Sen. Hillary Rodham Clinton (D-N.Y.) is pushing economic messages this week.
Today, she talked with Bloomberg's Al Hunt.
Tomorrow, Clinton is in Chicago for an address to The Economic Club of Chicago. (see my column about Clinton's Chicago trip below)
``Health care costs are skyrocketing. Businesses are understandably feeling pressed by health care. They're trying to figure out how they're going to deal with it.''
Senator Clinton: U.S. Economy, Health Costs, Trade (Transcript)
April 10 (Bloomberg) -- U.S. Senator Hillary Rodham Clinton, a Democrat from New York, talks with Bloomberg's Al Hunt in New York about challenges facing the U.S. economy, U.S. manufacturers and trade with China, and the U.S.'s policy toward Iran. (Source: Bloomberg)
(This is not a legal transcript. Bloomberg LP cannot guarantee its accuracy.)
ASSAAD: Lately Congress, of course, has been touching on several controversial issues, including immigration, port security, the national debt, the U.S. economy.
Well, this morning we have a special guest, Senator Hillary Clinton, who's joined by our Bloomberg Executive Editor Al Hunt – Al.
HUNT: Senator Clinton, thank you for being with us this morning.
CLINTON: Glad to be here.
HUNT: You're going to give a major economic speech tomorrow night to the Economic Club in Chicago. The unemployment rate is 4.7 percent, robust growth, low inflation and interest rates, consumer confidence is soaring. What's wrong with the economy?
CLINTON: Well, the economy is working really well for many people. And the indicators at the present time, as you say, are positive. But if you look just over the horizon and below the surface there are some troubling issues.
I think our failure to get health care costs under control, our failure to have a real energy policy, our fiscal position going into these huge deficits, increasing debt, raising our debt limits, our trade deficit, most economists that I speak to who are not of either the right or the left persuasion but actually looking at the evidence are raising some yellow flags, if not some red ones saying, look, we have to get a position where we're in charge of our own economic destiny.
Yes, unemployment is four percent, but it was four percent in the Clinton administration and more people were in the workforce. So, a lot of people have disappeared from the workforce. Replacement jobs for those that are lost are 20 to 40 percent less than income. The sort of pillars of the middle class, a stable job with certain benefits if you work hard, are beginning to disintegrate. Health care costs are skyrocketing. Businesses are understandably feeling pressed by health care. They're trying to figure out how they're going to deal with it. The plan in Massachusetts gives us some hope, but we need to have a national response. And, of course, energy costs.
And just so many issues that we're kind of pushing to the side. We're either denying or trying to overcome with happy talk. I think they're going to come back to bite us if we're not careful.
HUNT: Let's pick up on all those.
Health care costs – what are the two or three things that we could do right now to make health care costs more affordable and more accessible?
CLINTON: Well, number one, we need a health information technology framework. I have legislation with Senator Bill Frist that has passed the Senate. I hope it'll pass the House and be signed by the president because right now we're wasting billions of dollars. And we're not practicing evidence-based medicine with the results that we could expect in lowering cost and lowering problems.
We need to have a fix for small business. There's something moving through the Congress right now, which many of us believe will make matters worse. But there is an alternative that I think could create a big pool, similar to the federal employees benefit pool that would give small businesses a chance to get in and try to provide affordable healthcare.
Obviously we need to incentivize more wellness, more preventive care. And we need to both the carrot and the stick approach. We're trying to do everything from taking foods with no nutritional value out of our schools – vending machines – to trying to create reimbursement for programs that will deal with people's nutritional and exercise status when they are diabetic.
So, those are three things we should do right now. But honestly we've got to have a national conversation about health care. We're letting the financing tail wag, the health care dog, and it is the single issue that CEOs talk to me about, not only CEOs from so-called old industry manufacturing and others who come in and say, the legacy costs are killing us. We need to give them some relief from that, but also the so-called new economy. People are saying we're doing everything we can to control costs. But how do we get them under control without some kind of consensus?
HUNT: Well, let me pick up on that because for generations Americans have basically relied on employers to provide ...
HUNT: ... their health care and their pension. That system, as I think you alluded to, seems to be breaking down or at least eroding. What replaces it?
CLINTON: Well, that's the debate, Al. You know, there are some, and many of the people I speak to, basically say, look, the market will have to take care of it. All bets are off. We can't compete in a global economy. And, therefore, employers' individuals are on their own.
HUNT: But you don't think that's sufficient.
CLINTON: I don't think it's sufficient. I think it does at least two bad things. I dramatically does scale back the middle class expectations of Americans. I think that would be a terrible retreat from what has been the promise of prosperity for people who did their part in our society.
Secondly, it is a race to the bottom. And right now we are competing with companies in countries that do provide some kind of health care, pension system. It's not the kind we would. We need a uniquely American solution. But they have a social compact for the twenty-first century and against companies in countries that don't provide any benefits.
I don't know that our democracy, which is really fueled by this broad-based prosperity that brings together a pluralistic society where people feel that they have a chance even if they came from nothing, would be as strong and robust as we need it to be to face the other challenges we confront. People feel like the deck is stacked against them, the rich are getting richer, everybody else is like marching in place not making any progress, and I don't think that's good for us.
HUNT: You're going out to the heartland of America, Chicago. Manufacturing – have we reached a point where our comparative advantage in manufacturing has just gone and we have to live with it?
CLINTON: No. No. I know that there are many who say that. I just reject it. I think it's both defeatist and dangerous to say that we cannot have a manufacturing sector that is globally competitive. In fact, we have a lot of companies that are.
What we don't have is any real sense that manufacturing must be a part of our economic future, not only for the jobs that it produces, which are still good paying jobs above the average for the education that people bring to the, and it ripples through the economy, but also for security reasons. We have a very important part of our industrial base that is directly tied to our advantage in weaponry and other military components that I don't want to see us outsourcing.
So, the question is how do we have a fair, level playing field. I spoke just Friday night up in Seneca Falls, New York, to about 2,000 New Yorkers who work in manufacturing at a forum sponsored by Nucor Steel. Now, Nucor Steel has done everything right. It has had lean manufacturing. It has had bonus and pay incentive programs so that people really have to work to get what are very good incomes. And yet they are already seeing some problems in their ability to continue to compete because of the externalities. They have a very legitimate compliant that currency manipulation really does undermine their ability to compete, primarily with China, that entering into trade agreements that we don't even enforce that we have no real follow-up on gives us the worst of both worlds, not trying to use our trade leverage to bring up the bottom the way we did at the end of the Clinton administration, where labor and environmental standards were put into the Jordanian Free Trade Agreement, for example, or where in Cambodia we've been successful in seeing how the textile firms there increased wages and working conditions and remained competitive.
So, we have the capacity if we deal, number one, with the internal problems that American manufacturing and where we as a government at not only the federal level but the state level try to provide incentives for retooling plants and then deal with some of the externalities.
HUNT: Would you – if China refuses to revalue its currency in that context, would you take retaliatory measures against Beijing?
CLINTON: I would much prefer that we work together on this. Obviously we're in a bind, in part because of our deficit. We go every month into the capital markets and borrow billions and billions of dollars, about $60 billion a month, in order to have the interest on our debt paid by having countries like China buy our debt instruments.
So, I'm well aware of the fact that we are in a mutually dependent relationship right now. And when I travel around Upstate New York and people say to me, senator, why can't we get tough on the Chinese? They try to steal our intellectual property, they don't follow trade rules, and they manipulate their currency, I often say, well, how do you get tough on your banker?
We've seeded some of our capacity to deal with these problems. So, there can't be an abrupt change. But in my conversations with representatives of the Chinese government as well as obviously with my American manufacturers and other exporters, I've made it very clear that we need to grow this relationship. I'm one of those who hopes that we can have a friendly competitive relationship. We're going to have a competitive relationship. We're two very large countries. They're growing dramatically. I want them to grow. I want them to have a very positive economic future, but I don't want us to be played for a sucker. That's my concern about this.
HUNT: Let me try one more question in manufacturing. General Motors is on the ropes. They've been in terrible troubles. If necessary, would you favor the federal government bailing out GM?
CLINTON: Well, what I do favor is legislation that Senator Obama has introduced that I'm co-sponsoring, where we basically say, look, they were part of the American social contract in the '40s, '50s, '60s and '70s. They made some mistakes, which they have to take responsibility for in terms of management decisions, product design, et cetera. But there are certain burdens that they carry for the rest of us, and providing legacy health care for their retirees is one of them.
I think we could in return for over a period of, say, 10 years lifting some of those legacy costs off of the car companies in return for them expediting a move for more energy efficient products. That would be a good bargain for America. It would help us keep jobs we can and should keep here, remain competitive in a major industry, but also move us closer toward the kind of energy efficiency we must have, both for our economy and our security.
HUNT: You cited fiscal discipline earlier. And I know that you and most Democrats advocate rolling back the Bush tax cuts for the very wealthy. Do you think a 15 percent capital gains tax rate, then, is too low?
CLINTON: You know, Al, I think we have to look at the whole package. You know, I obviously am an adherent to the Clinton economic policies. I believe in fiscal responsibility and I know there are some who come on your shows and say, that's outdated. We don't need it. I think that's a very dangerous position to take.
We need to figure out what is it we're trying to achieve and then we have to look to see on both the spending side and the taxing side how we get there.
HUNT: But that would involve a higher capital gains tax.
CLINTON: I don't know. I mean, I'm not going to ...
HUNT: If you roll back the Clinton – excuse me, the Bush ...
CLINTON: Well, if we went back to the Clinton policies it would. I'm not sure that that's exactly what we should do, but I think the combination of fiscal responsibility and economic growth proves to be very positive for our country.
HUNT: How about corporate taxes in general? Are they in general too low, too high, about right, the level?
CLINTON: Well, you know, there's a great debate on this. I mean, it's hard to answer because even what's on the books isn't often paid. We know that. There are so many loopholes. What is the effective corporate tax rate for the average American company? I don't know. I don't think anybody does. How many more companies can be jammed into that little building somewhere in the Bahamas that serves as the corporate headquarters for all these companies so they can evade even what's on the books for the corporate tax rate?
I think we have to take a hard look at it. I think we want to incentivize American corporations to invest more in R&D and over the long term, not lurching year from year as the research and development tax credit has to be reauthorized one more time. We need a much more robust R&D agenda for American businesses.
We also want them to begin to take some of these profits and these productivity gains and put it into wages, something we haven't seen in five years. So, I don't want to do anything that interferes with those two major objectives, which should be part of the economic growth that we should be looking at in this country.
HUNT: Senator, do you have any fear that in the aftermath of the Dubai controversy that foreign investment in America may be cut back, curtailed?
CLINTON: I don't. I don't. I mean, our market is the greatest market in the world and people come here to make money, which is what we want them to do. But I believe we have to have the kind of conversations sparked by the Dubai Ports deal. We have been fairly cavalier about our critical infrastructure.
I represent New York, as you know, and I have been sort of beating the drums now for all these years after 9-11 saying we're not doing enough on homeland security, on border security. We need to do more. And what happened with the Dubai Ports deal is that it came exactly at a moment when people were ready to have that conversation. Post Katrina, the disgraceful incompetence of this administration raised all kinds of questions like if they can't help us with hurricanes what are they doing on terrorism, the fact that we haven't really invested in a lot of our homeland security, which everybody knows.
And so, this was a legitimate question to be raised. And there is a distinction between a government-owned entity and a private company. And I've made that distinction. I haven't gone off as some of my colleagues on both sides of the aisle have, bashing foreign investment. I believe in foreign investment. But if it's a government owned entity it deserves a higher level of scrutiny, and the administration did not provide that.
HUNT: We only have time for several more questions.
Immigration – we came close to getting a deal in the Senate.
HUNT: It fell through. Will you get a deal? And is that a good accord that they talked about?
CLINTON: Well, I think comprehensive reform is good for the country. And ...
HUNT: Do you like the deal that was on ...
CLINTON: Well, it wasn't what my first choice would have been, but it was a decent compromise. It was a Republican compromise. Senators Martinez and Hagel hammered it out. The bipartisan coalition in favor of comprehensive reform stood behind it. And then it was torpedoed, I think, under pressure from those members of the Republican caucus who don't want any deal, even one that frankly was scaled back in a way that kept border security paramount but did have some kind of path to earn legalization.
This is another example of the denial that I see afflicting Washington right now. It's part of what I call turning Washington into an evidence-free zone. I mean, the evidence is clear that our borders are not secure and we have 12 million immigrants. We don't know who they are. We don't know what they're doing. They're out there. We're not enforcing employer sanctions. We have the worst of all worlds.
And so, yes, we can play politics with it and try to score points in the upcoming midterm election, or we can roll up our sleeves and try to solve a problem. And that's one of a long list of problems that we are denying, I think, to our detriment.
HUNT: Let me just ask you two non-economic questions before you have to go.
Came out a couple days ago that Scooter Libby revealed that President Bush authorized the leaking of classified information to bolster his case on Iraq. It seems he clearly has the authority to do that. But was that the proper use of the classification process? And was that proper politically?
CLINTON: No, it was absolutely not the proper use. Obviously it was done not just for political reasons, which sounds kind of everyday Washington politics. It was done to protect the decision makers from being held accountable for some of the information they used in the run up to the invasion of Iraq.
Our system is such a wonderful balance – the checks and balances that our framers put into it, the accountability that the Congress is supposed to provide, the courts having an independent view of what happens. But there's another element to this, Alan. And that is sort of the discipline, the habits of a White House in the sense of public policy.
Presidents should know not to go too far. We saw it with Richard Nixon. Claiming national security to break into Daniel Ellsberg's psychiatrist's office, to break into the Democratic National Committee. Well, here we have a president at least giving an implicit go ahead ...
HUNT: Is this analogous to what Nixon did?
CLINTON: We don't know. We don't know. But we do know that for political purposes that really use national security to score political points and to protect decisions and decision makers material was declassified. And clearly it was aimed at undermining Joe Wilson, who had been a distinguished diplomat in the service of his country for many years.
HUNT: You're convinced that your husband never engaged in any similar leaks.
CLINTON: Not that I'm aware of. Look, everybody leaks.
HUNT: No ...
CLINTON: I mean, everybody leaks. I know that. But the point is that classified information in the middle of a war and the goal being to out a CIA covert operative in order to discredit her husband who raised legitimate and we now know truthful questions about whether Iraq was seeking uranium in Niger, that's a pretty convoluted explanation of national security.
HUNT: Senator, you sit in the Armed Services Committee. There were reports this weekend, the ``Washington Post'' and elsewhere, that the United States is considering a military option against Iran if it won't relinquish any ambitions to nuclear weapons. The ``New Yorker'' even said that we're considering using nuclear – tactical nuclear weapons. Should those options be on the table when it comes to Iran?
CLINTON: Well, I have said publicly no option should be off the table, but I would certainly take nuclear weapons off the table. And this administration has been very willing to talk about using nuclear weapons in a way we haven't seen since the dawn of a nuclear age. I think that's a terrible mistake.
Secondly, when it comes to Iran I think the administration needs to engage in a process with Iran. They outsource this issue of whether Iran would go nuclear to the Europeans. I thought that was a mistake then. I've said it on numerous occasions since. We dealt with the Soviet Union, who had thousands of missiles on hair trigger alert pointed at us. I remember hiding under my desk – a little good that would do – when I was a child. But we lived with that threat and we never stopped negotiating and engaging in a process with our most implacable foe for decades, someone who had been a country, a system, that was dedicated to destroying us.
This administration takes this kind of hands off approach to North Korea, to Iran. All I know is that five years ago North Korea didn't have nuclear weapons. We now believe it does. And five years ago Iran may have been toying with it or thinking about it. Now it looks as though it's on the road to it.
We have to be much more diplomatically engage and not have this hands off approach to it.
HUNT: Senator, we thank you for your time.
I was at the Durham Film Festival this weekend. They were passing out this button that says, ``Eight for '08'', which is to elect a woman candidate, knowing they have eight candidates. There any particularly attractive of those eight candidates come to mind?
CLINTON: Well, I have no idea who they are, Al, but I think it's a worthy goal.
HUNT: OK. I'll give you the list later. Senator, thank you so much for being with us today. And we'll be watching your speech in Chicago tomorrow.
Suzy, back to you.
ASSAAD: All right. Thank you very much, Al.