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Auto industry plans major job cuts

Ford Motor Company announced it would cut 30,000 jobs and close 14 plants. MSNBC's Joe Scarborough hosts a debate between Pat Buchanan, former Clinton Labor Secretary Robert Reich and CNBC's Lawrence Kudlow
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The American auto industry is gasping for air.  But is the job market in Middle America also dying?  The Ford Motor Company, which is America‘s second largest automaker and the people that invented the economy for middle-class America, announced a plan to fire up to 30,000 workers and shut down 14 plants, this after losing $1.6 billion last year. 

Joe Scarborough was joined by a distinquished panel to discuss what this blow to middle America means for all of America.  Joining Joe were Lawrence Kudlow, former economic adviser to President Reagan and host of CNBC‘s “Kudlow & Company”, Robert Reich, former labor secretary for President Clinton,  and MSNBC political analyst Pat Buchanan. 

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

JOE SCARBOROUGH, HOST 'SCARBOROUGH COUNTRY': You want to know what people are asking in Middle America?  You know, because they are not asking this in New York.  They ain‘t asking it in Washington, D.C., or L.A.  But, in Middle America, people are asking, is Main Street paying for the sins of Wall Street?  Or is Detroit simply doing what it has to do to survive? 

Let‘s bring in our panel of experts.  With us, we have got Lawrence Kudlow.  He‘s former economic adviser to President Reagan and host of CNBC‘s “Kudlow & Company.”  Also here is Robert Reich.  He‘s a former labor secretary for President Clinton.  And MSNBC political analyst Pat Buchanan. 

Pat, you have been talking about this.  You have been predicting this for 10, 15 years, first GM, now Ford.  Is the working class worker in America a dying breed? 

PAT BUCHANAN, NBC POLITICAL ANALYST:  What is happening, Joe, is we‘re decentralizing this country.

We are sacrificing American factories, American labor, pensions, health benefits, all on the altar of some big myth called the global economy, and which no one really believes, except a lot of American academics and thinkers. 

What you are seeing happen to ford GM and every industry in America is, we‘re exporting our jobs.  What happens is, these folks want to keep Americans as consumers and get rid of Americans as workers.  And that‘s what the global economy is all about.  And that‘s what‘s happening. 

SCARBOROUGH:  All right, Pat, though, I—I read an article by Cramer (ph), who you fought after GM shut down its plant.  And he said the only reason why Ford Motor Company is not performing well, it‘s not because they don‘t make good cars.  But the only reason Ford and GM are failing is because they have got great health care benefits, because they have great pension plans. 

And what he suggested that GM did was declare bankruptcy so they can break their deals with their workers, the pension contracts, so they can break the union contracts, so, basically, they don‘t have to pay these great health care benefits anymore.  Is that what it has come to?  If you want to survive in America, you got to stiff the workers? 

BUCHANAN:  Joe, this is what‘s happening. 

These companies were the greatest welfare states on Earth.  They paid the highest wages.  They had the best benefits, best pensions, best health care.  And then we threw them into dog-eat-dog competition with Japanese and Germans and others, who had far lower wages, none of those benefits, didn‘t have to defend a thing strategically. 

And what happened is, the imports poured into this country.  They have killed these jobs.  They‘re drawing down these industries.  I understand what GM and Ford have got to do.  They have got to get rid of their American workers‘ pensions, health care, all of the rest of it, in order to compete. 

Something is wrong with the people who are creating an economic system that does that.  Our trade laws should be written for the benefit of the American worker and for the standard of living of the American people.  They are not.  They are written for the globalists. 

SCARBOROUGH:  Lawrence Kudlow, there are a lot of people out there that voted for Ronald Reagan twice, that voted for George Bush twice, and believe that Main Street is paying for the sins of Wall Street, that it‘s all about the bottom line, and they are the ones that are getting stiffed because of it. 

LAWRENCE KUDLOW, CO-HOST, “KUDLOW & CRAMER”:  Well, I was wondering how you were going to blame this on Wall Street.  I figured my friend Pat would say what he said.  I was just trying to figure out how you were going to blame Wall Street. 

SCARBOROUGH:  I‘m—hey, buddy, you know what?  You need to get to Kansas. 

KUDLOW:  Yes, I know.

SCARBOROUGH:  And you need to come to Pensacola, Florida.  You need to go to Middle America, because it‘s not me.  I‘m not trying to blame anybody.  I‘m telling you what they are saying in cafes and in greasy spoons across America. 

KUDLOW:  Actually, this is all fiction that you are creating, because the greatest carmakers in the United States in the last 10, 15 years have been Toyota and Honda and European cars from Germany that have moved their factories and their plants to the United States. 

They have hired, I guess we‘re up to almost 100,000 domestic workers, factory workers.  A lot of that is really in Main Street, Joe, since you are from the South.  It‘s all throughout the South in the Carolinas, in Texas, in Alabama, in the border states, in Tennessee and Kentucky.  That‘s where the American car industry, not imports, but actually cars produced here, is being reborn and rejuvenated. 

They are using the same workers.  They train them better.  They manage them better.  They give them good benefits.  They give them good salaries, not maybe as outrageous with General Motors and Ford, which are running a German-Franco welfare state.  But that is where it‘s happening.

KUDLOW:  And, in fact...

BUCHANAN:  Outrageous salaries.

KUDLOW:  Toyota is going to be opening up a plant outside of Detroit.  It‘s the final indignity.  Toyota is going to Detroit. 

SCARBOROUGH:  Robert Reich—hold on.  Robert, have things gotten so bad in American industry that people like Larry Kudlow say the only way Americans can get jobs are to be run by Japanese companies?


But look it.  Larry has a little bit of the truth and Pat has a little bit of the truth.  Let me tell you what the whole real truth is.

First of all, yes, many Americans are working for Japanese companies and some are working for German companies.  And they are not getting paid quite as much as Detroit auto workers were paid.  And that‘s partly because Wall Street demands very short-term profits. 

Larry, you can‘t let Wall Street off the hook here.  Wall Street is in fact demanding short-term performance, not real quality.

REICH:  Wait a minute.  Let me finish.  Larry, I gave you credit. 

REICH:  Hold it.  Hold it.  Hold it. 

KUDLOW:  You are all wet, Bob.  The stocks‘ value of these companies is down 80 percent.

REICH:  I appear on your show.  You let me finish my sentences. 

Now, listen.  The fact of the matter is, they are not getting paid as much as the Detroit auto workers.  A lot of the health care benefits are not as secure.  Jobs are not as secure.  But, look, here‘s where Pat is correct.  Pat is wrong about American auto workers losing ground to foreign auto workers.  That‘s not where the competition is. 

But Pat is correct in the sense that American manufacturing workers, overall, have lost enormous ground.  And a lot of the problem is that, again, companies, manufacturing companies, Ford and others, are not investing long term.  They are not investing in their workers.  They are not investing in worker training.  They‘re not providing real good cars and good products. 

SCARBOROUGH:  Bottom line. Hold it.  Pat, you can—hold on, Pat.  You can.

BUCHANAN:  All right. 

SCARBOROUGH:  But let‘s expand this out also.

BUCHANAN:  Right. 

SCARBOROUGH:  This ain‘t just about the auto industry.  This is very simple. If you are paying American workers $10, $11, $12 an hour, and you can pay somebody in China $3, $4, $5 an hour, I mean, the bottom line is get out of America.  Go to China.

BUCHANAN:  Joe, let me answer that question.

KUDLOW:  This is not coming from China.  This is homegrown. 

SCARBOROUGH:  Larry, Larry, I am expanding this out.  But go ahead, Pat.

BUCHANAN:  We have got a $200 billion trade deficit with China, for exactly the reason you mentioned.  They got labor over there for $2 and $3 an hour.  Ours is $40 an hour.  They are holding down their currency in order to suck out of this country our technology, our jobs, our factories, our plants.  They are bringing them into China. 

REICH:  Pat, wait a minute.  Wait a minute. Don‘t go into China bashing. 

BUCHANAN:  It‘s not China bashing.  I understand what they‘re doing.  I don‘t understand what we are doing, letting it happen.

REICH:  We‘re borrowing $2 million a day, mostly from the Chinese and the Japanese.  Don‘t China bash.  The problem is us.  The problem is our managers.

BUCHANAN:  It is us. The problem is our economic system.

REICH:  The problem is top executives who are making off like they have never made off.  But top executives at Ford and every other company are making bundles, 400 times what the average worker in these companies are making.  And Wall Streeters are laughing all the way to the bank. 

SCARBOROUGH:  That‘s got to be—that‘s fighting words for Larry Kudlow. He has dinner with these people every night.  Larry, defend these CEOs. 

REICH:  And plays golf with them and breakfast and lunch. 

KUDLOW:  Actually, I don‘t play golf.  I play tennis.  But it‘s fair enough.

KUDLOW:  The fact of the matter is, if you don‘t make profits, you can‘t stay in business, whether you are in Japan or Germany or France or the United States.  It‘s called market capitalism.

The problem with Ford and General Motors, they designed poor cars.  They were too expensive.  They lost their market share, not to the people working in China, Pat. 

BUCHANAN:  People working in Japan and Germany.

KUDLOW:  Actually, General Motors sells a ton of cars in China, I might add. 

BUCHANAN:  Larry, globalism is the enemy of patriotism.

KUDLOW:  Hang on a second.  It‘s here, homegrown.  The Japanese moved here.  They are patriotic.  They are hiring people.  And let me say this.  Joe Scarborough, you should be ashamed of yourself for whipping up this hysteria, because the unemployment rate in the United States is 4.9 percent.  We‘re creating 175,000 new jobs. We just had the third straight year of two million jobs.  And it‘s not like we‘re being hollowed out.  This is the silliest argument.  It is unsubstantiated by Pat. 

SCARBOROUGH:  You attacked me there, Larry.

REICH:  Joe, let me say something here.

SCARBOROUGH:  Not until I defend myself.  Hold on. Larry Kudlow, your hero and my hero, Ronald Reagan, said what?  A recession is when your next-door neighbor lost his job.  A depression is when you lost your job. 

SCARBOROUGH:  Don‘t tell these 30,000 families that this isn‘t a serious blow.

KUDLOW:  That‘s the silliest argument.  The unemployment rate today is lower than it ever was during the Reagan years, Joe Scarborough.

SCARBOROUGH:  OK.  So, Ronald Reagan is silly.

KUDLOW:  The level of prosperity is—continues to...

REICH:  You guys are talking right past each other.

KUDLOW:  And that is just untrue.

REICH:  You guys are not listening to each other.

SCARBOROUGH:  No, no, no.  Hold on a second. Robert is about to be condescending again. Go ahead, Robert.

REICH:  No, I‘m not condescending at all.  I‘m just telling it like it is.  I mean, the fact of the matter is...

SCARBOROUGH:  Yes.  You‘re just telling us why you‘re right and everybody else is wrong.

REICH:  Wait a minute.  Wait a minute.  No, no, no, no, no.  Look, I‘m saying, Joe, you are right in one very important respect.  I was secretary of labor.  I talked to these people.  I know and understand and felt their pain.  I was there.  In fact, this stuff has gone on for a very long time.  Manufacturing workers have lost their jobs.

Or, if they haven‘t lost their jobs—and, look, Larry, this is where you are wrong.  They are working, but they are working at lower wages.  They don‘t have health benefits.  They don‘t have the kind of pension benefits they had before.  Many of them are working in the local service economy, retail, restaurant, hotel, hospital jobs.  They‘re not working in the old manufacturing jobs. 

The fact that the unemployment rate is low doesn‘t tell you much about the quality of the jobs people are getting.  And they are getting lousy jobs. 

SCARBOROUGH:  All right. 

REICH:  And, so, Pat, to the extent, is right.  But, Pat, you are wrong to blame globalization.  Technology is creating a lot of redundancy.  I went to a factory not too long ago where there were 10 workers in the entire factory.  They were technicians sitting behind consoles watching robots and computerized machine tools. 

SCARBOROUGH:  All right. 

REICH:  It‘s not just globalization.  It‘s technology and failure of companies to really invest for the long term. 

SCARBOROUGH:  I appreciate it, Robert. Appreciate it, Pat Buchanan. And, Lawrence Kudlow, I‘m going to make your day.  Here are a couple facts about the economy.

We have got, right now, a 4.9 percent unemployment rate.  That‘s the lowest it‘s been in about 30 years.  Consumer confidence is up for the third month in a row.  Unemployment at a five-year low, actually.  And wages are up.  A lot of economic signs up.  But when it comes to manufacturing, when it comes to the long-term health of this economy, a lot of us in Middle America are very concerned, very troubled, maybe not on Wall Street, maybe not with the people that Kudlow plays tennis with. 

But I can tell you, here in Pensacola, in Saint Louis, in Kansas City, in Phoenix, in Middle America, we are scared.