Measuring austerity vs. growth in America

>>> this morning, my question -- if you are not catholic why should you care who is pope? plus, my one-on-one interview with white house senior adviser valerie jarrett. and the case for $9 an hour. but first for those who are keeping track as you can tell by our cute lilt bug, it is the mhp's first anniversary. what a year it has been.

>>> good morning, i'm melissa harris-perry. in 1919 , a young army colonel, along with hundreds of his fellow soldiers boarded a convoy to embark on the first ever u.s. army coast-to-coast motor transport train averaging a mere 5 miles per hour, it took the caravan two months to reach san francisco , driving along the local lanes and the state roads, but they were in such disrepair that the soldiers had to fix 88 bridges themselves just to complete the journey. years later, that same young soldier, dwight d. eisenhower , found himself again on the road, but this time as a general commanding the allied forces in world war ii . along the pristine freshly built roads of the german autobon. troops and eisenhower took full advantage of the roads built by nazi germany and using them to defeat the axis forces , and the super highway left a lasting impression on the general and one that would grow into the grand plan once he became president. even before the election, he envisioned a national highway system 40 miles long that would be quote as necessary to defense as it is to the national economy and the personal safety . as president, eisenhower set out to gather national support complete with a made-for-tv style campaign ad .

>> in this century, america has become a nation on wheels. we ride on wheels to work, to shop, to play, to go about any place we want to go. we depend on wheels to bring us the food we eat and the clothes we wear and the things that we use, but when we depend on wheels, we depend also on highways.

>> but of course, as all things in washington tend to go, the 34th president struggled with the lack of consensus. governors, democrat and republican, fought eisenhower e on with what they called his plan for the biggest federal aid programs, calling the republican president to task for running away from his staunch opposition to federal encroachment on state sovereignty . it was in fact the democratic senator from virginia, harry byrd , who tried to block eisenhower 's plan, and byrd was known as a pay as you go man, and he had a wild hatred for debt. after a lot of coalition building president dwightize ize en eisenhow eisenhower 's dream became a reality with an allocation of $41 billion to build miles of road across the country. eisenhower found himself leading an economy that had dipped into the worst recession since the great depression, and boy, he was happy to have the federal highways project well under way.

>> this is not a dream. it is not a visionary project for your consideration. work is going on right now. and it will go on more rapidly and more effectively each month passing until the job has been completed.

>> by the 1960s , an estimated 1 in 7 americans was employed through the automobile industry , and what was supposed to be a 13-year project had extended to create almost 43,000 miles of standardized roads, and 54,666 bridges cross cutting 1.6 million acres of land. finally being completed in 1991 . this week, echoing president eisenhower 's vision of a truly united states , our current president called for a reinvestment in the nation's crumbling infrastructure.

>> america's energy sector is just one part of the aging infrastructure badly in need of repair. ask any ceo where they'd rather locate and hire, a country with the deteriorating roads and bridges or one with high speed rail and internet. so, tonight, i propose a "fix it first" program to put people to work as soon as possible on the most urgent repairs like the nearly 60,000 structurally deficient bridges across the country.

>> this the most e cent recession, 260 million construction jobs were lost, and our unemployment is stuck at 8.7%, and with the sequestration looming, the budget office released a project sthaun the gdp will tighten because of the mandates of the sequestration. and in fact, the cbo found that the growth would improve by 1.1% if it weren't for the planned cuts. perhaps heed the advice of an economist before president obama orren before president eisenhower e's time, john maynard keyes who warned that the boom and not the slump is the right time for austerity. with me is economist lawrence michelle, professor of the poll policy institute , and dorn lord at columbia university and a fellow at the roosevelt institute, and cnbc contributor ari, and also joined by former senior adviser by rick perry . i have a table full of guys, and this never happens on the mhp show, but i am fascinated by this idea that it is growth and in fact, a courageous growth experiment that may be what we need in our lean times. lawrence, talk to me about the sequester, any reason to cut right now?

>> well, i agree, melissa, that the priority that this nation is to lower the unemployment, because right now it is higher than worst moments of the last two recession, and according to the cbo, according to the end of 2015 , the unemployment rate will be one percentage less. when it is that much at the national level we know it is double that for the blacks and putting downward pressure on the wages for nidle class workers and the low-wage workers and we know that incomes have fallen already by 9% in this recession. still, unlikely to recover and we maintain unemployment at the levels we have. to me, the absolute priority and i throw my weight in there with lord cain's, ekeynes, and this is a priority that we can't not do. we calculated the sequestration based on this year's jobs.

>> and ari, it feels like the deficit reduction that we had during the clinton years, and you have high borrowing rates and that is not the circumstances that we are finding ourselves in. is there any reason to have an angst about the deficit right now?

>> no! one of the central republican arguments early on is that if we do this the interest rates will go up and that is the problem, but that is not the case with the drama going down in washington . that is why you have to take a step back and what the republicans have done well and obviously a long term proposition as you showed with byrd demonizing debt decades ago is this notion that debt is a bad word . i remember when liberal was a bad word in washington and those days have finally ended as you heard "the new york times" headline of the president's liberal inaugural address and no shame in that.

>> damion is spitting liberal.

>> and the idea that debt is a bad thing is insane. if you look at the bond market , it is a place where people buy and sell debt. if you look at mark zuckerburg is who is successful, he just got a mortgage which is a 30-year debt proposition, because whether you are a business, a household or a government, especially when you are a government, you want to take the proposition that you need to spend money to do things, and later, often make it back at a higher yield. that is the whole concept. so this idea that debt is a bad thing is wrong.

>> and now, as you listened to ari say that debt is not a bad word --

>> he is my friend and we just disagreed.

>> well, the roads project was earth-moving and more than what we did in the panama canal , and moving billions of tons of earth, but it goes on until 1991 , and this is the we do enormous things, and good for the country to have a recognition of the economic and security aspects of it. for the republican party for the all of the moments now, they used to be a party of the big things and now it is a party of no, and party of making all of the big cuts and not do something on this, and can you guys regain something on that? is.

>> well, back to the republican president of eisenhower e wwho got the country behind him, and also a defense issue to move sections from one part of the country to another. and this is a bold thing and general and won a war and everything was set up for him. i disagree with the debt. because that is what is worrying most of my republican friends. the amount of debt that we are piling up.

>> but it did not bother you when you were racking it up?

>> yes, we were kicked out of it because of it and then kicked back in because of spending. and the republicans can't say no, but they have to offer solutions. i agree with newt gingrich , because you can't say no, no, no and looking at bill clinton and coming together to solve big problem problems.

>> well, i heard you say that create a deficit and the new spend spending, but that is the myth, right? this is not some new spending, dorian, that is under president obama , because that is a partisan lie, because it does not come from.

>> no, it comes from are the great recession and comes from the economy falling dramatically and that is where the debt came from in the last three years and you add in a $4 trillion war that we didn't need to fight, and tax cuts that no republican was against when it came to debt, how much the tax cuts would cost and how much the war would cost, and the silence was deafening for years and years, and years. but we have an empirical example of what is happening in terms of the austerity and that is europe. if you look at the countries in the eurozone, they have administered austerity measures and for the first time last year they experienced no growth. we see the youth unemployment rates of 30%, 40%, and 60% in those countries. there's the example if you'd like. or we can continue down the road of much more money in investments and infrastructure and education.

>> i have to say even though we are in the lenten season of sacrifice, this is a time for growing and i will say fat tuesday, mardi gras on this one. when we come back, i want to talk about how senator elizabeth warren took the whole country to econ 101 this week.