This Sunday at 8pET, there'll be a GPS primetime special on CNN – Restoring the American Dream: Getting Back to Work. I dig into the unemployment crisis and look at how to create more American jobs. The other day I talked to John King about some of the key points I'll raise in the special. Here's the transcript:
John King: Let's get some perspective now from a man who has spent a lot of hours of late exploring the jobs question. His special, "Restoring The American Dream, Getting Back To Work" airs Sunday night at 8:00 p.m. here on CNN. I'm glad our colleague Fareed Zakaria can share some insights with us tonight. First I want to break this down into two parts, the debate here in Washington and the debate out there in what I'll call the real world.
Here in Washington you have the president's job package and the debate about that, then you have the super committee which is dealing with deficit reduction but a lot of the jobs package could end up being rolled into that. Listen to how the House speaker, John Boehner describes this:
John Boehner, Speaker of the House: Now, tax increases I think are off the table. And I don't think they're a viable option for the joint committee. It's a very simple equation. Tax increases destroy jobs. And the joint committee is a jobs committee....And when it comes to producing savings to reach the $1.5 trillion target, the joint select committee has really only one option - spending cuts and entitlement reform.
John King: Spending cuts and entitlement reform will get you deficit reduction, but do they get you jobs?
Fareed Zakaria: This has become the mantra in Washington that the only thing we need to do is to cut government spending. In the short run, just to be clear, this is just mathematical, the more you cut government spending the more you weaken the economy in the short term. What does it mean to cut government spending? It means you fire teachers. You fire policemen. You fire firefighters. The government stops spending money on various programs and bureaucracies.
Those people who are now not being employed by the government in some way or the other aren't going to go to their local diners. They aren't going to buy clothes. They aren't going to do all the kind of economic activity that used to stimulate demand.
In the long run, perhaps, a leaner, meaner government means that we become more competitive as a society, etc., although the argument that you know the only way to go here is cutting spending is also somewhat suspect because you're taxing at 15 percent of GDP. You're spending at 23 percent of GDP. That's a big gap.
I worry when I hear what John Boehner is saying that the Republicans have decided they're not going to make any compromises, in which case you're not going to get a deal out of the super committee. If the committee's Republicans stick with what John Boehner is saying, what is most likely to happen is that the axe will fall and you will have a sequestration. You will not have a compromise.
John King: And so that would be an example of this world, my world, Washington, not working or not working as well as it should. Out in the real world you mentioned Jeff Immelt. He's the CEO of General Electric. The president asked him to head up a jobs commission of his own to try to find ways to make America more competitive, to make America create more jobs. He looks at Washington from the CEO's perch and he has some complaints like everybody, but he sounded a tad optimistic.
Jeffrey Immelt, Chairman and CEO of GE: Education in this country is not going to be magically solved by cutting the budget deficit. In fact, it gets tougher. So I believe ultimately in our system. I just think we're in a particularly, you know, tough time right now because we're coming out of the crisis where people are still angry and that's understandable. I kind of get that. But ultimately, there's a sense of teamwork that's very much a part of the American culture. There's a sense of partnership that's very much a part of the American culture that I think will ultimately play out.
John King: Will ultimately play out. Where is this sense of teamwork and partnership in our politics? Where does he see it? Because I work here every day and I don't.
Fareed Zakaria: I think it's a hope, it's not a prediction. Look, the thing that he said, though, at the start of that clip, which I think is so important, is he talked about how you can't just cut the education budget and hope that that will create jobs - that it might have the opposite effect. The point is that we have to be practical about this. One of the things I tried to do in that special is say what are practical solutions to creating jobs, let's try to figure out the sensible, smart things the private sector can do and government can do.
You know, for example, when foreigners come here they spend a lot of money. It creates a lot of jobs. Why not have more foreigners come here? We make it so hard for people to come and visit this country as tourists. Every other country's rolling out the red carpet for tourists. So if we approach things that way and say, "It's partly government's responsibility, partly the private sector, some taxes need to be reduced, others could be raised," rather than get into this kind of theological debate about the meaning of government and you know all tax increases always destroy jobs.
Well, you know, Germany has pretty high taxes and a pretty strong regulatory system. Germany is experiencing the lowest unemployment rate it's had in 20 years. Why? Well, because they invest. You've got to invest in growth. You can't just cut your way to a new generation of economic growth.
John King: Did your reporting solve or answer what I'll call the chicken and egg question here in Washington. What came first, the chicken or the egg, and that is that you have the president and others saying corporate America could sure help. They're sitting on billions of dollars in cash, if they would spend it investing in new factories, investing in new jobs, they sure could help. You talk to some CEOs and they say, "Well, we want Washington to help first." There's uncertainty in the tax climate, uncertainty in the regulatory environment, Republicans specifically blame the health care bill and the Dodd-Frank financial bill. Where did the CEOs you talked to come down on that question?
Fareed Zakaria: Well, Jeff Immelt among others came out very clearly on this issue. The reason corporate America is not investing is a lack of demand. In other words, if you had lots of people demanding your products, the fact that Barack Obama wasn't making nice speeches about you wouldn't stop you from building a new factory. Now I think that hits the president too.
The president's jobs plan has a lot of payroll tax cuts and little gimmicks that will supposedly make corporations invest and hire. I don't think they will because ultimately there isn't right now much demand. Consumers are paying down debt. They're not spending money. The one area where it is absolutely clear you could generate lots of jobs is infrastructure, because that is something not dependent on consumer demand.
The government could just go out there. Cheapest interest rates in American history, borrow the money at two percent, build bridges, modernize highways, put in smart grids, do all the things that will pave the way for another generation or two of economic growth. That's the biggest low-hanging fruit we have to create jobs in the economy.
John King: It is the most immediate challenge for the country right now. Fareed Zakaria's special "Restoring The American Dream, Getting Back To Work" Sunday night at 8:00 p.m. right here on CNN - important reporting.