Video: Wall St. v. Main St

msnbc.com
updated 11/22/2005 4:41:00 PM ET 2005-11-22T21:41:00
TRANSCRIPT

General Motors announced yesterday that it plans to slash 30,000 jobs and shut down a dozen plants in the heart of Middle America.  These layouts strike the heart of this country at plants in Oklahoma City, Lansing, Michigan, and Doraville, Georgia. 

The announcements came days before Thanksgiving and the heels of the other reports that GM has lost $4 billion so far this year. 

CNBC host Jim Cramer and MSNBC analyst Pat Buchanan join Scarborough Country to discuss the financial impact on these parts of the country.

To read an excerpt of their conversation, continue to the text below. To watch the video, click on the "Launch" button to the right.

JOE SCARBOROUGH, MSNBC HOST: Pat Buchanan, let me start with you right now; 30,000 families going to be broken-hearted this Thanksgiving, because GM decides to cut their jobs.  Is this the America you were warning about 15 years ago, about free trade and the policies of the Republican Party kept moving forward, that this would eventually happen? 

PAT BUCHANAN, NBC POLITICAL ANALYST: This is a direct result of Republican free trade policy that's been imposed for the last 20 years, Joe. 

We're seeing the de-industrialization of America, as General Motors throws its workers onto the American market and moves its plants abroad.  And this de-industrialization is brought about because we have created a global economy, where it makes economic sense to get rid of your workers who have high wages, who have pensions, who got health care, and go hire
Chinese or Mexican workers at one-tenth the salary.  I think what we are seeing is...

SCARBOROUGH: And that's exactly what has happened here, isn't it? 

BUCHANAN: Sure.

SCARBOROUGH: Jim Cramer, these jobs are going and it doesn't matter what happens to GM over the next five years.  They will never come back to Middle America, will they?

JIM CRAMER, HOST, "MAD MONEY": Well, they might come back, but they will be in the form of a job from Toyota or from Nissan or guys who are growing.

I think that GM was just cataclysmically managed, one of the worst managed operations I have ever seen.  Even today, they are closing all these plants, but they are still paying an 8 percent dividend.  What, are they out of their minds?  How can they go to the unions and say, you got to sacrifice if they're not asking the shareholders to sacrifice.  That's ridiculous. 

SCARBOROUGH: Go ahead, Pat. 

BUCHANAN: Joe, let me just say this.  Look, General Motors has been the most generous country — in America. It's a priceless national asset.  It paid the highest wages.  It's got the best health care benefits and it got everything else, pensions, better than any other company. 

You cannot force these companies to compete with companies, even in Japan, where they give benefits to exports and they discriminate against imports.  We need a policy of economic patriotism.  Globalism is economic treason against the American worker. 

CRAMER: How can you take General Motors?  They have done everything wrong in the book. 

BUCHANAN: Jim, has every other American company done everything wrong? 

CRAMER: No.  A lot of companies have really adjusted to the new world.

BUCHANAN: We got a $700 billion trade deficit.  That means that export of jobs, technology and sovereignty abroad.  It's because of the policies pursued by this administration. 

CRAMER: If that's the case, why is Caterpillar doing so great?  Why is John Deere going to report a good quarter?  Why is Boeing taking share worldwide?

BUCHANAN: Boeing.  Let me tell you something.  We had 95 percent of the aircraft market until you let the Euro zone put together that Airbus.  They got 50 percent of the world market.  Lockheed is out of business.   McDonnell Douglas doesn't make passenger planes.  Boeing is in deep trouble. 

CRAMER: Boeing is in deep trouble?  Boeing is hitting the ball out of the park.  You got to check that, really, Pat.  Boeing is in great
shape.

SCARBOROUGH: One at a time, guys.  Jim.

BUCHANAN: Jim, do you know anything about the history of how Airbus was created?  25 years of subsidies.

CRAMER: I think Airbus is a joke.  But even...

SCARBOROUGH: OK.  Hold on a second, guys.  I got to get in here. Jim, I want to ask this question.

CRAMER: Yes. 

SCARBOROUGH: And respond to Pat.  But also let's look at the places where these plants shut down, Oklahoma city, Lansing, Michigan, Tennessee, Doraville, Georgia, Flint, Michigan, Pittsburgh, Ypsilanti, Portland.

Again, it looks like the industrial Middle American background, it looks like it's being ripped apart tonight, that there's no future for manufacturing in Middle America.  Is that an overstatement? 

CRAMER: I think it is an overstatement. 

I have to tell you something.  This is something that GM has to do.  They have no choice.  They had to downsize.  They are still acting as if they have 60 percent share.  They have 26 percent share, going to 20 percent.  At least they are finally owning up to their problems.  That's better than, say, the Bethlehem Steels of the world did it, where it just got too late. 

But they're not out of the woods.  They haven't cut the dividend.  And they got the Delphi.  If Delphi strikes, I'm telling you, GM is going to be in even bigger trouble than now. 

BUCHANAN: All right, Joe, let me tell you this.  Look, two-thirds of our manufacturing workers from the Reagan era are gone from this country.  And we're supposed to have the finest
manufacturing workers in the world.  And we do.  Why is that, if it's a level playing field?  It's not all over this world. 

SCARBOROUGH: I mean, we have General Motors, they lose 30,000 jobs here.  Ford fired 4,000 people a while back.  Delphi fired, how many, 24,000. 

BUCHANAN: Delphi is going under. 

SCARBOROUGH: Hewlett-Packard, 15,000.  Something big is happening out there.  What is happening, guys? 

BUCHANAN: GM is building plants in Brazil and Asia and the Third World because they can build cheaper there.  And it's a good bet, because you can come back into the United States with your cars for free.  It didn't used to be that way when we built this country. 

CRAMER: GM couldn't figure it out.  Some companies can.  Boeing did.  Honeywell did.  General Electric did.  Some of these companies figured it out, that you have got to be global.  Intel figured it out.  Microsoft figured it out.  

BUCHANAN: Boeing is building tail sections in China.  And a lot of these companies are outsourcing their manufacturing to the Third World and bringing them back into the United States.  Why else, Jim, would there be two-thirds of our manufacturing workers gone? 

CRAMER: I got to tell you, I think that some of our companies are doing incredibly well, Pat. 

BUCHANAN: I know they're doing well, because I got their stocks.

CRAMER: I really don't want to put the hammer to them to say that they're — I think that Boeing has done a fabulous job for the American worker.  It's a great partnership.  I think Caterpillar has had great partnership.  Some of these companies have been really terrific. 

BUCHANAN: But who killed McDonnell Douglas` air passenger service?  Who killed Lockheed? 

CRAMER: The Europeans did.  But we were able to preserve a great company in Boeing. 

SCARBOROUGH: Jim, I got to ask this, again, let's stay out of the weeds for a second here and talk again on the general issue of what's happening to American jobs, because, as I said, GM isn't the only company that's cutting jobs in Middle America. 

Take a look at this.  Auto parts supplier Delphi proposed slashing more than 20,000 jobs.  Computer company Hewlett-Packard announced its plan to cut more than 15,000 jobs.  Ford, of course, planned to eliminate about 4,000 jobs, as I said before.  And aerospace giant Lockheed Martin says it's going to cut about 1,000 jobs starting in January. 

Isn't it safe to say, Jim, even though there are the Caterpillars of the world and a couple other companies that are doing well, that, when it comes to blue-collar, working-class Americans, again, that built this country, chances are good they are not going to have a job like they had in the past in the next five years? 

CRAMER: I'm not going to disagree with that. 

You know, it's funny.  I don't think I'm that opposite from Pat, in terms of, I know what the foreign competition did.  I wish that we had been able to somehow shut down Airbus, because Airbus is just exactly the opposite of what built America and what made America great. 

I'm just saying that some of our — I just hate to ever say that our — that some of our companies really need the government to help them, because so many of our companies have figured out ways to be able to beat this market.  Now, they are not hiring like they did for blue-collar, but there's still a lot of jobs being created in this country.  Bush is so under water, he can't even talk about it anymore.  But there's still a lot of jobs being created.

BUCHANAN: Joe, look, we have got a $200 billion trade deficit with China?  Why.  They hold their currency down deliberately.  It's Hamiltonian economics.

CRAMER: Our interest rates are low because of the Chinese.)

BUCHANAN: Go ahead, Joe. 

SCARBOROUGH: Pat, if you are the CEO of GM and you see that you are losing money, that you're getting raked out there on the market, don't you have — if you are talking to Wall Street, if really talking to your people, don't you have to fire these people?  Don't you have to cut back?  Don't you have to become more conservative?  Did they have any other choice?

BUCHANAN: Well, first, I don't call it conservative. 

But you are exactly right.  They sacrificed the workers for the benefit of the corporate guys and for benefit the shareholders.  The global economy puts shareholders at war with workers.  It puts guys like me at war economically with me with working folks.  And, Joe, we shouldn't be.  That's not the old Republican politics or economics.

CRAMER: I actually agree with that.  Pat, I agree with that a lot.

SCARBOROUGH: You guys agree with something.

CRAMER: You're right.  The shareholders are the winners and the worker are the losers. 

BUCHANAN: Exactly. 

CRAMER: I can't disagree with that. 

BUCHANAN: Is that right, though? Is that right?

SCARBOROUGH: And so, what do we do about that, Jim, if we're concerned about what's happening in Middle America?  Remember the Reagan Democrats...

CRAMER: You mean like me, yes.

SCARBOROUGH: ... the ones that elected Reagan two times and elected Bill Clinton two times?  Like you.  Those Reagan Democrats that are still in Pittsburgh, that are still in Cleveland, that are still in the heart of what we called the old Rust Belt — there's nothing left to rust anymore — again, they are extinct now, aren't they?

CRAMER: Yes, they really are.

SCARBOROUGH: It's about time to close the curtain.

CRAMER: Right.  These people don't have the Electoral College votes.

SCARBOROUGH: Jim, who betrayed them?  Who betrayed them? 

CRAMER: Who betrayed them?

BUCHANAN: The globalizers did.  The globalizers did, the free traders. 

CRAMER: I think the managements of these companies.  General Motors management has got to get its head out of the sand.

SCARBOROUGH: So, who did it, Jim? 

CRAMER: I think the management of these companies, because the history changed for Ingersoll Rand and for Caterpillar and Deere.  They figured it out.  General Motors never figured it out.  Bethlehem Steel never figured it out.  Sayonara.  And I mean that literally. 

SCARBOROUGH: Take a look at the money that is being made, Pat, by General Motors` top brass.

With bonuses and salaries, CEO Richard Wagoner made $4.6 million last year.  Chief financial officer John Devine pulled in almost $3 million, as did GM chairman Robert Lutz. 

Now, Pat, I don't usually talking about salaries, but while you are firing 30,000 people Thanksgiving week, it's kind of hard to justify that type of money, isn't it?

BUCHANAN: Yes, Joe, it used to be that the top executives made 20 times what their workers do.  It's now in the neighborhood of 400 times, the great big executives, what their workers do.

Joe, I could draft — Hamilton did in four pages a report on manufacturers that we followed for 150 years, made us the greatest, most independent, self-sufficient nation on Earth.  And the free traders have thrown it out for a policy written by a bunch of scribblers who never ran a great country. 

SCARBOROUGH: Jim, what do we do with the CEOs` salaries?  I mean, obviously, it's up to the shareholders.

CRAMER: I can't believe that Devine, that CFO, he's making $3 million?  Wagoner making $4 million?  These guys should be ashamed. 

If I were them, I would be writing checks, individual checks to every single person.  How can they live with themselves?  I don't know how they can live with themselves. 

BUCHANAN: Joe, something is wrong with the board of directors of these companies who are voting those kinds of salaries or tolerating that.  And, frankly, that's not terribly high, given what some of them are making. 

CRAMER:  Well, given what they are losing, they should be giving back $4 million each.

SCARBOROUGH: Jim, what I want to know is, this Thanksgiving week, Jim Cramer, this Thanksgiving week, you have got 30,000 workers, 30,000 families.  You have got all these communities that are going to be ripped up. 

Is there any reason for these blue-collar workers, these working-class men and women, who, let's face it, these are the people that helped us win — these type of people helped us win World War II. 

CRAMER: They built this country.

SCARBOROUGH: Built this country.   Can you give them any reason to believe, right now, that their country has anything for them in the next five, 10 years, that there's a reason to believe that they can find another job out there?
 
CRAMER: No, because we have a government that is from 1848.  It's Dickensian England.  And they're supposed to just go enjoy themselves.  It's like "Oliver Twist."  Hey, it's their own darn fault. 

SCARBOROUGH: Pat Buchanan, I will ask you the same thing.  Any reason to believe? 

BUCHANAN: I will be honest.  Look, I know those guys in Weirton, West Virginia, those steelworkers.  They turned Clinton's picture to the wall and they voted for George Bush in 2000 and 2004.  I bet you go out to places like that now and they will say, we made a mistake again. 

CRAMER: I agree with you, Pat.  I agree with you.

SCARBOROUGH: All right.  Jim Cramer, Pat Buchanan, thanks so much. 

Unfortunately, not a lot of good news out there. 

And, friends, you know, I don't want to overplay this, but the bottom line is, the news that was on the front page of all newspapers across America this morning what General Motors is doing and what Wall Street would say General Motors has to do, it's not a sign of the times.  It really is a milestone for Middle America. 

Catch 'Scarborough Country' each weeknight at 10 p.m. ET

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