Planet Money Explains Latest Economic Numbers

Experts disagree on the path the U.S. economy will take in upcoming months. Manufacturing is up, as is unemployment. Personal spending continues to drag, and the housing market remains weak. Alex Blumberg and Jacob Goldstein of NPR's Planet Money talk about what to expect in the coming months.

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NEAL CONAN, host:

This is TALK OF THE NATION. I'm Neal Conan in Washington.

It's becoming ever tougher to make heads or tails of what's going on in the economy. You can find conflicting reports from analysts and economists everywhere. Some argue a double-dip recession is inevitable. Others insist we're on track for a slow but steady recovery.

Data doesn't add much clarity, either. Manufacturing is up. So is unemployment. Spending is flat. Consumers seem to be saving more. And the housing market remains terrible. Then we hear comparisons to Japan's lost decade.

In a moment, we appeal for help from the Planet Money team. What puzzles you about the economy? What do you want to understand? 800-989-8255. Email us, talk@npr.org. You can also join the conversation on our website. That's at npr.org. Click on TALK OF THE NATION.

Later in the program, we want to hear from the actors out there as Oscar winner Martin Landau joins us. You can email questions now. That address again is talk@npr.org.

But first, the economy. Alex Blumberg and Jacob Goldstein of NPR's Planet Money join us from our bureau in New York. Nice to have you with us today.

ALEX BLUMBERG: Nice to be here.

JACOB GOLDSTEIN: Thanks for having us.

CONAN: And one thing that many people are worried about is jobs, jobs, jobs. That seems to be at the top of the agenda. Who wants to are we making any progress at all?

BLUMBERG: Well, it doesn't seem like it. The unemployment rate is hanging pretty steady. It's about nine and a half. It's gone down a little from its highs of over 10 percent. But no, I mean, it's not coming down nearly as fast as anybody would like, and it's a little confusing to people, especially experts.

CONAN: Especially me, too, even non-experts. Is any sector, I mean, we hear reports that manufacturing is picking up in the last couple of months.

GOLDSTEIN: Well, you know, it's important to look at the difference in manufacturing between how well the businesses are doing and how many jobs there are, right. So and this is a very long-term trend that predates the current recession, that the manufacturing industry in this country has actually been doing very well for a long time. But they've been doing very well by being high-tech, which requires fewer and fewer workers.

So, you know, the places we've been seeing job growth throughout the recession have been primarily health care and education. Manufacturing is still way down from where it was. Construction has been hit very hard.

CONAN: So a good year for robots is what you're telling me.

GOLDSTEIN: It's a great job market if you're a robot.

BLUMBERG: And for people who make robots.

CONAN: And for people who make robots.

BLUMBERG: But not people who are replaced by robots, yes.

CONAN: And one is this one of those psychological spirals people are -employers are uncertain as to whether they should hire anybody until they see people spending more, and people don't want to spend more until they can see the economy going again and more people being hired?

BLUMBERG: I mean, like anything, like everything in this economy, Neal, sort of your guess is as good as ours.

(Soundbite of laughter)

CONAN: All right. Short program today. We can all go home.

BLUMBERG: But no, but I mean, that is the fear. I mean, that's the danger, that is the terrible cycle that policymakers are trying to prevent, that people are just sort of, like, they're afraid that nobody's going to buy. So they don't spend. And then nobody has a job, and then yeah, it just sort of reinforces itself.

GOLDSTEIN: And it is the case that corporations have a lot of cash, have a lot of cash that they're apparently not spending. So it does seem to be the case that they're sort of waiting and seeing. It's clearly the case that consumers are saving more money. So in a sense, they're waiting and seeing. And it's really hard to know at this point how do you break that cycle, right.

I mean, we had a stimulus. You know, there's some debate. It clearly had some effect. And now there's sort of this beginnings of a debate over a second stimulus. And all of that goes to this issue that you're talking about, right, this kind of catch-22 where people are companies are waiting for people to spend, but people are waiting for companies to spend and hire more people, and it's very difficult to see how you break that.

BLUMBERG: Right, and - yeah.

CONAN: I was just going to say: Isn't there another part of that cycle? The banks seem to have a lot of money, which they're not loaning.

BLUMBERG: Yes. That's the charge. They are loaning it. They're just not loaning it to consumers. They're loaning it to governments, specifically the U.S. government. So the U.S. so banks are borrowing a lot of money, and then they're actually investing it a lot in Treasury bonds.

So they're not making consumer loans, but they're actually because it's very safe to lend to the government. So it's easier to make money lending it to the government.

CONAN: Because the government gets to print money.

BLUMBERG: Because the government can print money, right.

GOLDSTEIN: And it's also the case, you know, that a lot of households and small businesses are in what economists call deleveraging right now. They took on too much debt during the boom, and so the last thing they want right now is more debt. So part of the reason you're seeing less lending from banks is because there is less demand for debt from consumers.

BLUMBERG: Right.

CONAN: We want to get some questions from those consumers, and if there's any bankers in the audience or any employers, too, we'd love to hear from you, 800-989-8255. What puzzles you about this economy? Email us, talk@npr.org. We'll start with Jay(ph), Jay calling us from Chesapeake in Virginia.

JAY (Caller): Thank you very much for taking my call. And I have been wanting to ask this question for the longest time, and nobody has seemed to have even talked about it.

But ever since the Reagan revolution and trickle-down economics, it's obvious that the wealthier got the wealthy got wealthier. But for the average working American, who worked 40, 50, 60 hours a week, two jobs, everybody in the family is working, wages remained flat. All we got in return was credit-based wealth. Everybody got multiple credit cards. I was getting five or six offers a week, teaser rates of zero percent, one percent, so on and so forth.

But now that all that credit-based wealth has just evaporated and gone forever, middle-class America and working America and the working poor have been left with actually all the only thing that they have left are their wages. They're suddenly realizing hey, I really wasn't making that much money, I just had a lot of credit-based wealth.

CONAN: Jay, I'm hearing a lot of analysis there. What's the question?

JAY: Why isn't anybody talking about what is the effect of this credit-based wealth evaporated have on the economy? How much of the economy was supported by consumers spending this wealth that they never really had? And I'll listen to the radio.

CONAN: All right, thank you. Oh, I hung up on him.

BLUMBERG: I think if you're asking about what the effect is, you're looking at the effect of what that was right now. Basically, what the reason we went through what we went through is a lot of that credit-based wealth evaporated, and it, you know, ran us into one of the worst recessions in history.

GOLDSTEIN: And in particular, you saw it in the housing market, right. Lending standards got easier and easier. So you saw people at the lower end of the income spectrum being able to borrow a lot of money to buy a house, and then, as the bubble inflated, to be able to actually pull cash out of that house in the form of home equity loans.

CONAN: And...

BLUMBERG: Right. And the analysis that your caller was putting forth, I've heard from, you know, from Chicago, you know, economists and many experts, as well. This is a big, key problem.

You know, during - in the last decade, people had a lot more access to credit. That's where they were that was fueling their spending. Spending is a huge part of the economy. That credit is not going to come back. The world isn't going to lend us as much money as it was lending us before. So people aren't going to have as much access to credit. And so where is that consumption going to come from? That's a big question.

CONAN: Here's a big question from Ken(ph) by email: Everybody talks about this-and-that index and other numbers. What is the economy?

(Soundbite of laughter)

BLUMBERG: Oh man. These are tough. So the economy is basically everything that everybody makes and does and sells. So it's everything that people make and sell, and it's everything that people do and sell, so services and goods that people make and sell.

GOLDSTEIN: And I mean, to the extent that economists boil it down to a number, which is obviously, you know, ridiculously reductive, but we're journalists, right. It's our job to be ridiculously reductive. That number is basically GDP, gross domestic product.

So when people say the economy is growing or the economy shrank, usually what they mean is GDP is growing or GDP shrank. And, you know, over the last several years, what we saw was, well, typically, historically, GDP grows, right, in ordinary times. In a recession, typically GDP is shrinking.

We saw GDP shrink through 2008 and into 2009, and then in general, it grew through the end of 2009 and in the beginning of this year. And now we're seeing GDP growth slow again.

CONAN: And if it goes into negative territory that would be the greatly feared double-dip.

GOLDSTEIN: More or less. You know, interestingly enough, the way we decide officially in this country if there's a recession is there's this group of experts, and they get together, and they say yes, it's a recession. And then they say yes, the recession is over.

And GDP is probably the most important indicator there, but really it's up to them. Ultimately, it's a subjective, qualitative thing.

CONAN: All right, let's see if we can get another caller on the line. Let's go to Jennifer(ph), Jennifer from Kansas City.

JENNIFER (Caller): Hi, thanks for taking my call.

CONAN: Sure.

JENNIFER: I had just a couple of comments and then a question. My comments are that I am in the in an odd situation in that I've been sort of a victim of the economy but also benefitted from it.

I've lost my job, but now I a couple of months ago, now I'm self-employed. I'm making more money than I was before. My husband and I are both self-employed, and we're ready to, you know, to buy a house, to move, to do some different things. And we can't do any of that because of the impact of the bad economy now that we can't get a loan. You know, banks won't look at us because we don't fit a certain profile and that sort of thing.

So, you know, I know other people are in my - similar situation to me because they've had to be, you know, sort of inventive after this whole, you know, job issue. But my question is: How can we impact the economy positively if we're sort of, you know, hamstrung?

CONAN: Spend yourself into debt.

(Soundbite of laughter)

JENNIFER: But that's the thing. We paid off all of our debt.

CONAN: Congratulations.

JENNIFER: We look better on paper, and yet, you know, we can't qualify for a loan because we're now self-employed.

BLUMBERG: So it's a question of you can put down a down payment, but you just can't get a loan because you don't fit into the conforming loan package?

JENNIFER: Yeah, exactly.

BLUMBERG: Yeah, right. So you would need to get a separate...

JENNIFER: So how can we change the housing market?

BLUMBERG: Right, right.

CONAN: Good luck.

JENNIFER: Yeah, thank you.

GOLDSTEIN: I mean, there is, you know, there is this interesting reassessment going on right now about this whole model that we've had as policy for a long time in this country, which is more homeownership is better, right.

And one of the things people are saying right now is oh, wait, if everybody owns their home, it's harder to move. You know, if you own your home in a city and jobs are disappearing in that city, and you want to go move somewhere else, you're sort of tied down by a home, whereas if you have renters, they can go where the jobs are.

So it's an interesting argument against the notion that it's always better when more people own their homes.

BLUMBERG: Right. But what you - what that caller is talking about is the classic situation that we are in post-financial bust. There are what we had before was the world - everybody in the world was rushing to lend American homeowners money so that they could buy houses, and they were willing to lend it on very, very easy terms with very little down payment.

And now, they've seen the folly of that strategy, and so now people are pulling back. They're probably pulling back too much. And so now there's just very little money out there for people who don't fit into very specific categories.

CONAN: But Jennifer, we're very pleased that both you and your husband are doing better than you did before. So congratulations on that.

JENNIFER: Yeah, thank you.

CONAN: Bye-bye. We're trying to make sense of this up-and-down economy with Alex Blumberg and Jacob Goldstein, part of NPR's Planet Money team. What puzzles you about the economy? What do you want to understand? 800-989-8255. Email talk@npr.org. I'm Neal Conan. It's the TALK OF THE NATION from NPR News.

(Soundbite of music)

CONAN: This is TALK OF THE NATION. I'm Neal Conan in Washington.

As you may have heard earlier today, another oil rig has exploded in the Gulf of Mexico. Oil is reported in the water. We'll have an update for you in about 20 minutes. So stay tuned for that.

When we hear about news of the economy, we tend to get a lot of numbers but not a lot of context: unemployment near 10 percent, sales of existing homes down 27 percent, retail sales up more than four percent.

What does it mean? Where the economy is headed, whether your job is at risk or your retirement, what puzzles you about the economy? What do you want to understand? 800-989-8255. Email talk@npr.org. You can also join the conversation at our website. That's at npr.org. Click on TALK OF THE NATION.

For answers, we're talking with Alex Blumberg and Jacob Goldstein with NPR's Planet Money. You can find them at npr.org/money. That's what they report on. It's not what they make.

(Soundbite of laughter)

CONAN: Anyway, let's go next to Barrow(ph), Barrow's with us from Newton in New Jersey.

BARROW (Caller): Hi. I'm calling because we are in what is typically a recession-proof business: renovations, kitchen and bathrooms. And at the beginning of this whole mess, we were absolutely dead in the water.

However, since earlier March, since early May, we've had a big uptick. We're doing decidedly better, and I think what happened was originally, people thought that it was a depression and were terrified to spend any money. Now, I think they've decided, as they usually do in recessions, to fix up rather than move or move on.

Okay, my concern is we hear so much about double-dip, we hear so much negative comment. And since consumer confidence is such a big part of what the economy turns out to be, I'm concerned that there is a political necessity at work here to make the current situation seem so much worse than it actually could be by constantly talking down the economy.

BLUMBERG: I think this gets to something that we were talking about before, about what does that mean if we're going to have a double-dip recession. And I think sometimes people think: Does that mean that we're going to go through what we just went through?

And what we just went through was a whole bunch of things, which a recession was one component. We went through a financial crisis. We went through a very scary time when a whole bunch of businesses went bankrupt.

We went through, you know, and I think whether or not we go into a technical recession again or not, I think it's very unlikely that we're going to go through anything like what we went through before. I don't think there's going to be whole industries having to be bailed out. I don't think there's going to be I don't think that the unemployment rate is going to go up another five percentage points.

So I think it's the difference between right now, the unemployment rate is around nine and a half percent. If we go into another recession, maybe it'll go up a little bit more. But even if we don't, I don't think it's going to go down that fast, either, and that's the confounding thing.

CONAN: But we're talking I think what Barrow is asking about is psychology. In the next two months, we're going to hear the phrase job killing at the rate of infinity per hour. Is this talking down the economy?

BLUMBERG: I mean...

BARROW: That's what I'm asking.

BLUMBERG: Yeah, I think I mean, I don't there's a big debate about whether you can, you know, the confidence is definitely a big part of it. Like, can you you know, so confidence is a big part of the economy, and whether people feel confident in the future, that's why they spend money, and if they don't feel confident in the future, they're going to save money.

GOLDSTEIN: And, you know, the economy is always politicized, and people take credit for things that they don't deserve credit for, and they get blamed for things they don't deserve blame for.

And I think you can say that in a pretty nonpartisan way, right. I mean, there are...

BLUMBERG: But Barrow, you're asking is an opportunistic politician going to ruin my business? That's basically what you're worried about, right? Are they going to talk down the economy?

BARROW: Actually, the business of the country, the business of the country.

BLUMBERG: Right, and your business in particular. Yeah, absolutely. I mean, boy, I hope not.

BARROW: I think they just did it last time around. So I'm wondering if they're going to do it again.

GOLDSTEIN: The economy is not in great shape. You know, I think it's fair to say that in an apolitical way. I mean, if you look at GDP growth, if you look at unemployment, if you look at the inventory of unsold houses sitting on the market, there are lots of signs that the economy is not strong right now.

And, I mean, I think that's a fair, apolitical statement.

CONAN: All right, Barrow, we wish you luck and that renovations continue there in New Jersey.

BARROW: Thank you so much.

CONAN: Bye-bye. Here's a tweet from SplinteredBoard(ph), and I guess this goes to the question of politicians getting credit or blame: How is it that it was so easy for Ronald Reagan to turn the economy around, but Obama is having so much trouble? Apples and oranges?

BLUMBERG: Yes, I think apples and oranges. I think when Reagan came into office, there were a lot of things that were there was a much higher tax rate, a much higher marginal tax rate than there is right now. There were a lot of really growth-inhibiting regulations on the books that, you know, things like banks couldn't, the amount of interest that they could give you on your deposits was set by law. So he was able to get rid of some of those real economy-inhibiting regulations.

CONAN: It also didn't happen instantly, but anyway.

BLUMBERG: Right. Yeah.

GOLDSTEIN: It's also the case that the recession of the early '80s was actually consciously induced by the Federal Reserve, which raised interest rates significantly in order to choke off inflation.

And so they essentially knew that they were going to shove the economy into a recession. It was just something they had to do. And because they sort of did it consciously to begin with, they were able then to pull interest rates back down, and the economy responded as you would think it would in a textbook. It came back.

And in this instance, it's been much less predictable. It's been much less amenable to responses from the Fed and in many ways a much more dramatic crisis than what we saw in the early '80s.

CONAN: Let's go next to Lois(ph), Lois with us from Denver.

LOIS (Caller): Hello.

CONAN: Hi.

BLUMBERG: Hi.

LOIS: Hi. What perplexes me is that we're still stuck on an economic paradigm that's based on limited resources. We're based still on oil and fossil fuels and all these consumer goods that are using the resources that will be depleted.

My question is: Why aren't we investing more - you know, since you said earlier the government is the one that's able to secure a lot of the lending. Like, what if the government invested in companies that are producing renewable energy, the infrastructure, the technology? It may provide jobs and be a product that we can export into the world, both things that can fuel our economy. Why aren't we doing why aren't we shifting our paradigm to something renewable?

BLUMBERG: Well, I think there is I think there is a lot of talk of doing just that, and I think the Obama administration seems to be trying to do that.

CONAN: A fair part of the stimulus was devoted to that.

BLUMBERG: Yeah, a fair part, yeah, exactly. You know, but it's not, it's not as easy as it may sound. I mean, the problem, as I understand it, with shifting over, we use a lot of energy right now, and to get anywhere near the amount of so basically to make anywhere near the amount of energy that we're already using through some of these alternative measures, it's just not possible. And if it was possible, it would cost a lot more. So...

LOIS: Fuel is subsidized, oil is subsidized by the government. Could we shift that over to renewable energy?

CONAN: They are heavily subsidized by the government.

BLUMBERG: Yeah, renewables are being subsidized. So I think the answer is, I mean, is it happening? It seems to be happening. Is it happening as fast as it could? Probably not.

There are a lot of entrenched special interests that probably wish it were not happening at all. But even if it was happening as fast as humanly possible, even if every single, I think, you know, thing that the government could throw at shifting us over to a new energy paradigm, it was doing. I mean, I think it just takes I think it's a decades-long process, not an overnight process.

GOLDSTEIN: I mean, it seems to me that more broadly, the notion that there is some single silver bullet, whether it's energy or whether it's lowering mortgage rates or whether it's, you know, committing more to traditional infrastructure, whether it seems like there is not any single thing that, oh, if the government just flipped this switch, they could fix the economy.

BLUMBERG: Right. Gasoline is a pretty miraculous energy carrier, unfortunately. And so it's hard to find something that's going to match it in just terms of just, like, getting bang for the buck. And so that's yeah, it's tricky.

CONAN: Lois, thanks.

LOIS: Thank you.

CONAN: Thanks very much for the call, appreciate it. Here's an email from Denise(ph) in Texas: I am puzzled why we hear so much doom and gloom on the economy. Are we in a bubble here in Texas? The restaurants are full during the week. The mall parking lots are full. Everyone looks like they're spending money.

My husband has a small business, 30 years, as a tile contractor for higher-end newer homes, his business has picked up dramatically after the scare. He's having to work on the weekends, as well as his crews.

I work for a major bank. They're hiring the contingent workers as permanent left and right. You can't find a parking spot if you're not here 20 minutes early. Maybe we're just luckier over here in Texas because we were not part of the housing bubble.

BLUMBERG: You well, I will say this about Texas. Texas was not part of the housing bubble because Texas, as I understand it, had a housing bubble a decade earlier that they learned their lesson from. And so they did not take - a lot of banks in Texas did not make any of the same loans that people were making in California and Florida.

So yeah, so Texas had learned its lesson during the bust it went through and didn't make the same mistakes the second time around.

CONAN: Let's go next to this is Tom(ph), Tom with us from Eugene in Oregon.

TOM (Caller): Hi, thanks for taking my question.

CONAN: Sure.

TOM: I've seen a few articles that pointed to the 1986 Tax Reform Act as the start of our homeowner problem. The act eliminated credit card interest as an itemized tax deduction and replaced it with home equity loans. And in the course of the next 10 or 20 years, people's true home equity gradually declined as they took out more and more equity loans for, you know, leisure purchases and also to pay off credit cards.

And there was an article in the Journal that talked about a bank that came up with some software that actually allowed them to mine the data of mortgage holders and figure out which ones had the best equity, and they were solicited for home equity loans.

CONAN: Hmm. Well, can we nail the source of the problem to the change in those regulations back in 1986?

GOLDSTEIN: It's certainly clear that during the housing boom of the first several years of this century, there was this huge push to home equity loans and to refinancing in general. And in fact, lots of people were given mortgages where the whole idea of the mortgage is, well, it's going to reset and be a lot more expensive in a couple years, but you can just refinance then. And there was a sort of perverse incentive operating, which was even if a mortgage wasn't in the best interest of the borrower, it might generate more fees for the people giving the loans. And so we certainly saw this incredible kind of churn and bankers getting people to pull money out of their house, in some instances when it wasn't in people's interest even to do so.

BLUMBERG: And getting to the idea of, like, whether this law, you know, actually led - without this law, would this have happened, I think probably. I don't think you can pin it to one law. I think it was a confluence of factors. But there's no question that the tax code does encourage homeownership. And the fact that you can deduct the interest on your mortgage from your taxes and the interest on a home equity loan from your taxes, definitely creates an incentive for you to take out a larger home equity loan than you otherwise would, or buy a larger house than you otherwise would, or perhaps to even buy a house when maybe you wouldn't. And so - yeah.

CONAN: And isn't it true that both the Clinton and second Bush administrations passed regulations that made it easier for people to qualify for loans?

BLUMBERG: Yes, yes. No question. And there was a big push in this country towards, you know, that homeownership is, you know, the ownership society and homeownership is going to be something that's going to be good for a society as a whole. And so there was several - there was many and many incentives that government has put in place to encourage people to buy homes, and I think now people are taking a second look at those incentives.

GOLDSTEIN: And really, I mean, it goes back all the way to the Depression, right, where you have the origins of Fannie Mae and Freddie Mac, which was kind of this implicit subsidy the government set up to make it easier for people to buy homes. You know, a 30-year, fixed-rate mortgage that you can pay off whenever you want is an incredible deal. And it is only possible because of, essentially, the largesse of the federal government, and ultimately it led to this huge bailout of Fannie and Freddie, which is probably digressive from what we're talking about today but ultimately relevant.

CONAN: All right. Tom, thanks very much for the question. We're talking about the economy. What's up? You're listening to TALK OF THE NATION from NPR News.

And let me reintroduce Alex Blumberg and Jacob Goldstein, both part of NPR's Planet Money team. They join us from our bureau in New York. And can I ask you about the Japanese analogy, not the title of the latest thriller, but indeed, an economic comparison between the United States now and Japan in what 25, 30 years ago?

BLUMBERG: Yeah, the lost decade. I think people make this - so this is basically a period in Japanese history where they had deflation, and I think that's when people are worried about a lost decade here, that's what they're worried about. They're worried about that we will actually enter a deflationary period.

And I think people make the comparison because it started the same way. They had a huge property bubble. That bubble burst. And then they had decades of slow or no - of negative growth or slow growth and where nothing sort of increased in value, and in fact, things lost value. Now, Jacob had a very clear example of why that's a bad thing, deflation is a bad thing.

GOLDSTEIN: Right. So I mean the basic example is if you think - if you're going to buy, say, a car, if you're going to buy anything today and you think it's going to be cheaper in six months or in a year, then you might just wait. You might just say, you know what, I'm just going to keep that money under my mattress and wait for a year until that thing is cheaper.

And in what I think is a pretty clear is that just feeds on itself, right? Then everybody stops buying things. The price of things fall, and it's this sort of juiced-up example of the kind of chicken-and-egg thing we're talking about in the economy now. Nobody buys things and so the economy essentially falls apart.

CONAN: Here's an email question from Drew(ph) in Columbus. What effect would the expiration of the Bush tax cuts have on the economy, and what would be the effect if we didn't let them expire? These were temporary tax cuts passed in the Bush administration. They expire at the end of this year. President Obama wants to keep the ones for the middle class and let the ones for people that earn over $250,000 a year expire. Unclear as what's going to happen politically - a lot depends on the election. But anyway, what would be the effect on the economy if they did expire?

GOLDSTEIN: Well, I mean, you can think of tax cuts as a kind of stimulus with the basic idea that, you know, your leaving people with more money. If people have more money, they're going to spend more money, and that stimulates the economy. So if you allow the cuts to expire and the tax rate goes up, that's sort of an anti-stimulus, right? That's the basic idea.

Now, you can make sort of finer points about, well, there may be types of tax cuts that are better targeted than the Bush tax cuts. For example, people have talked about a temporary cut in the payroll tax that businesses have to pay when they hire people. This is a very direct way you can incentivize businesses to hire people. I mean, practically speaking, it seems quite likely certainly that the Bush tax cuts on people making less than 200 or $50,000 a year, those will be extended, right? And the political debate is going to be over sort of the margins, right? The cuts on the people at the high end.

CONAN: Well, then the - well, it could get tied up in arguments. We're not going to pass anything unless we pass what you want. So compromise may not be possible here, but is this - some people say that the higher tax cuts include a lot of small businesses. Is that right? They report as individuals?

BLUMBERG: Yes, that - I mean, that's entirely possible. Yeah, absolutely. And so - and opinion is really - I mean, the opinion is really divided. I mean, this is like - this is - talk about - this is maybe one of the thornier issues that...

(Soundbite of laughter)

BLUMBERG: ...you - that we've touched into, like, what would be economic effect of letting those tax cuts expire? And there's a huge camp that says it would be catastrophic and then there's another camp that says, actually, in terms of, like, if you want - if you - what you want to do is to stimulate spending, tax cuts aren't even the best thing to do. There's other things that you can do that are better.

CONAN: Well, I hope we're a little bit less confused than we were half an hour ago.

(Soundbite of laughter)

BLUMBERG: I hope so too.

CONAN: Alex Blumberg and Jacob Goldstein, thank you both very much for being with us today.

BLUMBERG: Thanks a lot, Neal.

GOLDSTEIN: Thank you.

CONAN: And you can find out a lot more about what they cover if you go to npr.org/money. They're on NPR's Planet Money team.

Coming up, we'll talk with Martin Landau about his six-decade career on movies and TV. Stay with us. It's the TALK OF THE NATION, from NPR News.

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