Unemployment Could Overshadow Economic Stimulus

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The U.S. unemployment rate dipped to 10-percent in November after a two-year climb to heights unseen in almost three decades. Still, the decline is only a small improvement as some still wait to reap the benefits of President Obama's economic stimulus package. Stephen Henderson, of The Detroit Free Press, explains why he thinks the U.S. job market could take years to recover from the economic downturn and why the stimulus package may not offer a big enough boost.

MICHEL MARTIN, host:

I'm Michel Martin, and this is TELL ME MORE from NPR News.

Coming up, just in time for your holiday meal planning, can you find food that is produced humanely? And can you afford it, if you do? It's the first in our series on conscientious shopping and that is a little later in the program.

But first, more on unemployment. The president is expected to talk about it again today. The president hosted a summit on jobs creation last week just before new figures were released showing the jobless rate dropped to 10 percent in November from 10.2 percent in October. It was a rare bit of good news in the dismal job picture Americans have been experiencing since the recession began, leaving some to wonder if the president's economic stimulus package has worked at all. Indeed, leading some to wonder whether the president's men and women know how bad things are for many Americans.

Stephen Henderson is editor of the Detroit Free Press editorial page, is one of those who is wondering. He wrote a recent column saying that America might be doomed to high unemployment rates for a very long time without a massive government jobs program. We called him to talk more about it. Stephen, welcome, thank you for joining us.

Mr. STEPHEN HENDERSON (Editorial Page Editor, Detroit Free Press): Thank you for having me.

MARTIN: You said that whatever you think of Barack Obama's economic stimulus package, you have to acknowledge by now that it just isn't creating the jobs we need to pull out of the recession. And I should mention you have reason to know, Michigan has one of the highest unemployment rates in the country. Talk more about how that's affecting your community.

Mr. HENDERSON: Well, on top of the national economic problems that we're having, here in Michigan, we have problems of our own related to the collapse of our most significant industry, the auto industry. We have two of the three auto companies last year file bankruptcy. They are in the middle of, I think, a rather pivotal changeover that is costing lot of people jobs, not only in those companies but also in the many, many other companies that depend on those companies for their own economic survival. So, things here in Michigan have been bleak longer than they have been bleak nationally and they are - our problems are deeper.

MARTIN: I hear the anxiety not just in your voice but in your words. I mean, you write that this downturn is crushing us. And the suffering is playing out in horrific ways. Homelessness and hunger in a prevalence that is just alien and barbaric in this nation. Tough words...

Mr. HENDERSON: Yeah, I think we're seeing things here in Michigan that we have never seen before. At least, I have never seen and I've lived here most of my life. There are people who are losing everything. If you drive up and down the streets in Detroit or in our suburbs, you can just see the suffering in terms of just the housing market and the collapse there, the number of foreclosed houses, the number of places that have just gone abandoned. You know, it is a dark time for us here and I think those of us who are here are hopeful that maybe there is light at the end of the tunnel but right now�

MARTIN: But why do you think that a government jobs program is that light at the end of the tunnel? You write that most economists agree that tax cutting is a less efficient means of stimulus and job creation than government spending. I would argue with you. I would argue that they very much do not agree about that. Some people argue that tax cuts are by definition more efficient because individual employers can apply them to hire people and that if you funnel money through the government, you have to let contracts, you have to, you know, I mean, it's almost a joke how long it takes to get a job with the government. So why do you think that a government jobs program is the way to go?

Mr. HENDERSON: Well, I think if you look at what - I think Mark Zandi is a great example of an economist who is a pretty conservative economist, I mean, he was John McCain's financial advisor. And, you know, he and other economists have sort of agreed on a list of bang-for-your-buck types of stimulus programs. And tax cuts are nowhere near the top of that list. And I guess my point is not that I'm not in favor of taxes. I'm in favor of tax cuts like anybody would be. The question is, how can you create jobs the fastest and the best? In the best of times in this country, 1950 to 1951 when we created probably more jobs than at any point in history, the private sector was only able to create a fraction of the jobs that we need to get back to the level that we had pre-recession now just a few years ago.

It's just not going to be able to do enough on its own. It's not that I think -I guess it's less of an ideological question for me than it is a practical one. You know, I'd love to say that if we could cut the corporate tax rate to zero, we could get back to, you know, the employment levels we enjoyed before the recession in a couple of years. There is nothing that suggests that that's so.

MARTIN: What about the deficit?

Mr. HENDERSON: Well, I mean, deficit spending is part of a recession. I mean, that's also a pretty accepted economic theory, that when the economy turns sour the government sometimes has to step in and fill the role. The flip side of that, of course, is that when the economy recovers you've got to have the government get re-disciplined and attack the deficit and take it down.

MARTIN: What do you say to those who say that, look, deficit spending is borrowing from of your children's future? And how do you square that with what you see in front of you now?

Mr. HENDERSON: Well, I think - that's something to consider but at the same time not spending that money now is inflicting unbelievable suffering on people who don't have a choice. I mean, I would invite anybody who believes that to come here to Michigan or come here to Detroit and say that to the people who haven't been to work in two years, the people who are losing their homes, the people who are looking around with nowhere to go and no relief in sight. I don't think that's any more palatable a solution than the deficit.

MARTIN: And finally, Stephen, very briefly, do you believe that policymakers in Washington, indeed the rest of the country are hearing you? Do you think that they see what you see?

Mr. HENDERSON: I think they are beginning to. At the Free Press we did an interview with the president last week about jobs and I think he really does understand how deep the hurt is and how desperate the situation is. Whether they're going to do something about it I think is another question.

MARTIN: Stephen Henderson is the editor of the Detroit Free Press editorial page. If you want to read the piece that we're talking about, we'll have a link on our website. Just go to npr.org, click on programs, then on TELL ME MORE. Stephen Henderson joined us from NPR member station WDET in Detroit. Stephen, thank you so much for speaking with us.

Mr. HENDERSON: Thank you for having me.

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