Can Obama Stimulus Plan Create Jobs?
REBECCA ROBERTS, host:
From NPR News, this is All Things Considered. I'm Rebecca Roberts. President-elect Barack Obama put a little more meat on the bones of his economics stimulus plan today. His main focus - this week's dismal unemployment numbers.
President-elect BARACK OBAMA: In the past month alone, we lost more than half a million jobs, a total of nearly 2.6 million in the year 2008. Another 3.4 million Americans who want and need full-time work have had to settle for part-time jobs.
ROBERTS: So many people are applying for unemployment help that this week computer systems crashed in several states across the country. The computers worked here in Washington, D.C., but when I dropped by the One-Stop Career Center, a case worker named Claudia Serrano(ph) was near overload at the front desk.
Ms. CLAUDIA SERRANO (Case Worker, One-Stop Career Center, Washington, D.C.): We were not prepared to deal with such large crowds. It is frustrating, I mean, to see that many people coming, and you can't help them as fast as they want help. We're short staffed.
ROBERTS: The center's manager, Cherie Finley(ph), says this week was unprecedented.
Ms. CHERIE FINLEY (Manager, One-Stop Career Center, Washington, D.C.): I have been working in workforce development and employment services for the last 12 years, and I've never seen anything like this.
ROBERTS: So far, details of the Obama stimulus plan have been pretty vague. Today, we got a slightly clearer look. At six o'clock this morning, his transition team released an analysis of what sorts of jobs the plan might create. Nobel Prize-winning economist Joseph Stiglitz has been skeptical about what he's heard until now. Professor Stiglitz, thanks so much for joining us.
Dr. JOSEPH STIGLITZ (Professor of Economics, Columbia University): Nice to be here.
ROBERTS: I want to start by playing a couple of clips from the president-elect's weekly address today. Let's start with this one.
(Soundbite of Obama's weekly address)
President-elect OBAMA: The report confirms that our plan will likely save or create three to four million jobs.
ROBERTS: Professor Stiglitz, you have read the report. Does it really confirm that the stimulus plan would produce that many jobs?
Dr. STIGLITZ: Well, I think it's a very carefully done report in the sense that it is very honest about the large uncertainties. But the report actually helps frame, but only partly, the nature of the problems going forward. In the 2008, '09 and '10, there'll be almost six million new entrants into the labor force. So clearly, a stimulus package needs to create far more than the three, four million jobs that this package promises.
ROBERTS: Let me play you another clip from Obama's address today.
(Soundbite of Obama's weekly address)
President-elect OBAMA: Ninety percent of these jobs will be created in the private sector. The remaining 10 percent are mainly public sector jobs we save, like the teachers, police officers, firefighters, and others who provide vital services in our communities.
ROBERTS: So 90 percent private jobs, 10 percent government. What do you make of that proportion?
Dr. STIGLITZ: Well, I think I would put more - a little bit more emphasis on saving jobs that would be lost in the public sector and particularly in the stakes in localities. The fact is that the stakes in localities are facing an unprecedented budget crunch as a result of the economic slowdown. I would suspect that if we devoted more money to stakes in localities, the number of jobs saved would be far greater, and this would, in fact, be some of the most effective way of spending the stimulus money.
ROBERTS: Professor Stiglitz, on the federal level, a big part of the stimulus plan is tax cuts. How effective do you think tax breaks are in terms of creating jobs?
Dr. STIGLITZ: Well, the report is actually very honest that they are not as effective as other forms of expenditure. A particular concern to me is the tax cuts for businesses, some of which are oriented around allowing a carry back of losses in previous years which will be effectively doing little more than another bailout. We don't have the details, and so it may not be true. But unless a great deal of care is taken, that kind of a program is likely to have very little stimulus.
ROBERTS: Today's report was also the first time we've gotten something of a look at specifically which industries would be targeted to add jobs. And construction is number one, which isn't a surprise. But the second and third biggest sectors were retail and hospitality and leisure.
Dr. STIGLITZ: I think that is really reflecting the fact that those are sectors that tend to be really badly hit when you go into a downturn. And so their hypothesis, I suspect, is that if we can forestall the downturn, it will reverse those effects, and people will start to spend more. But again, many families in America are faced with a huge burden of debt. The value of their retirement savings has been eroded. In that kind of circumstances and with the limited availability of credit, I'm not sure that Americans will be running down to the shopping mall to spend more money. And of course if they don't run down to the shopping mall, that means the jobs that were forecast to be saved or created in retail won't materialize.
ROBERTS: Joseph Stiglitz is a Nobel Prize-winning economist at Columbia University. He joined us from his apartment in Manhattan. Thanks so much.
Dr. STIGLITZ: Thank you.