Finding Hope For Jobs In New Economic Numbers
AUDIE CORNISH, host:
This is WEEKEND EDITION from NPR News. Im Audie Cornish.
President Barack Obama has renewed his pledge this morning to make job creation his number one focus in 2010. He again outlined his job creation package, which includes tax credits and eliminating all capital gains taxes on small business investment. But he stressed that economic recovery is not possible without trimming a record budget deficit.
President BARACK OBAMA: As we work to create jobs, it is critical that we rein in the budget deficits weve been accumulating for far too long, deficits that wont just burden our children and grandchildren but could damage our markets, drive up our interest rates and jeopardize our recovery right now.
CORNISH: Thats the president in his weekly radio and Internet address. Mr. Obama is set to release his budget proposal for 2011 on Monday and says it will include a three year spending freeze on some domestic programs. That wont include cuts to Medicare, Medicaid or Social Security. The president also pledged to create a panel of Democrats and Republicans to come up with ideas to reduce the deficit. And he praised the Senate for restoring pay-as-you-go rules that he says led to the surplus is in the 1990s.
President OBAMA: But then we did away with PAYGO and we ended the next decade with a $1.3 trillion deficit. Reinstating this law will help us get back on track, ensuring that every time we spend, we find somewhere else to cut.
CORNISH: Were joined now by New York Times economic columnist David Leonhardt, here in the studio. Hello, David.
Mr. DAVID LEONHARDT (Economic Columnist, New York Times): Good morning, Audie.
CORNISH: So, what are these latest economic numbers mean? How would you characterize the countrys economy?
Mr. LEONHARDT: The economy is clearly in recovery now, which is good news. And these numbers we got this week were a little bit better than we expected. But the thing to keep in mind is there such a long way to go. The bust from financial crises wreak terrible havoc on an economy, leave huge number of people out of work. And so were going to have to be growing at a long time, at a pretty good clip, to get everyone who is out of work employed again.
CORNISH: And President Obama says that he is actually made job creation the top priority of his administration. But is this jobs bill that they have been describing a sequel to the stimulus package we saw last year?
Mr. LEONHARDT: It really is a sequel. This notion that they have made jobs the top priority is in part description of policy. But its also in large part political. They want to seem really engaged on the economy. The stimulus bill that they passed last year has actually had an enormous impact. If you look at private estimates of how many jobs it saved or created, and its hard to distinguish between those two, its somewhere up 1.5, 1.8 million. Its a huge number of jobs.
But its still not that popular, because its not that easy to go out and say it saved this job and it saved that job and created this job. And so they have decided that stimulus is something of a dirty word, and they want to call it a jobs bill instead of a stimulus bill. Really they have the same idea behind them. This is a much smaller bill than the first one. They hope that they can target it just a little bit better, so that even though it will be smaller, it will have pretty good bang for the buck, but we dont know yet.
CORNISH: So it sounds like it's still a tough sell.
Mr. LEONHARDT: It is still a tough sell, and its kind of funny. Stimulus works, I mean we saw in the Depression, when the Hoover administration didnt stimulate the economy, it didnt work. And typically when economies are stimulated, it works, but its not that easy a sell politically.
CORNISH: At the same time, the president is calling for a spending freeze, but many economists point out that jumpstarting the economy requires spending billions of dollars. How to balance that?
Mr. LEONHARDT: Yeah, this spending freeze is pretty controversial among economists. Its not again, it looks like its in part really political here, that they want to seem like theyre focused on the deficit. What we need now is we need more spending in the short term to get people employed again. And then we really need deficit reduction in the long term.
The most sensible way to do that is to have health reform that really reduces the costs of Medicare, which is the big long-term problem here. The bill that stalled would do some of it. It would actually make some progress. It wouldnt go as far as we need to, but because of the politics of that, what they want to do is they want to seem like theyre engaged on the deficit with this notion of a spending freeze, but they say thats for 2011. And in 2010 theyre going to try to keep stimulating the economy. Its a little bit of a tricky two step
CORNISH: Yeah, theyre trying to have both at the same time, it sounds like.
Mr. LEONHARDT: Yeah.
CORNISH: Now, this week after much debate, the Senate actually confirmed Federal Reserve Chairman Ben Bernanke for another four-year term. And at the same time Treasury Secretary Tim Geithner endured a tough round of Congressional hearings. I mean whats your read in all the criticisms that theyve been facing?
Mr. LEONHARDT: There are two types of criticisms about Bernanke and Geithner. The first has to do with what they did during the crisis. And I think a lot of that criticism is misplaced. Im not saying that their record is perfect by any means. I think some of the criticism this week about Geithner, that maybe they should have been tougher on the banks, was fair.
But by and large, when you have a financial crisis, you need to come to the rescue of the financial industry. Its just the way it works. And so this notion that they bailed out these banks and that was a mistake I think is mostly misplaced. The criticism that they didnt do a very good job preventing this crisis I think is totally fair. If you go back and look at some of the things that particularly Bernanke said in 2005 and 2006, they look really bad in retrospect.
He didnt simply say its hard to know whether we had a bubble. He said we dont have a housing bubble. And so I think Bernanke and to some extent Geithners performance was not that impressive in 2005 and 2006. In fact, it was unimpressive. But in 2007 and 2008 especially, it was pretty close to heroic. I mean they really brought this economy back from the brink, and its sort of hard to parse through those two different things when you see everything going up on the Hill.
CORNISH: So senators are sort of half right?
Mr. LEONHARDT: Senators are half right, and I actually think their emphasis is in the wrong place. Its a lot easier to pound the table about bailouts than it is to sort of have a nuanced discussion of what part of this bubble they should have caught in time.
CORNISH: David Leonhardt is an economics columnist for the New York Times. He joined me here in the studio.
Mr. LEONHARDT: Thanks, Audie.