Untangling the economy: A lively Q&A with pro-labor economist Robert Kuttner


Robert Kuttner may not be a household name to many union members, but he’s an important figure to organized labor in Washington, DC. Kuttner, 69, has had a long and distinguished career as a writer, editor, economist and political analyst, and he’s served as a champion for working people and the labor movement in many venues and publications. He has degrees from Oberlin College, University of California Berkeley and the London School of Economics, but he’s also honed his skills in verbal combat against the likes of Sean Hannity. Kuttner is a fellow at the Demos think tank, co-editor of The American Prospect magazine, a columnist for the Boston Globe, and co-founder of the Economic Policy Institute. He was also a longtime columnist at Business Week, and in the late 1970s served as chief investigator for the Senate Banking Committee. Kuttner is visiting Oregon for a month as a guest lecturer at the Wayne Morse Center for Law and Politics of the University of Oregon. After sitting in on an Oct. 5 strategy discussion he held with Oregon labor leaders, the Northwest Labor Press interviewed him by phone.


You’ve written two books about the Obama presidency, one before he was elected giving him advice, and one two years in about how America’s best chance for radical financial reform turned into Wall Street’s greatest victory. What’s your assessment of Obama as his term comes to a close?

President Obama is really at risk of losing a winnable election against a very weak candidate. If he’d been clear all along that ordinary people are getting hurt and the reason why — that Wall Street has too much power — he would have been a more effective president, and a more effective candidate for re-election. This was really an opportunity — the financial collapse of 2008 and the Obama presidency — to push back on 30 years of conservative ideology and Republican misrule and take back a more Roosevelt-style economy and politics. And Obama just did not maximize the moment.


Defenders of the president often say he would like to do this, that, or the other thing, but Congress won’t let him, Republicans block him, etc. 

But then you turn that into a politics. You do what Truman did: You make it clear what you’re for, and hold Republicans responsible for blocking your ability to succeed. Obama spent his first two years trying to get along with them, and his second two years going back and forth between whether Wall Street was the enemy or whether it was funding his campaign.


In 2010, you recruited a group of thinkers to come up with a list of things Obama could do by executive order, without any help from Congress, to help working people and promote unionization. Did he do any of the things you suggested?

Not really. He did a very weak initiative on contracting. We pointed to the fact that you had two very important examples of a president using the power of federal contracting. During World War II, Roosevelt laid down rules where if you tried to break a union or refused to recognize a union or pay prevailing wage, you could not get a war production contract. Secondly in the early ‘60s when Kennedy and then Johnson did not have the votes yet to pass the Civil Rights Act, they used the power of executive orders to say that any employer who discriminated against minorities in employment, or failed to take affirmative action to correct past discrimination, was ineligible to bid on a federal contract. So Obama could certainly say that a company that is a law breaker — or that refuses to recognize workers’ rights or is guilty of misclassification — is not eligible to bid on a government contract. Obama has not had the nerve to do that, because he’s afraid of alienating corporations.


We’re now four years into an economy that working people continue to experience as a recession, and yet so much of the political urgency about jobs that was felt back in 2009 has dissipated. Instead both parties seem to have turned their attention to the deficit. That’s the subject of your next book, “Debtor’s Prison.” [Due out in April 2013.] What are your main arguments in the book?

The main argument is that when you’re already in a depressed economy, austerity — everybody tightening their belt — is completely perverse economically and not smart politically.

When everybody tightens their belts, people have even less money to buy products, so business is even less likely to invest in expansion,  banks don’t have customers to make loans to, and the whole economy goes into a deeper nosedive.

If you look at World War II, we ran up enormous debts, but all that stimulus was what finally got us out of the Great Depression. At the end of the war, instead of saying, “Oh my God, we’ve got to have austerity and get rid of the debt,” we doubled down with things like the GI Bill, and as a result we enjoyed an era of shared prosperity which produced high growth in GDP, wages and living standards. We grew our way out of debt.

Austerity economics is Wall Street’s way of trying to maintain political control, and it’s a mark of their influence that all the Republican Party and half of the Democratic Party is promoting austerity as the cure for a depression.


It was inspiring to watch you fight back when Sean Hannity attacked you on his show in 2008. What did you take away from that experience?

What I took away from that was something I wish President Obama would take as a lesson. The best way to deal with a bully is to punch him in the nose. And when somebody doesn’t have the facts on their side and is making facts up, you have to call them on it, or you’re just a wimp. I was very fortunate in that Hannity, the very week that Wall Street was collapsing, was trying to tell me the economy was in great shape, and it was so preposterous that it didn’t take all that much to point out what a fool he was. But a lot of people get intimidated by bullies.


At a breakfast with labor leaders last week, you said organized labor has to figure out how to play hardball with Obama. What did you mean, and what do you think labor’s relationship should be with this president before election day, and afterward, if he wins a second term?

You know, it’s really difficult. I think [AFL-CIO president Richard] Trumka’s actually doing a rather good job of playing hardball with Obama. There’ve been a couple of occasions where Trumka has gone to Obama and said, “If you do this, Mr. President, it’s war.” And on those occasions, they reached an accommodation. But labor can’t do that every day of the week. With all the help labor gave Obama to get elected, labor was not able to call in that IOU and get Obama to do any kind of heavy lifting whatsoever on the Employee Free Choice Act. They take the labor movement for granted. There’s not one of them in a very high position who appreciates the labor movement’s contribution to progressive democratic politics in the United States. They’d rather see the labor movement as yet another interest group to be tended, rather than the heart and soul of the progressive wing of the Democratic Party. So I think to the extent that Obama and other Democrats rely on labor to get out the vote, to put in countless volunteer hours, to make political contributions, it’s really important to utilize that leverage as much as possible. If some jerk gets the nomination in 2016, the labor movement may decide to emphasize local races, and organizing, and support the candidate only to the extent that the candidate makes explicit commitments to labor. Labor needs to do everything it possibly can so that the Democrats nominate a progressive who really appreciates the labor movement.


I don’t think organized labor has had a true friend in the White House since Lyndon Baines Johnson left office in 1969.

I agree. Had Carter wanted to, he could have used his influence: We fell two votes short on labor law reform in 1978. Clinton in his first two years, when he had a working majority, he could have done it. And Obama certainly could have done it in his first year when he had influence and a working majority. Look at what Rahm Emanuel, his first chief of staff in those years, just did with the teachers in Chicago. I think it spoke volumes about what Rahm Emanuel really thinks of the labor movement. As long as guys like him are in tremendous positions of influence in the Democratic Party, it’s a really uphill battle for labor.


In the last 35 years, voters around the country have approved all kinds of state ballot measures that cut taxes and limit governments’ ability to provide services. You’ve referred to the movement as “right-wing populist nihilism” What does that mean, and what’s bringing this moment about?

If you have a situation where the tax breaks are going to the top, and government is not delivering for regular people in ways that they appreciate, the average person says, “I can’t do anything about my lousy wages but at least I can vote myself a tax cut.” You get into this downward spiral where people don’t appreciate government, don’t feel they’re getting value for their tax dollars. So they vote for these tax caps and supermajority requirements and these tax revolt measures, and then government delivers even less and the tax code is even less equitable. And ever since Proposition 13 in California, which was 1978, this has been the trend. You can turn that around by enacting progressive tax reforms, as Oregon was able to do with Measure 66 and 67 in 2010, and by having government start to deliver again for regular people. But that’s really difficult in this climate, particularly when you have high unemployment and government revenues are down. Instead of government hiring new people and filling the gap, you actually have for the first time since the Great Depression government laying off workers. Then you get into situations like Wisconsin where right-wing governors scapegoat public employees. So this is not an easy politics. It takes real leadership.


In Thomas Frank’s book What’s the Matter with Kansas, he seems to suggest that many working class voters are being bamboozled on cultural issues into voting for a political party that works against their economic interests. But you could frame the question another way: “What’s the matter with Democrats” that up to 40 percent of union members in some cases would turn away from the party? 

I think Frank gets it right as far as he goes. But I think if the Democrats were delivering the goods on pocketbook issues, more working class voters would see through that stuff. I mean, you go back to Roosevelt. Roosevelt was ahead of his time on race. He got jobs and housing to Black people. He had Jews in his inner circle. So for his time, he was a liberal on social issues, but that didn’t scare off white working class voters, because he was delivering the goods economically. So where I think Frank doesn’t take it quite far enough is to point out how much Democrats have dropped the ball delivering the goods economically. And of course the reason is that the party has been increasingly captured by Wall Street.


To what extent do you think today’s Democrats do promote the interests of working people? 

Some do, some don’t. If you look at the House Democratic caucus, there’s 190 members; I’d say probably 130 are good progressive pocketbook pro-labor Democrats, and maybe 60 are in bed with Wall Street. But when it comes to the presidential wing of the party, it tends to be more conservative, because it has to raise all this money from Wall Street. So when Nancy Pelosi was moving heaven and earth to get a second stimulus bill passed in the fall of 2009, because the first stimulus obviously wasn’t doing enough, the White House told her to cool it: “Let us lead on this. Wait for the president’s State of the Union address.” The bill passed by like four votes in the House, and died in the Senate. The president did not lift a finger, and then in the State of the Union, he announced the Bowles-Simpson commission, which is a plea for deficit reduction and austerity. So I think the rank-and-file Democratic party in the House and Senate, two out of three of them are still pretty good progressives. It’s the presidential party that’s killing us.


For 40 years, the union movement has been declining. Now it seems like labor’s opponents smell blood in the water. In Wisconsin and elsewhere, they’re going for the kill. Do you see the labor movement surviving, and how can it turn this around?

Well, I see it surviving. I think it would survive much better if it had some help from its friends in government. But the labor movement has to double down on organizing. It’s a terribly difficult climate in which to do that. I think the labor movement has had more success in the public sector because you can’t bust unions with impunity there. Private sector organizing is going to continue to be more difficult unless and until the government gets more serious about enforcing the Wagner Act.



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