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REP. JIM MCDERMOTT (D), WASHINGTON STATE: Great to be back, Ed.
SCHULTZ: You bet. Now your state is going to lose some jobs because of this Hostess liquidation. But what message does it send? You have these CEOs up on Capitol Hill that are telling lawmakers how the economy ought to run, what we ought to be doing with all these tax cuts. And this is the culture that just goes right down on the workers. What do you make of it?
MCDERMOTT: Well, Ed, this is a perfect example of what mismanagement in a company is all about and how venture capitalists never intended to run this business to work. The bakers would not give concessions because they said you have not made improvements for 60 years, and if you`d make improvements, this place would run much better, you`d make much more profit and you could keep the place open.
But the management was more interested in selling it than what they -- they went into bankruptcy twice and came out worse the first time than they were when they went in. And now they come out and they get the judge to give them 1,800,000 dollars a year bonus just to keep the lights on, so they have some place for people to send in the 110 people who want to buy the business.
The brand is good. The product is good. It`s the management that is just really worthless.
SCHULTZ: So they didn`t invest in infrastructure in the company or new technology that would have made them more profitable. And yet the unions are taking the hit publicly saying, well, it`s their fault they put them out of business. What do you make of that?
MCDERMOTT: Well, it`s typical. Always blame the workers. The fact is that if you don`t invest in your business, if you don`t continue to make reinvestment, like the president is talking about for the country --
MCDERMOTT: -- we have to continue to reinvest in the country. Well, if a business doesn`t continue to reinvest in new equipment and modernize, they will ultimately go bankrupt. And this is a perfect example. You`ve got Costco, where they invest back in, they invest in their workers, they invest in the way they market, everything else, and it works. But you have Hostess where they don`t, and it goes down. It`s really sad.
SCHULTZ: It is. It`s really wrong. It`s mismanagement across -- I think there`s a moral component to this, too. Surprising to me that the bankruptcy judge will go along and give these 19 executives, who are probably going to get inherited by the next company to come along -- that they would get 1.8 million dollars in bonuses.
Now, the -- what about the tax incentives? Will that have helped save companies like Hostess? And of course, we have to point out the GOP killed
Invest in America Act.
MCDERMOTT: Well, there are a lot of things we could do with the tax structure that could make this situation much harder for businesses to go into bankruptcy. They go in there and they strip off the benefits. They strip off the pensions. United Airlines has done that to their employees. There`s all kinds of companies who use bankruptcy as a way of taking away benefits from workers. That`s not fair. When I fly home on the United Airlines from Washington, D.C., there are all these flight attendants working at age 60 years old for one reason.
They still have their health care benefits.
MCDERMOTT: Their husbands don`t. That`s a terrible situation in this country.
SCHULTZ: It`s happening in a lot of industries. It`s the corporate culture that is strangling workers in this country and this is a classic example. Still a hot brand, but not hot for the employee. Congressman Jim McDermott, great to have you with us tonight. Thanks.
Coming up, good news for the economy, in spite of the do-nothing
Congress. We will break down the numbers next. It`s rather astonishing.
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