The Hill’s interview with Commerce Secretary Gary Locke

The Hill: Did they have any specific requests for you today?

Commerce
Secretary Locke: They really wanted more flexibility from the federal
government on programs like health care, Medicaid, and rules and
regulations. And of course, having been a former governor, I understand
exactly how they feel, and a lot of the issues that they’ve raised have
long been on the top priority list of the Governor’s Association for
many, many years.

The Hill: How concerned are you about the budget battles that are
starting to develop in some states? Obviously Wisconsin has been
dominating the news… how are concerned are you about that?

Commerce
Secretary Locke: Well, all the states are required, either by
constitution or by statute, to have balanced budgets – they’re not able
to print money. So they have to focus on establishing priorities. But
all through the years, the employees (state employees, teachers,
firefighters, police officers) they’ve all been making sacrifices and
making concessions, the way the private sector has been doing, the way
most Americans are doing.

So I think it’s important that as the states
go through these budget problems (and each state is very, very
different – their economies are very different, their rate of
recoveries are very different, their industrial sectors are very
different. Some are agricultural, some are manufacturing, some are
high-tech, some are more export-dependent than others) – they have to
really look at the long-term prognosis and what they’re going to have
to do in order to balance the budgets but also create jobs.

But at the
same time, as they make these very painful cuts (and they have
incredibly painful choices), they cannot forget the future. They know
that their economic recovery depends on a highly educated workforce. So
what are they doing about supporting their public colleges and
universities? What are they doing about high academic standards? And of
course, what are they doing to really preserve the safety net for the
most vulnerable populations, whether children, or the elderly, and the
very, very poor.

The Hill: One of the things you deal with a lot is trade. The
European Union looks like it’s about to implement its trade agreement
with South Korea in July. Do you think Congress and the Administration
will be able to get the U.S.-South Korea trade act done this year?

Commerce Secretary Locke: Well, I’m very hopeful they will, because
the president has put together, I think, a better deal than what they
walked away from this past November at the G-20 meeting in Korea. And
of course, we believe the proposal is a far cry in terms of being a big
improvement over what the Bush Administration negotiated. I mean, when
you’re able to get Ford and the auto workers, and many of the labor
unions, coming out in support of this agreement, in which so many of
the bearers U.S. companies now face in Korea will either be
substantially reduced or outright eliminated – that really means a lot
of jobs for the people here at home in America.

In fact, the U.S.-Korea
Free Trade Agreement is estimated to provide $11 billion in additional
sales of goods and services over the next several years supporting some
70,000 jobs. And of course, as the service sector is opened up in
Korea, that will mean even more job opportunities here in the United
States.

So it’s really important that we try to get this ratified as
quickly as possible once it’s submitted to the Congress. I understand
that they’re working on the final details. When exactly it will be
transmitted to the Congress, you’ll have to ask Ambassador Kirk of the
U.S. Trade Representative’s Office. But we’re very optimistic that
there’s a lot of support for this trade agreement, which really reduces
the barriers that U.S. companies now face in selling their great
American-made products and services to Korea.

The Hill: What about Colombia and Panama? Is the president as optimistic about those as you are about Korea?

Commerce
Secretary Locke: Well, the president has instructed Ambassador Kirk to
step up the pace of negotiations on that, basically energize the
discussions, and so we’re hopeful – we’re keeping our fingers crossed –
but again, the timetable really depends on how quickly we’re able to
get the U.S. and the Colombians to resolve some of these remaining
issues. And again, that’s an area for Ambassador Kirk.

The Hill: How would you assess the relationship between business
and the Administration? There’s been a lot of debate back and forth.
The tax cut package was passed, the South Korea trade agreement is
pending, and a couple others we’ve just discussed – how would you
assess the business-Administration relationship?

Commerce Secretary Locke: Well, as the president said even more
than a year ago, we need the private sector to succeed, because if the
private sector succeeds, America succeeds. Because it’s not the
government that produces jobs, it’s the private sector. And if you look
at the record of what the Administration has done in the last several
years, it was to stabilize the financial system to keep it from the
utter meltdown that would have surely precipitated another Great
Depression. And it was to stabilize the financial markets to keep GM
and Chrysler going, because if they had gone into bankruptcy, that
would have meant millions of more people out of work. And it would have
made the recovery so much more difficult.

But if you actually look at
what the Administration has done: 17 different tax relief measures to
benefit businesses large and small, including the latest one, which was
passed in December on a bipartisan basis. It did more than just extend
the Bush era tax cuts, but actually it provided additional tax dollars,
especially for middle-income families. A two percentage point reduction
in the payroll tax for a family making $50,000 – that’s an extra $1,000
in their pockets. And of course, the tax measures that benefit
businesses large and small, allowing them to expense off, right off 100
percent of their purchases of equipment and machinery. And they can
deduct that, expense that off all in one year if it’s purchased in
2011. And economists all across the country are saying that’s going to
significantly increase the economic recovery and the GDP of our
country, and significantly lower faster than normal the unemployment
rate in the United States. So these are all measures designed to help
the business community grow and prosper, to be more competitive, and
ultimately hire more people.

The Hill: Do you think businesses are doing their part?

Commerce
Secretary Locke: Well, we’re seeing a lot of great interest by the
business community large and small, taking advantage of, for instance,
the expensing provisions. But again, the president has called for,
initiated, and signed into law 17 different proposals to lower the tax
burden on businesses, that will help them be more competitive around
the world and here at home, and leading to more jobs.

The Hill: There’s a lot of debate about the budget here on Capitol
Hill this week trying to avoid a government shutdown. How do you think
a government shutdown would impact the economy?

Commerce
Secretary Locke: Well, that’s something that nobody wants. I’m pleased
to hear the reports from the Hill and the Administration, reaching a
compromise and making good progress on averting a shutdown. And so
that’s what we really need to focus on. Let’s build on these bipartisan
efforts to restore the economy, to keep the momentum going, and to
really focus on job creation.

The Hill: What do you think of the impact of the cuts that are
being slated by the Congress would have on the economy and the
impressions of the economy abroad?

Commerce Secretary Locke:
Well, even as Goldman Sachs and other economists have indicated, we
have to be very, very careful. Yes, we need to get our fiscal house in
order, yes, we need to reduce the deficit, but at the same time, we
can’t embark on measures that will actually turn the recovery around or
halt the recovery, and throw us back into stagnation or actually
greater unemployment. And we need to make sure we’re focusing on things
that don’t make sense anymore that are not efficient or effective that
can be eliminated. But all the economists agree that yes, we need to
have a plan, a very tough, realistic plan, on reducing our deficits
over the next several years. But we don’t need to do it all at once.
And indeed, the discussion on the Hill is focusing on a very small
percentage of the overall U.S. budget. The discretionary, non-defense
spending (discretionary domestic spending). That really just represents
a small part of the entire budget. The real issues we need to be
focusing on, as the president has indicated, is really in Medicare and
Medicaid, and to some extent, Social Security.

The Hill: Final question for you: The areas of common agreement
between the Administration and Republicans on improving the economy –
can you be specific on some of those, please?

Commerce Secretary
Locke: Well obviously, one of the areas in which we all agree on and
which is the purview of the Commerce Department is really increasing
exports. The more American companies are able to sell around the world,
the more they produce. And the more they produce, the more workers they
need, and that’s going to result in good-paying jobs for the people of
America, badly needed jobs with the millions of people that are still
out of work or wanting to work more hours.

And indeed, exports are up.
The president’s initiative on the National Export Initiative, which is
to double U.S. exports over the next five years and supporting millions
of new jobs in the process, is on track. Just this last year, in 2010,
we had an increase of exports by roughly 17 percent. Manufactured
goods, exports were up 22 percent, and in fact, exports to China were
up 34 percent.

So we’re well on our way to meeting the president’s goal
of doubling U.S. exports over the next five years supporting millions
of new jobs. And indeed, the exports in 2010 were responsible for half
the economic growth in America. And we know that so much of what we
make as Americans, and produce and provide as Americans, is highly
valued and in great demand all around the world.

What we need to do, at
the federal government level – working with the governors, the mayors,
the economic development associations across the country – is to
inform. Especially small [and] medium-sized enterprises and companies
of the incredible services, much of it for free, offered by the federal
government to help those U.S. companies sell their goods and services
around the world, creating jobs here at home.

The Hill: Secretary Locke, thank you very much.