For this month's Environmental Outlook: Ten years ago, Israel experienced a prolonged drought that forced the country to come up with a strategy to address water scarcity. What its experience could teach an increasingly water-starved planet.
In last night’s debate among Republican presidential hopefuls, Governor Mitch Romney seemed to shore up his position as front runner in the race. But his chief rival, at this point, Herman Cain, also gained ground. The debate focused on the U.S. economy and what each candidate would do to boost growth. Yesterday the Senate blocked President Obama’s $447 billion jobs bill. Congress is now likely to consider some elements of the bill separately. For many voters the dismal job market remains the number one concern, but so far, none of the current round of ideas seems to be gaining traction: Please join us for a conversation about politics and the economy
- Chris Cillizza author of The Fix, a Washington Post politics blog, and managing editor of PostPolitics.com.
- Jim Tankersley reporter, National Journal
- Brad Close vice president of public policy, National Federation of Independent Business
- Lawrence Mishel president of the Economic Policy Institute.
MR. STEVE ROBERTSThanks so much for joining us. I'm Steve Roberts, sitting in today for Diane Rehm while she's away on vacation. But she'll be back on Monday. In last night's debate in Hanover, N.H., Republican presidential hopefuls sparred over just who and what to blame for our persistently troubled economy. And yesterday, the Senate voted to block President Obama's jobs bill.
MR. STEVE ROBERTSJoining me to talk about the efforts of both parties and the candidates to gain traction with voters on economic issues: Lawrence Mishel of the Economic Policy Institute, Brad Close of the National Federation of Independent Business, and, from a studio at NPR New York, Jim Tankersley, who's a reporter on economic issues for the National Journal. And, gentlemen, welcome to "The Diane Rehm Show," happy to have you.
MR. STEVE ROBERTSAnd also joining us by phone is Chris Cillizza, a popular columnist here in Washington, writes The Fix column at Washington Post, and he's managing editor of postpolitics.com. You can join our conversation at 1-800-433-8850 as always, or send us an email at email@example.com and, of course, through Facebook, Twitter and all the other modern ways of letting us know what's on your mind.
MR. STEVE ROBERTSChris, this debate, seventh in a row but focused entirely on the economy, and you've been watching these debates closely now for a while. What's the most important things you heard last night?
MR. CHRIS CILLIZZAWell, Steve, first of all, thanks for having me. Yeah, you know, almost all of these debates have been focused on the economy, more or less, but this one was kind of an overt economic focus. You know, I think we expected Mitt Romney to do well for a couple of reasons. He's the most practiced and, I think, has proven himself to be the best debater over the seven debates.
MR. CHRIS CILLIZZAHe's also the person who spent the most time talking about the economy in this campaign. He did quite well. He was specific. At times, he had the benefit of having rolled out a 59 point, 151-page economic plan a few weeks back, so -- could refer back to that. And he didn't get caught in the traps of talking too much about health care and some of his weaknesses and just, I think, distanced himself from the field.
MR. CHRIS CILLIZZAIf you watched the debate, it was pretty clear that Romney was the class of the field last night.
ROBERTSIs there anything you did not hear of? Note, often, the best way to follow a debate or follow a presidential speech is what you didn't hear. Anything noticeable?
CILLIZZAWell, you know, these debates are hard because you're talking about 90 minutes or two hours in which you have eight candidates up on stage, all of whom are clamoring for, you know, as much speaking time as possible. You didn't hear that many specifics. You certainly didn't hear a lot of specifics out of Rick Perry, the Texas governor.
CILLIZZAThis is someone who a lot of people were hoping would do a little bit better in this debate than he had done in the previous three he had participated in. But, really, Perry was asked his -- some specifics on the economy, what he would do to make things better, what President Obama had done wrong, largely avoided talking about any specifics. He tried to bring it back to an energy plan that he's unveiled.
CILLIZZAHe also said that he would roll out his economic plan over the next three days, which I found a little odd, given that we were in the middle on an economic-themed debate. He kind of said, well, wait and see. So lovers of specifics in this debate probably found it a little wanting. I would say they probably would find any debate wanting outside of the Lincoln-Douglas debate.
CILLIZZAYou know, it's just very hard in the context of a short -- relatively short period of time with so many people trying to speak and cover -- even within the economy, cover a lot of different issues. It's hard to get specific.
ROBERTSSure. Let me ask my other panelists here, most important takeaway you took from that debate. Jim Tankersley from National Journal, why don't you start?
MR. JIM TANKERSLEYWell, I mean, I think that the most important thing for us as we're watching this from home is to remember that the debate was dominated by this discussion of a very simple economic plan. But the economy is not simple right now. The problem...
ROBERTSYou're talking about Herman Cain's 999 plan?
TANKERSLEYAbsolutely, yeah, which is a very attractive plan for the simplicity, as Cain himself said repeatedly, but the economy is really complicated right now. And what is wrong with the economy is really complicated. And I think that it -- that Mitt Romney is, in some ways, right here to say, look, we can't just focus on very simplistic solutions to a very complicated economic problem.
ROBERTSLawrence Mishel, what did you hear?
MR. LAWRENCE MISHELWell, I was trying to pay attention to the content of what they were offering, and they all were of the same themes, either saying things that I thought were irrelevant or things that would actually hurt the economy. The irrelevant things were somehow stopping regulations is to going to give us a big job boost, changing the structure of taxation is going to give us a big job boost.
MR. LAWRENCE MISHELThe things that would actually hurt the economy is to cut spending right now and to raise interest rates to have hard money. Those things would actually worsen the recovery, and that was pretty uniform across the board. And there's nothing I heard that I hear either from the Republicans on the Hill or from these candidates that would give -- that, if they were in power, we would still not have high unemployment a year or two from now.
MR. LAWRENCE MISHELThey really are talking about policies that they think are going to make us better off three, four, five, 10 years from now, nothing about, what are we going to do to get a lot of jobs in the next year or two?
ROBERTSBrad, your federation represents a lot of small businesses. You were saying the average employment, only 10 people (unintelligible) members.
MR. BRAD CLOSEThat's right.
ROBERTSThere was a lot of invocation of small business last night about the burdens of the new Obama health care bill or the Dodd-Frank regulatory bill. What did you take away?
CLOSEWell, I think every politician wants to say they're for small business. It's a popular thing to say. For small businesses, the economy for the little guys is mired in recession levels. They're having an awful time of it. So I think what our members want to see is candidates, politicians who are advocating the ability to let them grow.
CLOSEAnd what they've seen up till now is a lot of mishmash of policies, a lot of involving spending government money, this program, this program. Our members' basic attitude is just, please, leave me alone, let me grow and do my thing. Those that have survived through the recession have done it by cutting back to the bone. Most of them, unfortunately, had to let employees go. *
CLOSEAnd when they look at what candidates, what the president, what Congress is talking about, they want to see a commitment to do the same thing with their government.
ROBERTSAnd did they -- do you think your members heard anything significant last night from any of the Republican candidates, make a difference to them?
CLOSEI think when you look at the current two frontrunners, in Romney and Cain, they both did talk about tax reform. Taxes are a big deal to the little guys. Most of them are not corporations, so the corporate rate is not as big a deal to them. They pay their taxes as individuals, pass through entities. So reforming the code, making it easier for them to function, a more simple code, that's something that does appeal to small business.
ROBERTSChris, you talked about Romney as being the most polished debater. He has done very well, by most accounts, in previous debates. But -- and he does have a very detailed economic plan, but a lot of what he seemed to be saying last night at the core was, trust me, I'm -- I know business. I've been in business. I'll make the right decisions. He was selling himself as much as he was selling a specific plan.
CILLIZZASteve, absolutely, and selling his resume and drawing a contrast interestingly, not with the other men and women he was on stage with, really, much more with President Obama.
CILLIZZAYou know, he said that outright in the early going of the debate. He essentially said, you know, we gave a chance three years ago to someone who didn't have a lot of experience, and look what it got us. He's clearly trying to drive that contrast that, look at my resume, look what I've done. And he was almost insulating himself. It was fascinating. He said, I have helped grow a lot of businesses.
CILLIZZASome of the businesses I tried to make work, failed, too, insulating himself against what -- if he is the nominee, a certain attack from Democrats, which is, you know, Mitt Romney came in the company, he's fired a lot of people and made off with his own profits.
CILLIZZAYou know, he named Staples. He named Sports Authority. He named some of the kind of famous successes of Bain Capital, but very much focused on what he has done in his life, preparing him to have the experience, the right kind of experience to do the job, drawing a very stark contrast with President Obama, who he cast as someone who did not have that sort of deep resume coming into office.
ROBERTSAnd we can certainly anticipate that if Romney is the nominee that this is going to be a main campaign thing for the next year.
CILLIZZANo question. You know, I think that is the central theme of Democratic attacks if he is the nominee, focusing on what he did at Bain Capital, how, in many cases -- well, certainly not all, although in many cases, he came in and cut jobs and helped Bain Capital make a profit, but not the company involved make a profit. I can guarantee Democratic opposition researchers are already building large books filled with that stuff.
ROBERTSNow, Gov. Perry, Jim Tankersley, stakes are fairly high. He's gotten poor reviews in previous debates, slipped to third in most polls behind Herman Cain. Nate Silver in The New York Times this morning described his performance as soporific. He seemed confused and uncertain in many places. Give us your assessment of his reliance on the issue of energy as the core of a jobs program. And how effective was he?
TANKERSLEYWell, I guess the question to put back to you is, why would we be surprised that the governor of Texas, whose state has had such a boom in energy jobs in his tenure, would found his entire -- or base his entire economic plan on energy? That makes a lot of sense if you're -- if that's your experience as the governor of Texas. And you do see -- I mean, there is a lot of potential for energy development in the United States right now.
TANKERSLEYYou could see that that's something we can start doing right away and certainly an area where the federal government has a lot of land that it could be leasing that it's not, whether it's on land or offshore, that you could put people to work doing that. I think the problem for the governor is that ship is sailing on economic plans, and it's getting pretty late in the game. I mean, the primary schedule keeps getting moved up.
TANKERSLEYAnd it's getting very late in the game to start rolling out big ideas. You have to have an answer to the question of what are you for that's more than just, well, I created a lot of jobs in Texas, especially since his past debate performances have clearly cost him in the polls. So I think, now, there's a lot of pressure on the governor to have a big rollout later this week of his energy/jobs plan in Pittsburgh and if he can really get some fanfare behind that and get Republicans excited.
TANKERSLEYThe one thing we see in all the polls is there still is room for someone to rise up and challenge Romney because so much of the Republican electorate is not sold on him.
ROBERTSNow, quickly, Lawrence Mishel, Herman Cain, who has had repeatedly mentioned his 999 plan -- Jon Hunstman, last night, said he thought it was a price of a pizza -- one of the few lines that drew a laugh. But quickly, he finally got some criticism last night from some of his colleagues.
MISHELWell, the Republican colleagues criticized it because he added a new tax, a national sales tax.
ROBERTSOne of the nines. One of three nine...
MISHELOne of the nine. Yeah, what they don't say is that he's very much along the same lines as the rest of them. They all think that lowering tax rates somehow is magical to change the economy. They all think it's really important to get rid of taxes on any income that people earn from wealth.
ROBERTSThat's going to have to be the last word for now. We're going to have to take a break. That's Lawrence Mishel of the Economic Policy Institute. I'll be back with my panel in just a minute. Stay with us.
ROBERTSWelcome back. I'm Steve Roberts, sitting in today for Diane. The subject this hour: jobs and what the Republican candidates at the debate at Dartmouth last night said about it. What's happening on Capitol Hill as well? I want to thank Chris Cillizza from The Washington Post, who was with us for the first segment. And still with me, Jim Tankersley on the phone from New York. He's a reporter for The National Journal.
ROBERTSHere in the studio Lawrence Mishel of the Economic Policy Institute, Brad Close of the National Federation of Independent Businesses. And, Brad, you had the lobbying at the federation, and important development yesterday on Capitol Hill.
ROBERTSAnd I want to ask you what you think of -- what's the significance of the decision yesterday by the Senate to block the president's jobs bill, $447 billion bill? He's been campaigning all over the country on this, got not a single Republican vote, and, in fact, two Democrats voted against him as well.
CLOSERight. You know, our take on the bill has been that there are some good things in there, but they're temporary. So we never kind of complain about a payroll tax cut to help small business. But it's a one-year deal. The tax increases in the bill, unfortunately, are permanent. And so as a small business owner, when you're looking at that, the plan going forward, it's hard to say that this is going to impact jobs.
CLOSESo you've got a hiring tax credit in there that we believe will only go to help people who were already going to hire 'cause when a small business owner looks to create a job, they need an economic reason. So if it's a $30,000 job, they need $30,000 of revenue. They're not going to create a job for $4,000, $5,000 or $10,000, especially if that credit goes away in a year or two.
CLOSESo I think it means, going forward, that the Senate is going to probably look at bits and pieces of this.
ROBERTSDid you lobby against this bill?
CLOSEWe did not. No.
CLOSEI did not.
ROBERTSBut why do you think there were no Republican votes?
CLOSEWell, I think, it seems this year, being a presidential year, maybe earlier than in past, that we have kind of entered into a very political time. The Congress -- we've already started the campaign for president up on the Hill. I think a lot of Republicans believe that the jobs plan was more of a political document. I think they -- you know, Republicans are looking at their nominees and who's going to emerge.
CLOSEAnd so I think a grand plan with new spending or new taxes just isn't going to go anywhere in this environment.
ROBERTSLarry Mishel, as I say, the president has put in a lot of effort, and with pass the bill now slogan, Republicans say it was all about politics, not about a substantive bill. But when you lose a vote like this, it can't help.
MISHELWell, listen, the vote yesterday, there was a majority at the Senate who voted for it.
ROBERTSBare majority, 50.
MISHELMajority where -- there's nothing new about this. Republicans have voted against everything -- the president or Democrats have offered since, you know, the whole time he's been elected. And it's basically a place where you have to have 60 votes to pass anything, and no one has 60 votes. So you can't pass anything if they are willing to block everything.
MISHELI want to step back and talk a little about what's the nature of our problem and how does one fix it, just to be able to clarify where policies fit in. Let's just acknowledge that corporations right now have a lot of cash on hand. They're not investing, and they're not hiring. We have a lot of people unemployed. We have businesses which have a lot of capacity to produce goods and services that are not doing it.
MISHELThey don't actually need to build more facilities or actually, you know, get more equipment to be able to hire people. What this means is that there's a shortfall of demand. Businesses need to be able to have people -- customers. In fact, the NFIB's own survey shows that the biggest problem that small business faces is poor sales. It's the highest on record under the Obama administration. It's twice as important as a problem as taxes.
MISHELSo the question -- I mean, I'm curious to hear what NFIB wants to say about, what are we going to do to get people, you know, more sales in the short term? I think the president's plan has a lot to recommend it, and I'd be glad to explain, you know, why.
ROBERTSBut let me ask this question, Brad, if that's the case. You seem to imply that the real answer -- that you kind of agree that the real answer is politics and that, at this point, Republicans are not looking at the substance of these proposals but looking at the politics.
CLOSEWell, I think both sides are. I think it's going to be hard to get any kind of an agreement on anything going forward. It just doesn't seem possible. When you look at what small business owners -- how they approach their business and the economy and the federal government, they don't look at the federal government being stimulate demand, being able to create jobs, to pick winners and losers.
CLOSEIn their mind, that's up to the consumer. The consumer should decide who wins, who loses, and that's the way the system works.
ROBERTSBut if you get -- I think the implication of what Larry was saying is -- and certainly of the president's plan -- that if you have government spending on infrastructure, on helping the states hire and retain teachers and firemen, those are consumers who are going to spend money at small businesses.
CLOSEWell, you know, from our member's perspective, we've tried this a few times. We've tried this under the President Bush and now under President Obama. We spent a lot of money. It hasn't moved the dial, so they don't think that's going to work. And when you look at the transportation spending, that might help.
CLOSEBut from a small business perspective, all that transportation money has rules on it that prohibit about 85 percent of small contractors from participating. And that's the project labor agreement rules that the White House includes in all these federal spending programs. So most -- you know, one of the biggest industries hit by this recession is the little guys who build houses, the construction guys. They're shut out.
ROBERTSLet me bring in Jim Tankersley. With the defeat of the president's package, there's a lot of talk now on the Hill of breaking it up into smaller pieces, more digestible that perhaps could command some Republican support. What are you hearing about the possibilities of smaller pieces of this, particularly the extension of unemployment benefits and the extension of a payroll tax cut, a 2 percent tax cut that is in existence now? What are you hearing?
TANKERSLEYWhat I hear is that there's a chance. I mean, this is something that Republicans have signaled some openness to. But I think it's important to recognize here also that it would be very hard for the Congress to pass a similar sort of bill to the tax deal that we saw last year, simply because they're going to want to pay for it right away. And they fundamentally disagree on how to pay for theses things.
TANKERSLEYThe Republicans want to cut entitlement spending down the line or the discretionary spending or both. The Democrats want to do some mix of deficit reduction by entitlement cuts or discretionary cuts plus raising some taxes. They've basically decided that they're not going to agree on that point, and that they're going to let the voters hash that out a year from now.
TANKERSLEYWell, that leaves a year of what could very likely be complete paralysis on the job economic front, while, essentially, Republicans and Democrats say 14 million unemployed Americans -- you just hang out right now while we let the voters decide once again what message they want to send us.
ROBERTSYou know, Jim, yes, the president's numbers are poor. He's down around 40, 42 percent in most polls. He's continued to suffer declines in the polls. But the ratings for Congress are much worse. Most polls show him at -- Congress at 12 or 14 percent. Is there anybody out there listening to those voters who are saying, we're totally unhappy with what you're doing?
TANKERSLEYWell, I think everyone interprets unhappiness differently, right? The Republicans are hearing from their base. We're unhappy because you're compromising too much. The Democrats are hearing similar things from their base. Very few people are taking the message here that, hey, we need to work together right now and put some ideology aside.
TANKERSLEYWe saw some quick flashes of that, maybe a month ago, after the sort of -- the debt ceiling debacle had really undermined the public's confidence in Congress. But we're reverting to a place now where both sides really feel like the reason people don't like Congress is because we're not doing -- it's not doing more of what I believe intuitively anyway.
MISHELCan we focus a little bit more on what will happen if we don't continue the unemployment compensation program that we had or the payroll tax holiday?
MISHELYou know, we estimate -- and we're not alone -- that will actually reduce jobs by 1.6 million. You know, keeping the unemployment compensation...
ROBERTSBecause of what you were saying earlier that it will sap demand?
MISHELYeah, basically, you know, the Congressional Budget Office -- just about every economic forecaster says that when you give money to people who are unemployed, who are not busy saving it, investing it, paying their debt...
ROBERTSSpend it right away.
MISHEL...they spend it. It's got very high marks for increasing spending. They walk into the small business, and they buy stuff. The small business restocks its shelf. People all the way down the line get jobs. So it's remarkable to me that doing nothing will actually make the unemployment rate rise. Right now, it's projected to be 8.5, 8.7 percent at the end of next year.
ROBERTSDoing nothing because these tax benefits would last without being extended.
MISHELWe're going to lose. We're going to actually shrink the demand for goods and services by a substantial amount, over 1 percent of the economy, by just not continuing the payroll tax holiday for the employees and the unemployment compensation. And we have a system right now where there are 4.5 unemployed workers for every job opening. It's not as if you can just walk down the street and go get a job.
ROBERTSRight. Brad, do you agree with this analysis?
CLOSENo, our members would not. And I think they would look at the idea that to continuing to extend unemployment benefits is a good jobs program, a way to inject -- get the economy going again, that they would not agree. And, you know, small business owners pay unemployment taxes. And depending on how the unemployment funds are in their state, how long the benefits have been going out, their taxes go up every year.
ROBERTSBut what about that argument that Larry was making and that many economists make, that of all of the ways in which you can inject money into the economy, unemployment benefits is probably the quickest because people spend it right it away, and you can spend it at your members' businesses?
CLOSEBut think about what that argument is. So we're talking about keeping people -- not keeping them, but folks who are still unemployed. We talk to small business owners who have been unable to fill positions because when they interview folks who are unemployed, they say, look, call me when my benefits run out, and I'm ready to go. Now, the incentive...
ROBERTSIs that really true with 4.5 people looking for every job?
CLOSEOh, sure. That's not everybody, but this is something our members face. We hear from them. We've got some stories on our website we'd be happy to share. And so why don't we focus on a way to get the economy going in the private sector so that, instead of having people buy things with the money from unemployment benefits, their -- they have a job and have a salary?
CLOSEThey're being productive and getting going. I mean, that's the tact our members would take.
ROBERTSLet me bring in Jim for two -- to talk about two other issues that are on Congress' plate, and then I'm going to go to our phone calls. One is trade legislation. Jim, today in what everybody anticipates will be a rare moment of cooperation on Capitol Hill, there are three major trade bills that -- with Colombia, Panama and South Korea, in particular, that are coming up. They have been stalled for years.
ROBERTSThey go back to the Bush administration. Looks like today, they will finally pass. Tell us about that.
TANKERSLEYYeah, and it appears that the Obama administration is finally going to get a victory, like you said, through the Congress for its general policy of trying to open up more exports, which, let's be clear, have been one of the few economic successes that you can quantify of the Obama administration. I mean, exports are up. Continuing to export more would appear on paper to be a good thing.
TANKERSLEYHere's the interesting -- and they -- and I do agree that they are almost assuredly going to pass. The interesting thing, though, is the kind of backlash that may be brewing against that. I mean, that's going to be a rare example of victory where the Republicans and Democrats come together, but -- I'm up here in New York to cover the Occupy Wall Street protests.
TANKERSLEYAnd yesterday, much of their anger -- to the extent that there was anger -- was directed at this whole idea of opening up more trade, more globalization, more NAFTA-style trade deals as they call it. I know it's been -- this has been a big point of emphasis for the business community to get these deals done. But sort of out in the populist parts of America right now, where people are angry, it's not such a slam dunk, yeah everybody is happy about it.
ROBERTSI'm Steve Roberts. And you're listening to "The Diane Rehm Show." Larry Mishel, Jim Tankersley says that this passage will be a victory for the Obama administration. But, by all counts, it probably will be done mainly with Republican votes. There are significant segments of the Democratic base, not just the Occupy Wall Street protesters but also organized labor, not pleased with these trade agreements.
MISHELWell, I think these trade agreements are a bad deal just like many -- the ones that came before it, and I think people are right to be upset about it.
ROBERTSAlthough most economists disagree with you?
MISHELWell, I'm not so sure about that. The -- at best, these agreements, according to the administration, will create 100,000 jobs or so over many, many years. The idea of selling this as a jobs program is pretty ridiculous. You're not talking about the actual trade bill that was in front of the Congress this week that actually would create a lot of different jobs.
MISHELThis is the one that deals with the manipulation by the Chinese of their currency, which could potentially create 2 millions jobs which also is bipartisan. That was voted on by Republicans and Democrats in the Senate. In the last Congress, Republicans and Democrats voted for such a bill in the House, but the House leaders won't even bring it up this time.
ROBERTSLet me go to some of our listeners who are anxious to weigh in. And let me read an email from Barbara, who writes to us, "Could you discuss the extent to which our economic problems are long term and do not lend themselves to a quick solution? I am really frustrated at the way the parties do not come clean with the public about the extent and depth of the problems."
ROBERTSLoss of jobs to overseas manufacturing, inadequate education and a long list of complaints, and her final word is argh in capital letters. Brad, you're nodding your head.
CLOSEWell, I think we hear that from our owners. They do think our problems are going to take a while to work out. And when you look, especially -- let's take the housing market, for example. Most small business owners own property. They own their house. They might own the lot or the building their business is located in, so one of their main sources of capital in the past has been their home. They'll take out a loan when they need to keep the business floating.
CLOSEA lot of them can't do that anymore, so it's going to take a while. You know, our members look at the housing crisis, and they just -- their attitude is, let's let it sort itself out and get back to where we need to be. But it's going to take time.
ROBERTSDave in Cleveland asks us, "What will happen to the presidential economic debate if the super committee fails to meet its goals?" Now, Jim -- just to remind our listeners, a super committee was created by legislation last summer as part of the debt ceiling debate, and that they have been assigned the task of cutting, I think, it's $1.3 trillion from the budget.
ROBERTSAnd if they fail to come to an agreement, then some automatic triggers would come into play. Answer Dave's question about what will happen if the super committee fails.
TANKERSLEYI think the biggest thing you'll see in terms of the politics will be not in the economic front but in the foreign policy front because that -- it's going to force a lot of defense cuts as part of the trigger. And so if the trigger forces defense cuts, you'll have -- you already have candidates, like Mitt Romney, saying that we need to spending more on defense.
TANKERSLEYAnd that cry will just grow if we get more mandated cuts because -- if the committee has failed to meet its goals.
ROBERTSAnd what are you hearing? The committee has been rather secretive, trying to meet in private on the assumption that you can't make these deals in public because organized opposition groups on both sides would attack it before it was ready. What are you hearing from inside the room, anything?
TANKERSLEYI think it's as much of a mystery to me as it is to you, Steve. I'm not -- I'm don't -- I wish I could share some fantastic inside information, but I just don't have any.
ROBERTSLet's -- here's a question from Rick from Jacksonville, who asks, "We keep talking about the Republican and Democratic bases, but we haven't defined who each is. I'm a middle-class Republican willing to bet nobody is really taking me into account. Big money seems to put both parties into office." Larry?
MISHELWell, I think he's one of the 99 percenters, as am I, and I think that that's the people that aren't represented. This economy has been run by policies for over 30 years that had been generated by people with power and wealth and large corporations. And it's worked for them because the upper 1 percent has garnished 50 to 60 percent of all the income gains and, even more of that, of all the wealth gains over the last three decades.
MISHELSo it's working very well for them, but it's working as designed. It's not an accident.
ROBERTSHere's another email from Richard in Birmingham, Ala. "So last night, none of the Republican candidates placed any blame for the nation's economic woes on Wall Street. They seem to have just forgotten or overlooked or ignored or had a trauma-induced memory lapse. It was Wall Street, not the federal government, that engaged in a high-risk hedge fund and a meltdown which led to the Bush administrations bailout in September of that year. The mind boggles," says Richard. What do you think, Brad?
CLOSEWell, I think that's reflective of a lot of our members. I think, when they saw the crash in '08 and they saw their housing values plummet, and you saw all these derivatives and crazy repackaging of mortgages, this is not something that our members appreciated. And then a quick bailout. Our members were completely opposed to TARP. They thought that should sort out on its own.
ROBERTSWe'll be back with your phone calls and my guests and our further discussion about jobs and what can be done about it on the Hill and among Republican candidates, so you stay with us.
ROBERTSWelcome back. I'm Steve Roberts, sitting in today for Diane. Our subject this hour, jobs. What can be done about it? The Republican debate last night in New Hampshire, the emerging developments on Capitol Hill, the defeat of the president's job bills yesterday on Capitol Hill and the possibility that today the Congress will deal with three trade agreements and many other things happening on this subject.
ROBERTSLarry Mishel of the Economic Policy Institute is with me. Brad Close of the National Federation of Independent Business and, on the phone from New York, Jim Tankersley, reporter from the Nation Journal. And let's turn to some of our callers. And let's start with Tom in Ann Arbor, Mich. Tom, welcome, you're on "The Diane Rehm Show."
TOMYes. I'd like to know where they get the information that most people that have jobs in America are working for small companies, and how current is that information?
ROBERTSWell, you ask a question of someone who, actually, probably has the answer. Brad Close is with the Federation of Independent Businesses. You take that one, Brad.
CLOSEYeah, happy to. Small business administration has the most up-to-date stats, and it's in the high 90 percentile of folks who work for small businesses when you look at companies of under 500, for sure. The best majority of businesses are classified as small businesses, and most of them are under 20.
ROBERTSAnd is it also true that -- in terms of new jobs that are being created?
CLOSEYeah, it's about a half to two-thirds of new jobs get created by a small business, depending on the industry.
ROBERTSLarry, you're shaking your head.
MISHELWell, you know, there's a -- a large majority of the businesses are small, but that doesn't mean -- because they all have very few people, not necessarily a large majority of the employees work for small businesses. In fact, you know, the best research shows that, you know, business -- employment is generated by maybe startups, but there's a lot of small businesses that start up and fail. There's no real reason to focus on small business versus other size.
MISHELAnd right now our problem is not -- you know, is basically that there are no customers out there. We're not really taking about that. There's no customers for small businesses, no customers for medium size businesses or large businesses. And, you know, there's nothing very special about size. You know, they come in all different kinds of industries, and I don't think that's really the important economic phenomenon.
ROBERTSBrad Close, you said something that triggered several reactions. Your comment that some of your members objected -- would object to the extension of unemployment benefits. We got an email from Tim who says, "The NFIB's representatives comment that people tell his members they will take a job when their unemployment insurance runs out is a horribly calloused insult to the unemployed.
ROBERTS"I am appalled that you'd even think of making such a statement." And we have a tweet from another listener who says, "Unemployment benefits of $400 a week would not keep an unemployed person from taking a good job." How do you answer these questions?
CLOSEWell, it's not just a statement we threw out there. It's what we hear. And $400 a week is not much. But where we find this is folks who are in their 20s, who are single, have no mortgage, have no family. That is something that they can handle and get by with. And so when we talk to members, especially in industries that are a more blue-collar type industry, this is what they're hearing when they go to fill a job. So it is a problem, and, again...
ROBERTSBut it's counterintuitive to anybody who looks at the pictures of when there's a job fair and there are lines around the block, and the statistics Larry quoted, which are universally recognized...
ROBERTS...of four people seeking every job opening and people desperate for work. I mean, we hear these stories every day. It just -- how does a listener hearing you say that just doesn't understand that?
CLOSEWell, it's not to infer that the majority of folks on unemployment are riding the pines and not want to get a job. But we do find from our business owners that this is a problem, especially in specific industries. You know, the incentive...
ROBERTSI think, a whole lot of people out there would say tell me where those jobs are, and I'll be on the first bus to get them.
CLOSEThe owners would love that.
ROBERTSOkay. Let me get...
MISHELWell, the other NFIB's own surveys don't even show that the problems that they are facing is the cost of labor, the availability of labor. I just think, you know, this is just word of mouth.
CLOSENo. No, no.
MISHELAnd it is insulting to the unemployed.
CLOSENo. That's not accurate.
MISHELYou know, listen, if the unemployed...
ROBERTSWe've got everybody talking at the same time -- don't talk the same time, please. Finish your point, Larry, and I'll...
MISHELYeah, I'm just saying, you know, we don't have high unemployment because the people on unemployment insurance aren't willing to take jobs. Not everybody who's unemployed is actually on unemployment insurance. If they're not taking jobs, and somebody who doesn't have unemployment insurance would take the jobs, we still see 9.1 percent unemployment. You know, it really is an insult to people.
MISHELAnd the unemployment benefits that are -- we're talking about being continued for next year are paid by the federal government and not paid by the taxes that the small businesses are paying to their states for the unemployment insurance system.
ROBERTSQuick response, Brad.
CLOSEWell, our members, depending on the state they're in, depending on the situation of the unemployment fund, they are concerned. Their taxes will go up in January to pay for more benefits. And that is another cost to the business. And for the little guy, taxes, expenses, they do make a difference.
CLOSEI mean, unlike a corporation, where decisions are made by executives with shareholder money, for a small business owner, every investment is a risk because it is their money. They have to decide, do I allocate something to this? Or do I need to set it aside to pay an expense? Or do I put it on my kid's college fund?
TANKERSLEYSteve, can I jump in really fast here on this?
ROBERTSQuickly, 'cause I want to go to another call. Yeah.
TANKERSLEYI just want to make two quick points about the unemployed that are at risk, that economic research shows definitively. The first is the longer you're unemployed, for a certain amount of time, once you pass a certain amount of time or duration of unemployment, it is much harder for you than ever to go back to work again. You just -- you lose skills. People don't hire you. The second point is...
ROBERTSThere's almost a stigma attached to it, right?
TANKERSLEYAbsolutely. And young people who start off unemployed and stay that way, especially coming out of school, lose enormous earning power over their lives. So this is why it's so -- we can't just wait another year to start bringing down unemployment. We risk making what is, right now, a cyclical problem, an intensely structural problem.
ROBERTSNow, let me turn to Robert in Miami, Fla. Thanks for joining us on "The Diane Rehm Show," Robert. What's on your mind this morning?
ROBERTYes, how are you doing? I just wanted to continue the conversation or the statement made by the prior individuals regarding this guy's statement about people not wanting a job because they won't wait for their benefits to go -- to went out, or they choose their benefits over a well paying job. This is ridiculous. You know, I've been unemployed for a year, and, you know, I have a doctor degree.
ROBERTAnd I see people who are not, you know -- and I'm involved with community people, and, you know, they want jobs. And they don't want to hear this stuff, you know, that conservative, the Republicans continue to say that people want to be on benefits because, you know, they're lazy and everything. They should go get a job just like it was suggested, you know, from these people that are protesting in Occupy Wall Street.
ROBERTThis is -- no one last night had anything specific about having -- building a jobs program right now, no one. (word?) said, in 1985, in the 1980s, the top 5 percent of wealth (unintelligible) had $8 trillion dollars. Their wealth was over $8 trillion. Now, it is $40 trillion. They said, us, the middle class has been stagnant since the 1970s. Oh, we have been shrinking, and most of those jobs, most of their income has been going down.
ROBERTIt is ridiculous for this guy -- suggest that people are not out there trying to, you know, bust their hump to get a job because they want to be on benefits as opposed to getting a job. Thank you.
ROBERTSThank you, Robert. Brad.
CLOSEWell, so here when you look at the small business economy now, one of the things that gets bandied about is uncertainty, right? Everybody talks about the uncertainty out there. For the little guys, it shows up in our surveys every month. And about one and five of our members express significant uncertainty. That is their number one concern going forward.
CLOSESo when we look at why small businesses aren't creating jobs, why they don't want to -- because, traditionally, when we come out of recession, it is small businesses that start hiring first. That hasn't happened this time for the first time, and it is because they look at the financial situation. They look at, what are my costs as a small business owner going to be going forward over the next two, three, four years? And it is impossible for them to predict it.
CLOSEThe political environment right now is in flux. There is really no way for them to say in four or five years that I know where my costs are going to be, and that I can afford to create a new job.
MISHELI've looked at the NFIB survey back to 1973 when it began. And I've looked at how many small businesses report concerns about regulation and about taxes. And the fact is that there's -- they always complain about regulation in taxes. And they're not complaining more now than under Reagan, under George Bush's daddy, under Bill Clinton, et cetera, so that is -- this is not a special concern right now.
MISHELWhat is a special concern is that we have high unemployment. We have to do something, just like Jim said. If we don't, young people coming out of school, college and high school, are going to be scarred forever. People who are unemployed are going to be scarred forever. We're going to -- we're losing output we could create now that we can never -- that opportunity will never come back.
MISHELYou know, the average person -- you know, the per capita income is far down, and it will be down for years to come if we don't do something. So we should do something now. We have a building on fire. If you want to worry about the foundation being flawed, fine. Let's work on that, but the building is on fire. Let's put it out.
ROBERTSYour comment, Brad, did trigger a number of responses...
ROBERTS...and fair enough. That's why you're here today. And -- but let me read you yet another email from Wayne, who writes to us, "I was on unemployment when I was in my 20s. It was a humiliating experience every week to have to go stand in line, prove that I had actively been searching, just to pick up a paltry check.
ROBERTS"He is exaggerating what conservative businessmen have been telling him because they do not want their taxes to go up." Fair enough or not?
CLOSENo. I mean, you know, I understand folks are on unemployment. It's not meant to be an insult, and this is not a widespread problem. But we do talk to our members every month. We talk to them at the state level. We run an economic survey every month. We do issue surveys every month, and this is something that pops up in the surveys, that they are concerned that job openings they have are not always being filled.
CLOSESo this is not the predominant problem. So for folks who are unemployed to be insulted, it's not meant as an insult and not to be -- and I hope -- and I'm sorry if you took it that way.
ROBERTSBut I want to step back and pick up on something Larry said, the larger issue here. As the president has said repeatedly, said it again yesterday, the economy needs a jolt now. He said that his jobs bill is one that would -- the insurance policy, I think, is one of the ways he put it against the double-dip recession. Larry drew a similarly emergency picture of the economy. Each one of you, I want -- I'll start with you, Jim.
ROBERTSIs there anything that can be done in the next year, between now and the election, that will alleviate, in any way, the kind of distress the president is talking about, both economically and politically, or are we pretty much in a paralysis state for the next year? What do you think, Jim?
TANKERSLEYI mean, I certainly think there are things that can be done. I wrote a cover story on this back in August about how there are several grand bargains just sitting out there waiting to be had. When we talk about something that Brad was mentioning earlier, there has been no serious effort by the Democrats and Republicans to find common ground on what would be a dramatic and aggressive housing policy.
TANKERSLEYIf you could find a policy that paired trying to move people who are being foreclosed upon, who borrowed too much and really should be out of their houses, try to get them moved out faster, with a policy that offered some help to keep the people who are -- who need to stay in -- who can stay in their homes, can afford their homes if they just had a job but have been out of work, if you could find some way to pair those two ideas -- one from the right and one from the left -- you could maybe stabilize this housing market, which would have dramatic positive impacts on the economy.
ROBERTSI'm Steve Roberts, and you're listening to "The Diane Rehm Show." Larry Mishel, answer your own question. Is there anything that can be done now or that's economically and/or politically feasible -- which are not the same questions, I know -- between now and the elections that can make any difference at all?
MISHELWell, there's a lot that's economically feasible. What's politically feasible is a tougher question. But one bipartisan policy that will create jobs and actually lower the deficit is, in fact, this China currency bill. If we get tough with China, get them to stop the currency manipulation, we will increase our exports, decrease our imports, create millions of jobs, have more government revenue, and there is a bipartisan coalition for that.
MISHELIf the Republican leaders in the House would let a bill go through, if the president would sign it, this could something that would have an effect.
ROBERTSIn fairness -- and this came up in the Republican debate last night -- your view is not universal, and there are a lot of people who fear a trade war with China, which is United States' biggest creditor, and that -- and this could be a very destructive bill, not a productive one.
MISHELWell, my view is that it would be -- it would help a lot. It passed the Senate. It could pass the House, and the president could sign it. But to have a deal with the Republicans who actually want to raise interest rates, cut spending, which will actually decrease the number of customers out there for small, medium and large businesses, doesn't seem, to me, to make sense.
MISHELThe president has proposed a plan that will create millions of jobs in the short term, prevent jobs from being lost as we discontinue the unemployment compensation program and the payroll tax holiday, and pays for it over the long term in, actually, a deficit-reducing way if people just don't want to protect those with high incomes and wealth from higher taxes. That's okay, but that's not the same as saying you want to really help people get jobs.
ROBERTSNow, Brad, I want to give you a chance to weigh in here. A lot of the Republicans last night were talking about solutions that are not short-term solutions.
ROBERTSThey -- when you talk about getting rid of the Dodd-Frank Bill, to take one example -- it came up a lot last night -- that's a bill that provide, you know, it imposes regulations on financial services and financial institutions -- that's not a short-term fix. And that's not going to make any difference to anybody out there over the next year.
ROBERTSFrom your perspective, is there anything that would make a difference in the 9.1 unemployment rate and the suffering that everybody has been describing?
CLOSEI think we would probably say the short-term prospects are not great. Our members, when you look at the small business economy, they're suffering. It's tough. We are in a political season that is going to boil down to an election in a year, and I think it's going to take an election to sort itself out before you get both parties figuring out where they want to go. And can they cooperate on certain things and move forward?
CLOSESo I -- being a pessimist and looking at the environment on Capitol Hill in D.C., I think that's going to be hard to do in the next year.
ROBERTSNow, Jim, you say that you're in New York reporting on the Occupy Wall Street protest. And as you -- there are many factors at work here and not a clear program statement to the protest. But give us a sense, if people listen to what Brad says -- I don't mean his description of the situation -- and they say -- and they're told, there's nothing much that can be done to improve their situation, is that only going to fuel the protest?
TANKERSLEYI think the protests are, in large part, a direct outcry against what Brad just described. The folks I spent all day talking to yesterday down at Zuccotti Park feel as if the system, the political system right now, is just not delivering the change that they need, the opportunity that they want to work. I mean, I talked to a lot of young people who say, you know, they're in college or they've just gotten out of college.
TANKERSLEYAnd they just want the chance to have the same opportunity to go to work that their parents had. And with -- almost 10 percent unemployment rate, that is not being addressed by Washington because no one can seem to get along, they've sort of decided, hey, we're just going to try to create our own little society here in the park, and get around to the demands later.
TANKERSLEYBut, most importantly, we just want to say we're outraged at the system. The system is just not working for people like us.
ROBERTSAnd do you have any sense that anybody is listening to them?
TANKERSLEYI think that is the question. I mean, I certainly think people are listening to them more today than they were three weeks ago, and I certainly think that more people are listening to them than if folks were just quietly protesting in their own homes or just quietly seething in their own homes, which I think a lot of Americans are, frankly.
TANKERSLEYBut to the extent that their movement sinks or swims, it will be how much it can catch on, how much can it spread from one little, you know, two-block park in New York City out and across the country, and I think the jury's out on that.
ROBERTSOkay. That'll have to be the last word. Jim Tankersley is reporter for National Journal. Also with me, Larry Mishel from the Economic Policy Institute, Brad Close of the National Federation of Independent Businesses and, earlier, Chris Cillizza from The Washington Post. Thank you all for joining us on "The Diane Rehm Show."
ROBERTSI'm Steve Roberts, sitting in today for Diane while she's away on vacation. And thank you, our wonderful audience, for spending an hour with us.
ANNOUNCER"The Diane Rehm Show" is produced by Sandra Pinkard, Nancy Robertson, Susan Nabors, Denise Couture, Monique Nazareth, Lisa Dunn, and Nikki Jecks. The engineer is Erin Stamper. A.C. Valdez answers the phones. Visit drshow.org for audio archives, transcripts, podcasts, and CD sales. Call 202-885-1200 for more information. Our email address is firstname.lastname@example.org, and we are on Facebook and Twitter. This program comes to you from American University in Washington. This is NPR.
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