Big Labor to Obama: Go Big or Go Home

Union leaders warn against 'Republican-lite' jobs plan

This is a rush transcript from "Journal Editorial Report," September 3, 2011. This copy may not be in its final form and may be updated.

PAUL GIGOT, HOST: This week on the "Journal Editorial Report", as President Obama prepares for a major job speech, a warning from organized labor, go big or go home. Can he make a deal with Republicans without losing unions?

Former Vice President Dick Cheney's new memoir is causing a stir. What it tells us about the Bush administration's successes and failures.

As parents across the country send their kids off to college, sticker shock is setting in. Why does higher education cost so much, and are you getting your money's worth?

Welcome to "Journal Editorial Report." I'm Paul Gigot.

With zero jobs added last month and President Obama poised for a major speech next week, labor leaders are pressing the president to go big and warning against what they call a Republican-light plan. Last week, AFL-CIO president Richard Trumka accused President Obama of allowing Republicans to set terms of the debate so far, saying, quote, "Will he commit all of his energy to offering bold solutions or continue to work with the Tea Party? If he falls to nibbling around the edges, history will judge him and working people judge him."

Joining our panel, Wall Street Journal columnist and deputy editor, Dan Henninger editorial board member, Mary Kissel; and senior economics writer, Steve Moore.

Dan, what do you think, go big or go home? You have to be like FDR. You have to have another $1 trillion jobs program. What are they asking him to do?

DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: They are asking him to go big and --

GIGOT: But what does it mean?

HENNINGER: It means to do big -- it means to spend as much money as he can, maybe $250 billion, $300 billion to propose a big infrastructure building program, roads, schools, airports, bridges --

GIGOT: Didn't we do that?

HENNINGER: We did all that.

(LAUGHTER)

(CROSSTALK)

HENNINGER: That I want to re-propose Card Check and do things that politically are impossible for him to do.

GIGOT: They want him to do things that the Republicans aren't going to pass?

HENNINGER: That's right.

GIGOT: What is the purpose of that because the president himself --

HENNINGER: They will feel better if he does that.

GIGOT: But the president himself is saying we want a bipartisan plan. We want something I know will pass. That is the White House line anyway we are going to propose something that both parties like.

HENNINGER: Paul, there is an enormous amount of frustration in American politics now. We sat here at this table several weeks ago talking about the Republican right wanting to push government in default over the debt ceiling debate. Even though there was no possibility of them winning on the argument. But that's what they want --

(CROSSTALK)

GIGOT: And this is the liberal equivalent?

HENNINGER: This is the progressive equivalent of that. People are so frustrated that they want to -- their leaders to do what is politically impossible. It will make them feel better if they can emote about something big and bold.

GIGOT: So, Mary, is this about framing the issues for the election, knowing that you are not likely to pass much?

MARY KISSEL, EDITORIAL BOARD MEMBER: Absolutely. I think what the president wants to do next year is go to voters and say, hey, look, I wanted to do something but the Republicans wouldn't let me do it. So to some extent, it doesn't hurt him to go big at this point, because it gives him more to talk about to the Democratic base next year.

GIGOT: OK. But the Democratic base aren't the only voters.

KISSEL: That's right.

(LAUGHTER)

GIGOT: There is a lot of Americans saying we want results. At this stage, when you have zero job growth in August, when you have 1 percent GDP growth, they are going to say -- I mean, you blame Bush all you want, he did inherit a mess, but what have you done for us.

KISSEL: That is right. You can see the line from the White House saying we didn't realize what a mess we were inheriting. It was much bigger than we thought. We are doing everything we can for you. And those Republicans, all they want is cut back on your entitlement programs. They want to give money back to the rich in terms of tax cuts.

GIGOT: Hope and change.

KISSEL: Hope and change.

(LAUGHTER)

Hope and chance.

GIGOT: Hope and spare change.

(LAUGHER)

Steve, what do you think about the ideas that you hear about are on the table from the White House. And of them strike you as significant in terms of -- substantively? Never mind the politics --

STEVE MOORE, SENIOR ECONOMICS WRITER: Let me step back to talk for a second about this jobs report. Paul, what this is telling us, when you get zero jobs, this month, they revised the jobs that were created, the paltry industry numbers over the last couple of months. What this indicates, Paul, is we're in a double-dip recession right now.

(CROSSTALK)

GIGOT: I disagree with you, Steve. We aren't necessarily in a double-dip recession. But let's go --

(CROSSTALK)

GIGOT: Let's understand, this jobs report is bad.

(CROSSTALK)

GIGOT: So moving ahead, what can be propose, what is he likely to propose that will make a difference?

MOORE: Right. Nothing that he put on the table that we're hearing about -- more unemployment insurance, more infrastructure spending, more payroll tax cuts that we've tried last year. Nothing that's going to work.

GIGOT: Temporary.

MOORE: Yes. My point was about bringing up a jobs report, the problem with the whole Keynesian model, Paul, is we did get a little bit of a blip-up in jobs when we spent that nearly $1 trillion in 2009 and 2010. The problem is the money has been spent. Now you are seeing a downturn in the economy. You didn't get any kind of multiplier effect from that spending. I don't think the public and certainly not the Republicans will go for another big spending binge, which is what the president will call for on Thursday.

GIGOT: Why is big labor unhappy with the president?

KISSEL: Big labor didn't get Card Check, which is what they really wanted, making it easier --

GIGOT: Easier to organize unions.

KISSEL: Right. So instead, the administration turned to rule by fiat and they've turned to things like the National Labor Relations Board, who - -

GIGOT: Which has blocked Boeing from trying to move it airplane production --

KISSEL: That's right.

GIGOT: -- to South Carolina, a right-to-work state.

KISSEL: That's right.

GIGOT: But that's something they're doing for unions. My question is, politically, why are they so upset? The president has tried to do a lot for them.

KISSEL: They couldn't even get Card Check through Democratic Congress.

GIGOT: But is that his fault?

(LAUGHTER)

(CROSSTALK)

HENNINGER: Well, I think one thing we are discovering here, Paul, is just how alienated the unions have become from the real economy. They are begging the president to spend hundreds of billions of dollars on road construction, airports and the like. What we are learning is the union movement has become utterly dependent on the public budgets. Some of them were the private unions. By and large, they depend completely on the injection injections in school and construction programs from the federal budget. They no longer participate in a real economy when they did back in the years of the UAW or the Miners unions.

GIGOT: OK.

KISSEL: And their membership is falling off a cliff. Public-sector union membership hovers around 30 percent. The private-sector unions were 20 percent in 1980. They are down to 7 percent last year.

GIGOT: Steve, what do you think the president should do if he wanted to grow jobs?

(LAUGHTER)

MOORE: Well, the first thing he should do is repeal Obama-care. I don't think he's going to call for that. I think the one thing he could do, Paul, that would create the jobs is call for a massive restructuring of the tax system. We have a super committee. There is a growing bipartisan agreement to bring rates down to get rid of the loopholes. That's the only thing I can see where Republicans and Democrats might agree on over the next couple of months.

GIGOT: Go for a big tax cut --

MOORE: Yes.

GIGOT: -- like John F. Kennedy did across the board, corporations and individuals. That would change the debate in a major way. It would lose the left but he might have a chance to make the real headway economically.

All right.

He said it would make heads explode all over Washington, so did it? When we come back, we look inside former Vice President Dick Cheney's new memoir. What it tells us about the successes and the failures of the Bush years.

(COMMERCIAL BREAK)

GIGOT: Dick Cheney's much-anticipated memoir, "In My Time," was released this week. Never one to pull punches, the former vice president had predicted that there would be, quote, "heads exploding all over Washington." While that may not have happened, there is backlash already. Both former secretaries of state, Colin Powell and Condoleezza Rice, say it takes cheap shot at members of Bush administration.

We're back with Dan Henninger. And also joining us, Wall Street Journal deputy editor and foreign affairs columnist, Bret Stephens.

Dan, you interviewed the vice president, another hardship assignment out in Jackson Hole recently. Talk about the book and his work in the administration. What was the surprising thing that you learned?

HENNINGER: It was an interesting experience. We did sit in his study in Jackson Hole. It's very comfortable. The vice president was relaxed and peaceful. He seemed to be at peace with himself. We talked about these policies and big events. And I think the thing that came across as the most surprising is how, by and large, people are in the situations about policies, right or wrong, WMD, invading Iraq, the foreign intelligence wiretaps and so forth. But what came through was how important the individuals are, personnel actually deciding where these things can go.

GIGOT: It could be decisive.

HENNINGER: Yes. And he said to me, the quality of the civilian leadership is enormously important. We discover in the last few days how much it's a battle of personalities.

Along the way I said to him, why isn't there a bigger resignation or firings in American politics? And there just really isn't. He laughed and said, I had a chapter in my book I didn't put in, called "The People Have Fired.

GIGOT: So who should the president have fired?

(LAUGHTER)

HENNINGER: If it had been President Cheney, I think Secretary of State Powell and Secretary of State Rice wouldn't have been able to stick around to argue with him over things because he would have fired them. The problem was, as he describes it -- and we'll get into this -- the issue is whether you were on board with the president's policies or whether you were going to go off and pursue alternative policies on your own. Cheney feels very strongly, if you are going to be part of the administration, you should be part of the policies that the president and his --

(CROSSTALK)

GIGOT: And he feels that Secretary of State Powell, who left after the first term -- he feels that Secretary of State Powell and his deputy, Richard Armitage, undermined the administration by their first term by the criticism, in the media and internally about the war in Iraq and then afterwards the --

(CROSSTALK)

BRET STEPHENS, DEPUTY EDITOR & FOREIGN AFFAIRS COLUMNIST: The great criticism of Powell's tenure as secretary was he was representing the State Department to the president rather than representing the president to his own department. When Condoleezza Rice was put in office --

GIGOT: In the second term.

STEPHENS: In the second term. I wrote it was a good thing because Condi was Bush's person there and she would represent the views to the department.

(CROSSTALK)

GIGOT: Was that wrong?

STEPHENS: That is what didn't happen. She became very much like her predecessor, very much like Powell, she became a voice of the State Department, particularly on key issues like North Korea, where she did bidding of her assistant secretary, Chris Hill, and tried to push forward a deal with the North Koreans.

GIGOT: Cheney is not unfair to either one of those in your view?

STEPHENS: No, I think he doesn't go hard enough on Colin Powell, particularly when the president is talk members of the press. He has a cabinet around him. They're asking him, do you know who was the leaker in the Valerie Plame case? There is Colin Powell, secretary of state, knowing perfectly well that the leaker is his deputy, Armitage, and he doesn't say a word.

GIGOT: The biggest surprise to me, Dan, in the book, is how much opposition there was internally to the surge, the Iraq surge. Cheney had to marshal almost internal policy insurgency to get the president to go along with and hear the arguments that he wasn't getting internally from other people. The State Department opposed it. Most of the joints chiefs opposed it. Some of it -- his own White House staff opposed it. And if not for some colonels in the Pentagon, of course, great generals, Petraeus and Odierno, and the vice president and Jack Keane and Fred Kagan, at the American Enterprise Institute, it probably wouldn't have happened.

HENNINGER: That's right. He brought Jack Keane in to talk to the president because he thought Keane was the best person who would be best able to make a forceful argument on behalf of the surge and he thought that Keane had a great effect doing that.

But as far as Powell and Rice go, Cheney's book is chapter in history. It's his version of things.

GIGOT: Right.

HENNINGER: I don't think he's being particularly unfair. If they're that upset about his account of the surge or of negotiations with North Korea, they should write an essay explaining their understanding of what happened. Ultimately, as Cheney admits, President Bush signed on to Secretary Rice's policies on North Korea.

GIGOT: They were his personnel choices, briefly, Bret.

STEPHENS: Well, no, I mean, that's right. There is that extraordinary thing about the surge where the spring of '07, as the surge is getting underway, there are leaks coming out and it turns out the leaks are being authorized by the president himself.

GIGOT: Wow! When we come back, it's back to school time. Many families are reeling after signing that first big college tuition check. Why does it cost so much? And are you getting what you paid for?

(COMMERCIAL BREAK)

GIGOT: It's back to school time and parents across the country are feeling the financial pinch as they send sons and daughters off to college. with upwards of hundred four-year institutions charging $50,000 or more a year. Outstanding student loan debt is set to hit a whopping $1 trillion by the end of 2011.

We're back with senior economics writer, Steve Moore. And also joining us, former Wall Street Journal editor, Naomi Schaefer Riley, the author of a new book "The Faculty Lounges and Other Reasons Why You Won't Get the College Education You Paid For."

Let's start by showing viewers a chart of the increase in college costs relative to energy, healthcare and the cost of living. You can see it's really out-stripped all of them, Naomi.

Politicians keep tell us college is supposed to be more affordable. We're making it more affordable. Why do costs keep going up?

NAOMI SCHAEFER RILEY, EDITOR & AUTHOR: For one thing, the incentives are in the wrong place. Every time the cost goes up, the federal government decides to subsidize the college more. There is another chart you could show that showed how financial aid is going up at the same time, at the same rate as the college costs. We're basically sort of saying to college administrators, great, you want to charge more, we'll pay more. Terrific.

(LAUGHTER)

SCHAEFER RILEY: That's one problem. The other big problem I think you'll find is administrative bloat. So the number of administrators has gone up 85 percent while the students -- while the student-teacher ratio has remained about the same.

GIGOT: Steve, is there any academic literature that shows that link between subsidiaries and college tuition?

MOORE: There is no question about it. As Naomi just said, the two run in parallel. This is a classic third-party payer system problem, Paul, that we see in healthcare. When somebody else pays for it, the costs explode. And yet, in the area of education, these costs are going up faster than they are in health care. And nobody talks about bending the cost curve down in health care. When was the last time, Paul, you heard somebody say, let's bend the cost curve down in education?

By the way, I have two sons in college now, Paul. I am going to need a big pay raise to pay for these tuitions because --

(LAUGHTER)

GIGOT: Hold on. Hold, hold, hold --

MOORE: It's $50,000 a year.

(LAUGHTER)

GIGOT: Hold on. You said it's a third-party payer problem. Then you said you are writing the checks, which a lot of middle class families are doing.

MOORE: Right.

GIGOT: So these subsidiaries don't help a lot of families. They do increase the costs. If you are a certain kind of family and you make maybe an upper middle class income, you are really getting socked with big bills.

MOORE: Well, that is partly true. But the problem is even these kinds of loans only pay for about half of the costs. So -- look, I don't know how lower income people can afford the college. We think of college as being opportunity equalizer. Yet it's not an opportunity equalizer because people can't afford it any long.

And the real mystery to me, Naomi, is why isn't the left really revolting against these high costs. Why isn't there any kind of auditing at what's going on in these colleges?

(CROSSTALK)

GIGOT: They want to make -- to answer that question, in part, they want to make college an entitlement.

SCHAEFER RILEY: They want to make it -- right. Universal higher education is a stated goal of the administration and the left generally. They think of higher education as a great mobilizing opportunity. And there is something to be said for that.

MOORE: But Naomi -- but Naomi --

SCHAEFER RILEY: Yes.

MOORE: -- if the costs are out of control, it is not an equalizer. That's sort our point, that when nobody can afford it, how can it be an equalizer? Are we going to have the federal government pay every penny of the tuition costs?

SCHAEFER RILEY: Sure. That is the goal obviously. And there is also I think a sense in which people are -- the very lowest incomes certainly are getting a great amount of subsidy. And there's also, as we haven't talked about yet, the student loan debt, which is, as you said, reaching a trillion dollars.

(CROSSTALK)

GIGOT: Pick that us. Are we going to look at a wave of defaults?

SCHAEFER RILEY: I'm not sure that is going to be -- what I think is that there is going to be some kind of adjustment of how people pay student loans and maybe some kind of forgiveness. I don't think we're going to have a mass of defaults on this.

But certainly they are affecting peoples' choices out of college. If you have that kind of student loan payment on a regular basis, there's only certain kinds of jobs you can take.

GIGOT: What about the argument that returns on a college education are much greater, over a lifetime? You make more, on average, if you college and get a degree than if you do if you only have a high school degree.

SCHAEFER RILEY: That is true. And even in professions where you wouldn't expect it. If you were a bartender with a college degree, you make more than a bartender without college degree.

GIGOT: No kidding?

SCHAEFER RILEY: Which shows you a little bit of what the value of a college degree is, which is that it is a credential. It's not about what you learn there, because I think increasingly you're not learning what you should be. But is about, this is your stamp saying, congratulations, you have shown up on time for life up to this point. You have a decent work ethic. This is your stamp of approval to join the middle class.

GIGOT: Do we need another credentialing process, briefly?

SCHAEFER RILEY: Absolutely. We need to have a more sort of vocational path to a degree and we need to let people into our corporate world and the business world without necessarily making them jump through these hoops, which are not particularly helpful.

GIGOT: All right, Naomi, thank you. Very interesting.

We have to take one more break. When we come back, "Hits and Misses" of the week.

(COMMERCIAL BREAK)

GIGOT: Time now for "Hits and Misses" of the week.

Steve, first to you.

MOORE: This week, the Obama administration brought criminal penalties against seven oil companies in North Dakota. Why? Because 28 migratory birds fell into an oil pit and died. Now, Paul, I'm a bird lover, but when you start treating businesses and employers like felons, it's no wonder that companies aren't hiring workers. One other point, you know, when is the last time the Obama administration brought criminal penalties against the windmill industry for killing birds? Can you say double standard?

GIGOT: All right.

Naomi?

SCHAEFER RILEY: Well, my miss of the week goes to New Jersey, which has put in place an anti-bullying law. Now, in public schools across New Jersey, you will be ale to report people bullying you in the lunch line to Crime Stoppers. You can give them anonymous tips. If this is the nanny state, I have to say most nannies know this is not a good idea.

(LAUGHTER)

GIGOT: For third graders?

SCHAEFER RILEY: Yes, exactly.

GIGOT: All right.

Bret?

STEPHENS: A few weeks ago, I wrote a column titled, "Is Obama Smart." Exhibit 143 in my contention --

(LAUGHTER)

-- that he's not the world-class thinker he has been made out to be is the needless political fight that he picked this week with Speaker Boehner over the timing of his jobs speech. The president wanted to give it at the same time as the Republican presidential debate in which Rick Perry is debuting. Well, Speaker Boehner rose to the challenge or to the bait. He objected to the timing of the speech. And lo and behold, the president backed down. So advice to the president, if you are going to pick a needless political fight, be prepared to at least try to win it.

GIGOT: All right. And don't interfere with the start of the NFL season either.

(LAUGHTER)

All right. Remember, if you have your own "Hit or Miss," please send it to us at jer@foxnews.com. And be sure to visit us on the web at foxnews.com/journal.

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