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>> you’re going out to the heartland of america, chicago. manufacturing, have we reached a point where our comparative advantage in manufacturing is gone and we have to live with it?
>> no. i know there are many who say that. i just reject that. i think it’s defeatist and dangerous to say 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 them 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 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 corsteel has done everything right, it has had lean manufacturing, with bonus and pay incentive programs so people have to work to get very good incomes. and yet they are already seeing problems in their ability to continue to compete because of the externalities. they have a very legitimate complaint that currency manipulation really does undermine their ability to compete, primarily with china. that entering into trade agreements 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 have 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.
>> if china refuses to revalue its currency in that context, would you take retaliatory measures against beijing?
>> 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 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 ceded 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, you know. that’s my concern about this.
>> senator, do you have any fear that in the aftermath of the dubai controversy that foreign investment in america may be cutback, curtailed?
>> i don’t. our market is the greatest market in the world and people come here to make money, which is that we want them do. but i believe we have on have -- to have the 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 home and security, on border security. we need to do more. 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. 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.
>> whatever she decides to do about her party’s presidential nomination, hillary clinton is coasting to a second term in the united states senate. my interview with senator clinton continues with the issues now dominating the national debate―illegal immigration, a nuclear iran, the “scooter” libby leak case and, of course, taxes. you cited fiscal discipline earlier and i know that you and most democrats advocate rolling back the bush tax cuts for the very wealthy e.. do you think the 15% capital gains tax rate, then, is too low?
>> we have to look at the whole package. 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 and see on both the spending and taxing sides how we get there.
>> that would involve a higher capital gains tax?
>> i don’t know.
>> if you roll back the bush -- >>.
>> if we went back to the clinton policies, it would. i’m not sure that’s exactly what we should do but i think the combination of fiscal responsibility and economic growth proved to be beneficial.
>> what about the level of corporate taxes?
>> there’s a great debate on this. 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 in the bahamas that’s the corporate hckets for -- headquarters for these companies to evade their tax rates. 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 to year as the research and development tax credit needs to be reauthorized. 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 productivity gains and put it into wages, something we haven’t seen in five years. 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.
>> senator, you said in the armed services committee, reports this weekend that the united states is considering military option against iran if it won’t relinquish ambitions to nuclear weapons. “the new yorker” said we’re considering using tactital nuclear weapons. should those options be on the table when it comes to iran?
>> i have said publicly no option should be off the table but i would certainly take nuclear weapons off the table. this administration has been very willing to talk about using nuclear weapons in a way we haven’t seen since the dawn of the 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 a number of times since. we dealt with the soviet union with thousands of missiles on hair-trigger alert pointed at us. i remember hiding under my besk desk as a child. but we lived with that threat and never stopped negotiating and engaging in a prose with our most implacable foe for decades, a country 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 engaged and not have this hands-off approach to it. here we have a president at least giving an implicit go ahead.
>> is this analogous to what nixon did?
>> we don’t know. we don’t know. but we do know that for political purposes that used national security to score political points and to protect decisions and decision makers, material was declassified.
>> on the next “for the record,” cisco c.e.o. john chambers and charles phillips.
>> immigration came close to getting a deal in the senate, fell through. will you get a deal and was that a good accord.
>> it was a decent compromise, 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 cautious who don’t―caucus who don’t want any deal, even one that was scaled back in a way that kept border security paramount but had a path to earned 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. 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,
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>> hello, i’m al hunt. hillary rodham clinton hasn’t said whether she plans to seek the democratic party’s 2008 presidential nomination. this week, however, the 58-year-old junior senator from new york and former first lady addressed a central issue in almost all presidential campaigns, the economy. in in a speech to the economic club of chicago, senator clinton criticized the administration’s handling of the economy. before that speech, she joined me for a television interview.
>> 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 is some troubling issues. i think our failure to get healthcare costs under control, our failure to have a real energy policy, our fiscal position going into these huge deficits, increasing debt, raising our debt limit, our trade deficit. most economists that i speak to who are not of either the right or 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 4%. but it was 4% under the clinton administration and more people were in the work force so a lot of people have disappeared from the work force. replacement jobs for those that are lost are 20% to 40% less in income. the pillars of the middle class, a stable job with benefits if you work hard are disintegrating. healthcare costs are skyrocketing, businesses are understandably feeling press by healthcare, trying to figure out how they’re going to deal with it. the plan in massachusetts gives us some hope but we need a national response. and of course energy costs. so many issues that we’re pushing to the side, either denying or trying to overcome with happy talk, i think are going to come back to bite us if we’re not careful.
>> let’s pick up on all those healthcare costs. what are the two or three things we could do to make healthcare costs more affordable and accessible?
>> we need a health information technology framework. i have legislation with senator frist that has passed the senate. i hope it will be passed through the house and signed by the president because we’re wasting billions of dollars and not practicing evidence-based medicine with the results we could expect. we need a fix for small business. there’s something moving through 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 employee benefits 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 both the carrot and stick approach. we strike trying to take foods with no nutritional value out of school vending machines to create reimbursement programs to deal with people’s exercise and nutritional status when they are diabetic. but we need to have a national conversation with healthcare. we’re letting the financing tail wag the healthcare dog and it is the single issue that c.e.o.’s talk to me about. not only c.e.o.’s 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.
>> let me pick up on that because for generations americans have basically relied on employers to provide healthcare and pension. that system, as you alluded to, seems to be breaking down or at least eroding. what replaces it?
>> that’s the debate, al. 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.
>> you don’t think that’s sufficient?
>> i don’t think it’s sufficient. i think it does two bad things. it 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 healthcare, pension system -- not the kind we would. we need a uniquely american solution. but they have a social compact for the 21st 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 flooralistic 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 if people feel the deck is stacked against them, the rich are getting richer, everybody else is marching in place, and i don’t think that’s good for us.
>> general motors is on the ropes. they’ve been in terrible trouble. if necessary, would you favor the federal government bailing out g.m.? >> 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 1940’s through 1970’s. they made some mistakes which they have to take responsibility for in terms of management decision, product design, et cetera. but there are certain burdens that they carry for the rest of us and providing legacy healthcare 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 toward more energy-efficient products, that would be a good bargain for america.
>>. 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, you know. that’s my concern about this.
