Stern Says Obama Ultimately May Ease Tax Rule (Transcript)
Andy Stern, the former head of the fastest-growing U.S. labor union and a close ally of President Barack Obama, said in an interview with Bloomberg Television’s “Conversations with Judy Woodruff,” to be broadcast this weekend, that he expects Obama to reverse his opposition to the easing of tax rules so companies with overseas profits will be encouraged to return the cash to the U.S. Stern is the former president of the Service Employees International Union.
(This is not a legal transcript. Bloomberg LP cannot guarantee its accuracy.)
JUDY WOODRUFF: Andy Stern, thank you for joining us.
ANDY STERN: Thank you, Judy.
WOODRUFF: The state of organized labor in this country, there’s been a steep decline in membership. Last year, with a Democratic president, a Democratic Congress, less than 12 percent of workers in this country belong to a union. Less than 7 percent of private-sector workers did. With the economy more global and less manufacturing-centered, is this decline inexorable for organized labor?
STERN: Well, I think we are in a very different historical moment. And I think labor union, companies, government has to be more futurist than historians. And so I think the labor movement, like every institution being challenged by a global economy, is going to need to find a different way to move forward, that we are in a global economy. We cannot deny the competition. We have public-sector unions under a lot of stress and government sort of seeking more efficiency. So I think it’s a time for change, and I think unions obviously are involved in that, also.
WOODRUFF: What - when you say change, what do you mean? What can be done to change this course?
STERN: Well, first of all, I think unions have to be advocates for their services. And I think we’ve seen in pension plans, for instance, there are a number of practices that really aren’t good for the workers or good for unions or the government, the spiking that sometimes occurs at the end of someone’s career or double-dipping. I think unions need to be spokespersons for that.
I don’t think that inefficiency in government is to the unions’ or their members’ behalf. I think they have to be advocates for really efficient public services, good, quality schools. And in the private sector, I think we have to figure out how to align ourselves with businesses so that we share in the gains, as well as sharing in the pains.
Right now, workers take all the pain, but we don’t necessarily have profit-sharing, equity-sharing, some way to share in the gains and be partners with our employers.
WOODRUFF: So you think it can be turned around?
STERN: I do. I think it’s going to take a long time. It’s probably going to take another generation. But I do think that what we know is that people want work to pay and that unions are a way that can happen.
WOODRUFF: Political clout for organized labor took a hit last year in 2010. You had moves in Wisconsin, Ohio, New Jersey, among other states, to take away collective bargaining rights. How much did that hurt labor?
STERN: Well, that hurts. I mean, it hurts the people, you know, are represented by the unions, you know, who went to work, had an organization, and just like the Chamber of Commerce is an organization or the Business Roundtable, they had a union to try to represent their interests. And when they lose their rights, which I think is why people around the country were so sympathetic, is they lost their rights to have an organization. Whatever that organization did is a different question, but I think people are getting tired of big business and big corporations taking away people’s rights. And that goes along with governors, as well.
WOODRUFF: Well, what do you think the lesson from that is? Is it to escalate the effort to defeat Republicans? Or is it to recalibrate and work with Republicans?
STERN: I mean, I think the labor movement has gotten too much of an adjunct to the Democratic Party. You know, I used to say we shouldn’t be lapdogs to a political party; we should be a watchdog for our members. And I think, you know, Wisconsin, you know, where Scott Walker acted egregiously, but it also says, in the larger sense of the word, you know, our members in SEIU were 30 percent Republican, 40 percent independent. You know, we cannot see ourselves as an adjunct to a political party, but really a watchdog.
WOODRUFF: The decision by Boeing to build a non-union aircraft plant in South Carolina after there were union- organized work stoppages in Seattle, the National Labor Relations Board has now filed a complaint. But isn’t this just the way free markets work, that companies are free to locate their plants in places where labor is less costly?
STERN: Oh, absolutely. I don’t think that’s the issue in this case. The issue in this case is whether they did that in response to an actively - as an act of discrimination. It would be as if we don’t want to have our plant in certain states, you know, that allowed African-Americans to participate.
So to me, the issue is there’s a rule of law, and I must admit, the NLRB is rather outdated. Many of us tried to change last year, and we didn’t get a lot of support from the business community. But we’re also learning - and Boeing and workers have the same problem - is justice delayed is justice denied.
And Boeing’s decision is now a year old. It should have happened much more quickly, in the same way that workers who want to right to have a union should make that decision quickly, as well.
WOODRUFF: And Boeing, meanwhile, had announced that it’s added 2,000 jobs at its plant in Puget Sound. So the argument that Boeing is anti-union, does that hold water?
STERN: Well, I think all the people that say that should be very thoughtful about what’s going to happen. The reason they’ve added jobs is not permanent jobs, but there’s been a series of projects they’ve bought back around the world to do temporarily in Seattle. And when those projects end, I think we’re going to see there will be less workers in Seattle than there were.
So I think, you know, Boeing has a very thoughtful strategy about how to do this. They’ve temporarily added to the workforce. But if that’s the deciding moment, I want to say when people say when they lose workers in Seattle.
WOODRUFF: But it puts labor in a tough spot, doesn’t it, to be opposing jobs created of any kind in South Carolina at a time when the economy’s so poor.
STERN: No, absolutely. I’m very sympathetic to the workers in South Carolina, you know, who applied for a job, want to go to work, you know, with a company that apparently may have violated the law. And now South Carolina is going to have to pay the price.
This is the reason where speed in decision-making matters, because businesses or workers should not have to wait for a year or two years before they know, you know, what their situation is. And I think, you know, I’m sympathetic to the Boeing’s part of having waited so long, even though some would say they were part of the reason for the delay.
WOODRUFF: Barack Obama elected president with the enthusiastic backing of labor. Here we are more than two years later getting closer to the next election. What’s the feeling about him on the part of organized labor today?
STERN: I’d say generally positive. But I think that some of the change that we hoped would have happened by now has not happened, and I think that people feel that at times the president needs to stand up more for working people, 9.1 percent unemployment, housing and problems, issues he didn’t create, but where we really need a president to wake up every day and think about jobs. And I think, you know, that is his challenge going forward.
WOODRUFF: Is - what could he do? I mean, what are some specific things he could do to energize labor right now?
STERN: Well, I think what we could do is really focus on the jobs issue. There’s clearly an infrastructure issue in this country that people are debating. There’s been some discussion. Chuck Schumer mentioned it today, and others, about looking at the repatriation issue and also looking at it as a way to fund an infrastructure bank. There was a lot of money put out for environmental activity, green jobs, weatherization, but I don’t think it was particularly well organized and focused. There were a number of things that Jeff Immelt and the competitive commission put out.
But the question is execution. You know, there are a lot of ideas lying around, a lot of jobs unmet, a lot of skills that are needed, but where is the passion and sort of pulling people together in this country and try to get it done?
WOODRUFF: And how frustrating is that to you, as somebody who supported him?
STERN: Oh, I’m not frustrated just with him. I mean, this is the Senate, the House, the administration. So I’d say, I am frustrated that at a time of real distress for working people in this country that we’re fooling around with the debt ceiling or we’re, you know, dealing with all kinds of silly issues that happen in Washington, D.C., things like Anthony Weiner, which just happened, but aren’t really what America’s people are thinking about.
WOODRUFF: Well, speaking of the election, some Democrats are saying Republicans have moved so far to the right that for Democrats this election’s in the bag.
STERN: Well, I always hate to win elections hoping that my opponents made a mistake as opposed to “I actually have done something that makes me attractive to voters.” So I think we’re, you know, 16 months away from an election. So much is going to happen between now and then. But the one thing that Democrats and Republicans have under their control is to do something.
WOODRUFF: You were a member - you mentioned the deficit -of the presidentially appointed Simpson-Bowles deficit-reduction commission. You dissented from the final report. As you follow right now the Biden - the Vice President Biden-led budget negotiations with the House and the Senate, do you think there’s cause for optimism or for concern?
STERN: Well, first of all, I think we have to give a lot of credit to Erskine Bowles and Alan Simpson, because I think a lot of the ideas that were put out in Bowles-Simpson and the goal of setting $4 trillion deficit reduction, which I supported, you know, has become sort of the way people are thinking in Washington, D.C.
I think unusually that we actually make have a deal here. It may not be very specific. It may be a lot about setting goals and triggers and things that will happen if we don’t meet those goals. But I think there’s a growing sense that we need to do something.
I think the vote on the ethanol subsidies recently, where Democrats and Republicans said we can’t afford certain kind of subsidies anymore, are all important.
WOODRUFF: Do you worry at any time that the administration may be so anxious for a budget deal that it may give in too much?
STERN: I’m always worried that, for the sake of getting something done, you know, we sometimes give up our principles, not make compromises, but give up our principles. And I want to make sure that when it comes to Medicaid and Medicare, that none of the Democrats, not just the president, for the sake of expediency, forget what they came here to do and who they represent.
So I’m always on guard. I’m always watching. And I’m always ready to hold people accountable, because I think that’s what democracy is about.
WOODRUFF: One of these reports that’s been in the media recently that the White House has put on the table in the Biden talks, payroll tax breaks for employers, as well as employees. Do you think that’s a good idea?
STERN: I think the employee part absolutely makes sense, because we know that when people get more money in their pocket, particularly most working people, they tend to spend it, particularly now when things are bad.
I’m not so convinced that giving money to employers does anything. I’m a little worried about trickle-down theory, and I certainly would like it targeted to smaller businesses, because I don’t think GE or Honeywell needs another 2 percent. You know, they have a lot of money in the bank. They have a lot of money to invest. And I’m not sure that’s the best targeted use of the money.
WOODRUFF: So - but you think, what - I mean, is it your sense that something could happen on that -
STERN: Yeah, I mean, I think something can happen, because I think the Republicans always like tax cuts. I think people who go to work every day would love to see 2 percent more in their pocket. And if the price of that is doing something on the business side as well, we may very well see it. I don’t think that’s a bad principle. I just don’t think it’s the best use of the money.
WOODRUFF: Very quickly, finally, Supreme Court ruled this past week in the Wal-Mart case, millions of individuals suing for gender discrimination. They ruled that it could not go forward as a class action case. The White House hasn’t said anything about that yet. What’s your take on that?
STERN: I mean, my take is that people need to say there is something wrong in a country where women make 70 cents on the dollar doing the same job as a man does and where our courts, you know, make it incredibly impossible for people to get justice, whether it’s as a class action or whether it’s as an individual.
And so I’m always worried when we have a problem that everyone acknowledges, and yet, you know, we find lots of ways legally and otherwise to thwart people’s efforts to win their rights. I think people are getting tired in Wisconsin and in Wal-Mart of seeing big companies get their way at the expense of people that work.
WOODRUFF: Now, you mentioned - a moment ago, you mentioned repatriation. You joined Republicans and corporate executives in advocating a so-called tax holiday for big U.S. corporations that have earned a lot of money overseas from foreign sources. These companies also have almost a trillion dollars worth of cash that they’re sitting on right here in this country. So my question is, why give a costly tax break to them when they’re not spending that money and investing it in jobs here already?
STERN: Well, I’d say three things. One is the money is sitting overseas, and I still don’t understand how people think a trillion dollars in foreign banks is better than a trillion dollars in the United States. Two is they are going to pay a tax on that money if they bring it back. Right now, they’re not bringing it back.
The question, I think, is “What are we going to do as a country with that money?” Chuck Schumer yesterday, now Rahm Emanuel, the president - CEO of Pepsi have all said, let’s invest that money in an infrastructure bank. Let’s leverage the money up 5 to 1 or 10 to 1. Let’s have $500 billion to fix our roads and our waterways and put people to work. I think that’s worth it. That’s a deal I think is worth making.
WOODRUFF: But as you know, this was tried - something like this was tried in 2005. There are now reports that the New York Times and Bloomberg have done that found that corporate beneficiaries like Hewlett-Packard, like Merck, got billions of tax breaks, but actually reduced their workforce. They cut jobs. They used that money for dividends and other benefits for their shareholders.
STERN: I think that was wrong. I don’t think we should let that happen again. I think in the Brady bill that’s been introduced, there have been already set some penalties if you actually shed jobs.
But I think the question really is, there will be jobs created. When you get money to shareholders, pension funds do better, state taxes do better, and it’s just better to have the trillion dollars here, because it’s an academic argument about whether they’re going to bring it back. They haven’t brought it back, and they won’t bring it back at a 35 percent tax rate, but we could create a lot of jobs in America if we figured out the right government use of the money.
WOODRUFF: So do you think that any measure with so-called repatriation should be written in a way that the tax breaks only go to companies that add jobs?
STERN: Well, I think - I think we’re saying the same thing. What I’m saying is, we shouldn’t let companies cut jobs - that’s for sure - who take the repatriation holiday. You know, I don’t really think we’re in the position to lord over companies and see what they do. We’re not really good at regulating behavior. We are really good at deciding what we do with the money the government would get, and the government will get $50 billion, put it in an infrastructure bank, could create $500 billion. That’s tens and hundreds of thousands of jobs.
WOODRUFF: I hear that, but then the congressional Joint Tax Committee has said it estimated this would cost taxpayers $78 billion. Treasury Secretary Tim Geithner has said that’s just not acceptable.
STERN: Well, I think this was called stimulus, you know, when you spend money and produce a temporary deficit in order to have a long-run gain. I mean, we spent $700 billion the Obama administration didn’t have for the purpose of trying to get the economy going. You know, this would be at worst $80 billion over 10 years. I don’t think those numbers are true. But even if they were true, this is stimulus. That’s the very definition of stimulus. You put money in the economy to try to get it going.
WOODRUFF: You mentioned the people who are in favor of this, but the White House looked at it. They were trying to find a way to support it, but what - our understanding is that they thought it was inefficient and said we can’t support this.
STERN: Well, I think they said that about the Bush tax cuts, too, that they could never support an extension of them, and, you know, this is where Washington makes decisions. I think it’s really encouraging that Chuck Schumer and Rahm Emanuel in the last three days have come forward with their own ideas about how to use this money for repatriation.
The mayors are extremely interested, Democrats and Republicans, about getting money for infrastructure. So I think this is an issue that’s beginning to grow on people, because in the end, it’s not about “Are we going to get the money back some other way?” We’re not going to get it back. That’s why there’s a $1 trillion or $1.5 trillion. The question really is “If we can get government tax revenue, could we spend it on creating jobs?” I think that’s what Americans want.
WOODRUFF: Do you think the White House could change its position on this?
STERN: I do.
STERN: When it’s time.
WOODRUFF: Two presidents, Bill Clinton and Barack Obama. Which one do you believe has been friendlier to labor?
STERN: Well, I’m probably a little bit prejudiced, also, because I’ve known Senator Obama and President Obama both, and both of them have been, I think, very supportive, but 30 million people that were added to health care is enormous. The appointments that have been made are terrific.
And I think Bill Clinton in the second term became much more aware of unions, but coming from Arkansas I think had a different background.
WOODRUFF: So - so in your opinion -
STERN: So, in my opinion, Barack Obama has, you know, clearly done, you know, better for the working people or been more focused on labor unions than his predecessor.
WOODRUFF: But do you think he’s appreciated for that?
STERN: I think people are really unhappy right now about life. You know, we’re living through a major globalization, economic change. Things are not good. You know, I think it’s very - every politician is having a hard time being appreciated.
WOODRUFF: One year after Andy Stern leaves the Service Employees International Union, you are on a corporate board. It’s called SIGA Technologies, Incorporated, controlled by Ron Perelman. Has Andy Stern gone establishment?
STERN: No, I think - you know, what’s the wonderful thing about SIGA is they’ve actually found a cure for smallpox, and their whole mission in life is to do what I tried to do, you know, was to find ways to help people. And in this case, it’s to make sure that people are safe in case of a terrorist attack, so that health care workers don’t have to be vaccinated but can actually be cured if there was ever a smallpox.
But I do believe probably a year later that sometimes in my life - and I’ll take full credit - you know, I was awfully tough on the private equity and the banks. Some of it was totally appropriate; other of it probably was a little bit out of hand, you know, and that we need to find a way to be a team in America a lot more and come together, because we’re in a global competition. China, Singapore, and people are doing rather well, and Team USA needs a better plan.
WOODRUFF: And that was - you’re saying that was something that was hard for you to realize when you were inside?
STERN: Yeah, when I was inside, you know, I was an advocate, a pure, straightforward advocate for my members and for things to have happen that are good for working people and to hold people accountable, like the banks and the private equity companies. But I appreciate that we’re in a much bigger context right now, and you sort of step out and you see people looking for good jobs, trying to come together as a country and find a new economic plan to compete in the global exchange, and I think that needs a different level of teamwork.
WOODRUFF: Do you think it’s that the times have changed, or has Andy Stern changed a little?
STERN: Yeah, I think I’ve learned in my job that the times are changing, and that means people have to change as well. Institutions can’t exist doing the same things. Labor unions are great historians, but our challenge is, are we going to be futurists?
WOODRUFF: Last year, last fall, there were reports that you were being investigated by the Labor Department and the FBI for corruption. You’ve denied that that’s the case. Where does it stand today?
STERN: Well, what I’ve now learned is I was being investigated by the FBI for a background check to be on the president’s commission and that my opponents used that FBI investigation for the president’s commission to say I was under investigation. It never was true. It’s still not true. And the only investigation was I got on the president’s commission, so I must have been OK.
WOODRUFF: So nothing else going on?
STERN: Nothing else.
WOODRUFF: Finally, quickly, a look over the horizon. What bright starts do you see in either American politics or American labor?
STERN: Well, you know, what I see is another generation of people coming up - and maybe they’re one or two rungs down - who actually have hope, who believe things can be done, have learned a lot about new technology and globalization, have sort of conquered some of the issues about race and equity. So I think there’s a lot of hope, you know, at a level of people rising up, certainly in the labor movement and I think around in the political movement, as well.
But the top is pretty capped, you know? And we have a very old political class here in Washington, D.C. And as we know in the Senate, we have a lot of rules that don’t work really well. And I’m looking forward to the day when these young people really take over.
WOODRUFF: Andy Stern, that’s something for all of us to think about. Thank you for joining us.
STERN: Thank you.
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