Reich: Stimulus Spending Shouldn't Only Help White Males

A rather astounding statement was made a few weeks ago by an economic adviser to Barack Obama that went completely ignored by America's press: "I am concerned, as I'm sure many of you are, that these jobs [hopefully being created by government spending] not simply go to high skilled people who are already professionals or to white male construction workers."

Such was uttered by Robert Reich, the former Clinton Administration Secretary of Labor, during a January 7 House Democratic Steering and Policy Committee meeting attended by high-ranking Democrats including Speaker Nancy Pelosi.

Despite huge attention given this hearing from a wide range of press outlets not one mentioned Reich's racist comments (video and partial transcript below the fold):

DR. REICH: Madam Speaker and chairs, thank you for arranging this and thank you also for the work that you are going to be doing, which is significant. Let me build on what Dr. Zandi just said. The federal government's role in restoring aggregate demand is at least as great a responsibility as its responsibility for mending our financial institutions.

The problem is not just on the supply side of credit. The problem is the demand side as well. And since the bursting of the housing bubble, the fact of the matter is that consumers have not had the money they need to continue to purchase all of the goods and services that can be produced in this country. And we've got ourselves into a vicious cycle. And that vicious cycle is that because consumers don't have the money, then businesses are not going to produce. And if businesses don't produce, they're going to lay people off. And if they lay people off people have even less money.

And that vicious cycle can only be remedied, it can only be turned around, by concerted government action. Government is the spender of last resort. Now certainly not in my lifetime or I expect in any of your lifetimes, have we seen an economic crisis of this sort, demanding this kind of rapid -- and I want to emphasize rapid -- government response.

My estimate is very similar to Dr. Zandi's. I believe that if government does not respond to the tune of -- and I would actually recommend a stimulus slightly higher. My calculations are that we are losing aggregate demand, in terms of percentage of GDP, that amounts to about six and a half to seven percent of GDP. And therefore, the stimulus package needs to be in the order of $900 billion over two years.

Now if we don't have a stimulus package that is that high or nearly that high, next year unemployment is going to be at least three million additional jobs lost. The unemployment rate is going to reach 10 percent. The under-employment rate is going to reach about 15 percent. And when I say under-employment, I'm talking about people who are too discouraged to look for work or who are working part time who would rather be working full time. You who have just come back from your districts, you already know the pain that has already hit most members of the public.

Now, how can government effectively do this? What are the criteria? I would say one criteria, very, very importantly, is to get money out quickly. How do you do that?

Well the two fastest ways are, number one, through what I'll call providing disaster relief for the jobless. That is, expanding unemployment insurance. There are huge holes in our safety nets.

Those safety nets were created in the 1930s at a time when obviously one quarter of the American work force was out of work. But since then, a lot of holes have been created. Now, fewer than 40 percent of workers who are unemployed are eligible for unemployment insurance.

Many workers are working part time or have only worked at their jobs for a relatively short period of time. They are not eligible in most states. So fixing that problem is not only good for people, but it's also good for the economy because it's a very rapid way of getting money back to people and also they will turn around and spend it.

Food stamps. Talk about a way of getting money to people they will spend, they will spend -- you know, the more people are in need the more likely they are to turn around and spend whatever money they get. Again, a two-fer.

Aid to state and local governments. State and local governments are now facing shortfalls estimated to be over the next two years approximately $200 billion or more. Now I understand there are many members of Congress of both parties who take a look at their governors who are of the opposite party and say, "I'm not sure I can trust that governor to spend it well." Well, all I can urge you is to put politics aside and governors put politics aside. This is no time to get into that kind of internecine worrying and squabbling.

This money does need to go to state and local governments. It is a quick way of getting money in circulation. State and local governments now, because of the shortfalls, are cutting substantially back on public services that are vital public services: family services, sanitation services, services all along the spectrum. They need, and individuals need, those services.

So again, it's a two-fer. Getting that money to state and local governments deals with the shortfalls, deals with the budget drag, the aggregate drag on the federal economy that is constituted by those huge shortfalls, but also gets services to people and keeps people or puts people in jobs directly.

Now let me say something about infrastructure. It seems to me that infrastructure spending is a very important and good way of stimulating the economy. The challenge will be to do it quickly, to find projects that can be done that have a high social return that also can be done with the greatest speed possible.

I am concerned, as I'm sure many of you are, that these jobs not simply go to high skilled people who are already professions or to white male construction workers. I have nothing against white male construction workers. I'm just saying that there are a lot of other people who have needs as well. And therefore, in my remarks I have suggested to you, and I'm certainly happy to talk about it more, ways in which the money can be -- criteria can be set so that they money does go to others: the long term unemployed, minorities, women, people who are not necessarily construction workers or high-skilled professionals.

Finally, let me say this. We've never been here before. There is not an obvious template. There is not a clear direction.

Anybody who tells you they know exactly what to do doesn't know what they're talking about. We are going to have to approach this in the spirit of experimentation. We have to keep an eye on what works and get rid of what doesn't work as fast as possible.

Secondly, the danger, it seems to me, is not that the government will do too much. The danger is that the government will be doing too little.

And thirdly, I cannot emphasize enough this issue of speed. Now this deliberative body is a deliberative body, and deliberation means deliberation. And deliberation often takes time and it's your responsibility to do it well.

But let me also add that if we wait until March, if this drags out between the House and the Senate, not only are we going to see the emergency and the results of the emergency mean many, many more people displaced, but it also is going to compound the public's concern and lack of confidence about the ability of its leaders to move as quickly as is needed. So again, I urge you to move forward with all deliberate speed.

Thank you.

As Hot Air's Ed Morrissey noted Thursday:

This sounds a lot more like a paternalistic welfare program than a real effort to improve American infrastructure.  We’re building roads and bridges for all Americans, using tax money from all Americans.  Everyone should have equal access to the jobs created by this stimulus plan.  What Reich proposes is flat-out official racism by government, refusing to hire people on the basis of their skin color.  Didn’t our last election demonstrate a rejection of that kind of thinking?  And note that Reich offers the racist rationalization that he doesn’t have anything against white male construction workers.  Maybe some of his best friends are white male construction workers, too.

Yet, despite LexisNexis identifying more than 50 reports concerning this hearing that included Reich's name, not one of them addressed these racist remarks.

Why? Do media not want Americans to fully understand what this proposed stimulus package is about?

What other reason could there be for this astounding statement by an Obama adviser to go completely unreported?

Noel Sheppard
Noel Sheppard
Noel Sheppard, Associate Editor of NewsBusters, passed away in March of 2014.