December 14, 2011 / 10:40 PM / 6 years ago

Ex-Obama aide: gridlock holds U.S. manufacturing "hostage"

NEW YORK (Reuters) - Political gridlock in Washington is holding America’s manufacturers “hostage” even after the nation in recent years developed a better appreciation for the sector, President Obama’s former manufacturing czar said.

Ron Bloom, speaking to Reuters at the Global Manufacturing & Transportation Summit, said Wednesday there are “some awfully obvious things to do” to address a litany of issues hindering American manufacturing -- from a widespread worker skills gap to uncertainty in tax incentives. “But the political system is jammed up and preventing us from doing the obvious things.”

Bloom, assistant to President Obama on manufacturing until August, said legislators face several needs that should be embraced on both sides of the aisle -- including enactment of a permanent R&D tax credit and funding for additional infrastructure development. But “we can’t get them out of the blocks ... that to me is a discouraging moment.”

During his time in the Obama administration, Bloom was a key architect of the bailout of General Motors Co (GM.N) and Chrysler LLC FIA.ML and then moved on to attempt to tackle bigger manufacturing issues. Prior to joining the administration, Bloom was a labor strategist who helped unions play a role in the restructuring of America’s steel industry.

Bloom is currently working as a consultant to United States Postal Service workers, who are facing big cuts under that agency’s plans for restructuring. He declined to speak publicly on that matter.

While the Obama administration and most Washington policy-makers have made progress when it comes to recognizing manufacturing as a bedrock economic activity, he said, there are still miles to go to fulfill the country’s industrial potential.

“I am in favor of trying to say that we need to recognize how severe the problems are. I think we face an inflection point in American history.”

Bloom said the biggest mistake critics of gridlock in Washington can make is to swear off government intervention when it comes helping the manufacturing sector. He said there are recent examples where government and the private sector successfully worked together for a pro-business solution.

    The auto bailout -- funded by tens of billions dollars of taxpayer money -- “was a successful intervention (and) minimally invasive,” he said. Bloom said legislators and regulators acted “aggressively but respectfully” of private markets.

    ”When you broadly discredit government, you are damaging the political environment,“ Bloom said. ”There are problems that private markets don’t fix.

    Bloom referenced the public’s criticism of loans to Solyndra LLC -- the bankrupt solar panel maker that owes $500 million to the U.S. government -- as being shortsighted when it are used to discredit government intervention.

    “People love the Solyndra case,” he said. “Obviously in hindsight it was not a brilliant investment, (but) the dilemma is when you find one bad investment and you ignore that the portfolio is performing as expected.”

    Bloom said the government appropriated a loss factor for Department of Energy investments and other bets that did not pay off -- “just as a bank would.”

    Reporting by John D. Stoll in New York; Editing by Steve Orlofsky

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