

Until the Dole campaign finally took the "go" out of the Buchanan crusade, it was the bellicose broadcaster who grabbed the headlines, doing what no
Democratic politician of the modern era has managed to do: put the hardships and
injustices facing American workers on the front burner of American politics.
It's an achievement that must stick in Robert Reich's craw. As Secretary of
Labor, Reich was supposed to be Bill Clinton's point man on this issue. And
certainly Reich has spoken out, and fought, for workers since joining the
administration of his old Oxford classmate Clinton. But Reich's efforts have never attained the visibility of Buchanan's. In an interview with SALON,
Reich conceded the point, arguing, "It's far easier to make headlines by
vilifying and demonizing, by casting blame, instead of doing the more
difficult work of coming up with solutions."

No doubt. But Reich also faces a second problem, closer to home. As a Labor
Secretary whose progressive outlook places him on the leftward edge of the
Clinton administration, Reich serves a president who seems less interested in
the travails of ordinary workers than in keeping corporate America happy
through a program of deficit reduction, tight money and global trade
agreements. As the New York Times has noted (citing White House sources, no
less), Bill Clinton "has done more for the Fortune 500 than virtually any
other President in this century."

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

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

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

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.

By Mark Hertsgaard

MORE FROM Mark Hertsgaard

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