Sen. Sherrod Brown's Recipe to Stop the Economic Hemorrhaging: Fix Our Manufacturing Policies
As chairman of the Senate Banking Subcommittee on Economic Policy, Senator Sherrod Brown, D-OH, has been a strong and consistent advocate for the middle class and working families. Often described as "Congress's leading proponent of American manufacturing," he has been steadfastly working with the Obama administration to create a national manufacturing policy. Over the past year, Brown held a series of subcommittee hearings examining ways to rebuild U.S. manufacturing and is also fighting to ensure that our nation's trade laws work for domestic manufacturing and American workers.
The follow is a transcript of an interview with Senator Brown.
Kathleen Wells: Later this month or early in February, it is expected that the Senate will take up a jobs bill [Jobs for Main Street Act]. How can Americans be certain that this bill will actually create jobs and put people back to work?
Sherrod Brown: First of all, without the first Recovery Act, we would have been in a much worse economic position than we are in now. It clearly created jobs. Even though we were losing that number of jobs, it obviously created jobs in terms of direct spending on infrastructure. It created jobs by putting tens of billions of dollars in state and local governments so that they didn't lay off teachers, firefighters and mental health counselors, etc.—all the kinds of things that state and local governments funded.
This jobs bill needs to do more direct infrastructure spending. We are facing a huge infrastructure deficit to pass on to our children. Water, sewer, highways, bridges, universities, broadband—all the things we have not funded as well as we should have, and have not built infrastructure well enough, are a huge problem for our children and grandchildren if we don't do it right now.
Second, this bill needs to make sure that it's got a manufacturing policy, so that we are moving forward in building wind turbines, solar panels and other kinds of alternative energy manufacturing that this nation absolutely needs to do.
KW: I know you are focused and have drafted legislation, the Investments for Manufacturing Progress and Clean Technology Act (IMPACT), regarding a national manufacturing policy. Will this legislation be added as an amendment to the jobs bill? And speak to me about the necessity for a national policy regarding manufacturing.
SB: A component of having a manufacturing policy is helping companies transition from the auto supply chain or other kinds of manufacturing into alternative energy. If you make glass for trucks, you can make glass for solar panels. If you build gears for cars, you can make gear boxes for wind turbines. We need to assist companies to do that—that's part of the manufacturing policy.
That legislation [IMPACT] has been introduced—I introduced it—and in total amended into the House version of the climate change bill. We are working with the White House and others to make sure that whether standing alone, part of the jobs bill, or part of the climate change bill, this idea gets written into law.
Other parts of what should be a manufacturing policy are assisting companies with credit. So many small companies can't get credit. They have the capacity to produce—they have customers, more and more—but they are not getting financing.
Another part of the manufacturing policy should be the [Hollings] Manufacturing Extension Partnership (MEP). This is a relatively small government program that helps individual companies deal with cutting their energy costs and helping them export. All the things small companies don't have the resources to do/hire will get help from the federal government this way.
Also, we need a very different-looking trade policy than the one we have now, including dealing with China currency. China is gaming the system, i.e. manipulating currency values to gain advantage with manufacturing exports.
And we need assistance for small businesses. We need to help the Small Business Administration by waiving some of the fees so that small businesses can grow and small businesses can get start-ups—i.e., start-ups can come forward by getting some low-interest loans from the federal government through the Small Business Administration.
KW: Be more specific about how a national manufacturing policy will defend against unfair trade.
SB: Well, you start by enforcing trade laws. Obama has had two big opportunities to enforce trade laws in this country in the last four months, and he has taken both of them and done the right thing with them. One was with Chinese tires. They were clearly "surging" Chinese tires in this country. They were breaking the trade rules that they had agreed to. The President's decision created hundreds of jobs almost immediately in the U.S. tire industry because China was cheating on this.
Second was [Chinese company] Oil Country Tubular Steel Pipes [which manufacturers] steel pipes that are sold for oil and gas exploration. This is a growing market. The Chinese clearly were dumping steel in this country. They were subsidizing their steel through subsidized energy costs for the producers of China through gaming the currency the way that they have. So, we can enforce trade laws. That's the most important thing the President can do.
Second, we need to make sure that we deal with the China currency issue. And third, we need to begin to write trade laws like the Trade Act, the bill I've worked on for a couple of years, and it has a large number of bipartisan sponsors in the House, to move forward so that trade is practiced in accordance with our national interest, not according to some economic textbook that has been out of print for 20 years.
KW: Critics of a jobs bill/national manufacturing policy state that this spending will merely add to the deficit. How do you address this issue?
SB: These people that talk about the deficit weren't so concerned about that deficit when it was President Bush who started the Iraq war and failed to pay for any of it. Or when the Bush Congress passed the giveaway to the drug and insurance companies in the name of Medicare privatization that ran the debt up tens of billions of dollars a year. Or the tax cuts for the rich that Bush started. They were not so interested in the deficit then, and now they are?
But the fact is we, of course, need to be aware of the deficit. But the deficit will grow much worse if the job picture fails to improve. What really drives the deficit—it's partly government spending, but it's partly a bad economy where government spending must, out of necessity, go up [because of] all the things we need to do when people are unemployed, for instance, unemployment insurance and food stamps, etc.
It also goes up because there are significantly fewer taxpayers because they have lost their jobs.
The most important thing to do is to get people back to work. Then we need to pay more attention to the deficit.
KW: We've been here before, with a bad economy. Can you speak to how the New Deal strategies effectively revitalized the economy and how those same strategies can be effective today?
SB: We had huge economic growth in this country from 1933 to 1936 because of federal programs Roosevelt and the Congress started in the 1930s. The economy grew eight, 10, 12 percent a year.
In 1937, after giving out the bonus checks to World War I veterans in 1936 that had been promised (and that was a shot in the arm of the economy), they stopped doing that and they cut back on spending and the economy went back downhill again. It's clear that you just don't do one round of stimulus. You need to do it again until the economy really gets going.
It was ultimately World War II—though I'm obviously not recommending a war—which was the biggest stimulus package of all. The huge stimulus government spending in World War II, with no concern about the deficit, made the country come forward and made people do exactly what we needed them to do, without any concern about the deficit. The concern was winning the war, and that was all that mattered.
I'm not suggesting that level of spending, but I am suggesting that you need to do it right. And [that entails] not backing off of spending when the economy shows a few good signs.
KW: Your state, Ohio, has suffered two times more losses in manufacturing than the nation as a whole. How will a national manufacturing policy directly address Ohio's losses?
SB: The hemorrhaging will stop if we do a better trade policy and a real manufacturing policy. If we do this right, there will be significantly more new jobs and alternative energy.
I've referred to Ohio as the Silicon Valley of alternative energy. We already have had more job growth than a great majority of other states. Toledo, Ohio, has more solar energy manufacturing jobs than any other city in America. We have all kinds of component manufacturers for wind turbines in Ohio already. We are well situated to benefit from a manufacturing policy with a better trade policy.
With the Manufacturing Extension Partnership (MEP) and doing this transition into alternative energy with some assistance from the IMPACT Act—all of these things will play well in rebuilding our industrial base in Ohio.
KW: I would be remiss if I didn't state that black communities (with a 16.2 percent jobless rate) and Hispanic communities (with a 12.9 percent jobless rate) have been disproportionately impacted by job losses. Are you and the White House aware of this and how is it going to be addressed?
SB: I'm aware of it, and I think the White House is, too. The ticket to the middle class for the African American community in the 1950s, '60s and '70s was a strong manufacturing base. Well, of course, not every African American who got into the middle class worked in manufacturing, but a huge number did.
The number of African Americans who worked at GM (General Motors), at Ford, at General Electric, who could buy a house, who could buy a car and send their son or daughter to college, was a big part of the creation of the middle class. And while there are lots of routes to the middle class, the one for most people continues to be manufacturing, and that's why the emphasis on manufacturing is good for the country as a whole, but it is even more important for the African American community.
KW: How would you differentiate the Bush administration from the Obama administration?
SB: That's a very good question. Today, I was with Secretary Donovan [U.S. Department of Housing and Urban Development], and we announced a huge new federal program. It's called the Neighborhood Stabilization program. He chose Columbus, Ohio, to announce it with the Lieutenant Governor, Lee Fisher, and the mayor of the city of Columbus, Michael Coleman, and I said to them, "It's such a difference having a President who basically believes the way we do about getting this country back on track."
A year and a half ago, the Bush administration was fighting the first Neighborhood Stabilization program, and we eventually convinced him not to veto the whole bill based on that provision.
This year, we have a President, with the Secretary of HUD, who is out front on understanding urban issues and understanding what we need to do to rebuild our country.
There are two ways out of a recession, historically, in this country. One is the auto industry and the other is housing. We've got to do both, but what we need to do in every community is rebuild the housing so that the housing stock gives people in neighborhoods a chance.
So many people have lost their homes or have seen their neighbors lose their homes, affecting the value of their home, especially in middle-income and lower-income neighborhoods, but everywhere really—rural, urban and suburbs.
And having Barack Obama and Secretary Donovan there, versus having George W. Bush and whoever his abysmal Secretary of HUD was—I can't even remember now—makes all the differences in the world.
I can give you 2,000 other examples, but I gave you one that was the most immediate because that was about today [last Thursday].