Jobless Rate Prompts Calls For More Stimulus Funds
RENEE MONTAGNE, host:
This is MORNING EDITION from NPR News. Good morning. I'm Renee Montagne.
STEVE INSKEEP, host:
And I'm Steve Inskeep.
Here's the dilemma for President Obama. Critics say his economic stimulus is not doing enough. But it is not clear if the lawmakers want the president to do more.
MONTAGNE: Yesterday, Vice President Joe Biden said everyone, quote, "misread how bad the economy was." President Obama quickly corrected that and said he wouldn't do anything differently. The administration has backed away from suggestions for a second big economic stimulus plan, but unemployment is still rising and political pressure is rising with it. In a moment, we'll talk with a Democratic senator from the economically troubled state of Ohio. We begin with David Wessel of The Wall Street Journal. Good morning.
Mr. DAVID WESSEL (Wall Street Journal): Good morning, Renee.
MONTAGNE: Does a 9.5 percent unemployment rate means the stimulus is not working?
Mr. WESSEL: No, but it's hard to declare it a rousing success. Most economists think things would have been even worse without the stimulus, but a lot of the early tax cuts have been saved by people rather than spent. That's good for them, doesn't help the economy. And a lot of the spending in the bill was so stretched out that it hasn't the economy yet, so the benefits haven't been felt.
MONTAGNE: And the case for more stimulus?
Mr. WESSEL: Well, there's still plenty of this first stimulus in the pipeline, but the recession looks much worse than it was when the Obama team arrived in Washington, especially in the job market. We see now that the stock market is weakening. State governments are cutting back, and that's offsetting the efforts of the federal government. The typical economist forecast is for very little improvement in the job market for another year or 18 months. There's lots of unused capacity out there, empty shopping centers, unused factories.
So the economic case is that we ought to start laying the groundwork now for stimulus that would hit the economy sometime next year when the current one starts to wear off, perhaps something aimed specifically at bolstering employment because the economy looks like it's going to be weak for a very long time.
MONTAGNE: But you just said that there's a lot of money is still left in the stimulus pipeline - I mean, how does that figure into the thinking? If there's money there, spend it and then see what happens, some people would say.
Mr. WESSEL: Absolutely. That's what makes this kind of a little bit hard to figure out. You don't want to do more stimulus if the stimulus you did still hasn't begun to help the patient. But there is some thinking that even what's in the pipeline isn't enough to get the economy close to what most economists would consider full employment, which is an unemployment rate closer to five percent than the 9.5 percent we have now.
MONTAGNE: Now, the administration has backed away at the moment for - from talk of a second big economic stimulus package. But what are the chances that such a thing would be proposed and the Congress would pass it?
Mr. WESSEL: I think there is a very little chance that it'll be proposed now or passed now. There is a lot of reluctance. One is what we've been talking about. There's a lot in the pipeline, you need patience. Secondly, there's a lot more talk now about the budget deficit. The more the government spends now, the more it borrows, the more we'll have to pay it back later. If the markets or our foreign lenders get uneasy about the amount that we're borrowing, they could push up interest rates and that could hurt the economy at the same time that stimulus was supposed to be helping with it.
And also I think there's getting to be kind of a bad political odor about stimulus. Washington Post/ABC News poll showed that fewer people think the stimulus package has succeeded. That's makes it hard for Congress to do more. And it begins to look like it was a big spending program doing a lot of other things besides stimulating the economy. So I think right now the politicians are saying let's wait, even though some economists are saying don't wait.
MONTAGNE: David, thanks very much.
Mr. WESSEL: A pleasure.
MONTAGNE: David Wessel is economics editor at The Wall Street Journal.