JUDY WOODRUFF: Now the economy — the White House today released its annual report to Congress on the economy, predicting an average of 95,000 jobs will be created each month this year. But the jobless rate could go up to 10 percent again, as discouraged workers reenter the market.
This report comes as the U.S. Labor Department reported initial claims for unemployment benefits dropped last week by 43,000 to a seasonally adjusted 440,000.
Well, for more on all this, we’re joined by Christina Romer. She’s chair of the president’s Council of Economic Advisers.
Dr. Romer, thank you for talking with us.
CHRISTINA ROMER, chairwoman, Council of Economic Advisers: Great to be with you.
JUDY WOODRUFF: Tell us, first, what is the main message in this economic report?
CHRISTINA ROMER: You know, I think the — the main message in the report is really threefold.
I think one is to document the tremendous challenges that this president and this administration and this whole economy confronted over the last year and more generally. It’s to talk about the policies that have already been put in place. And here I think the biggest message is just, when you bring them all together, it’s an incredible body of action, that even, obviously, what we have done to try to get out of the recession and heal the financial markets, heal the housing market.
But it goes beyond that to things that we have already done in health care, like reauthorizing the Children’s Health Insurance Program, to investing in innovation and education.
And then, of course, the third part is the president’s agenda going forward. And, again, I think it’s very helpful to bring it together in one place because you see what a — I think what a lovely, coherent whole it is and how it really is all aimed at helping average Americans do better, both right now and into the future.
JUDY WOODRUFF: Well, speaking of those challenges, as soon as the report was made public, Republican congressional leaders criticized it. The House GOP whip, Eric Cantor, said — quote — he said, “This report is full of blame for policies of the past.” He said, instead of praising yourself, he said the administration should have put on — greater focus on small business and on smart solutions to reduce uncertainty.
CHRISTINA ROMER: Well, the first thing to say is, you know, we’re just presenting the facts, and so it’s very much talking about — anyone that looks at this economy knows that there are real economic challenges, and that they were very large last January and continue to be substantial.
The other thing is, this — this volume is full of discussion, for example, of our small business policy, because that’s something where the president, working with Congress, has done a lot of important actions and where we have many more things that we’re working with Congress to do.
You know, it’s a very honest appraisal of — both of what we have already done, how well it’s worked, and the things that remain to be done.
JUDY WOODRUFF: Well, there is that good report that came out of the Labor Department today on unemployment claims dropping last week. But you forecast that unemployment overall is not going to be much below 9 percent or 10 percent this year.
What’s holding employers back from hiring?
CHRISTINA ROMER: Well, that’s a — that’s a very good question.
I mean, certainly, you are right about the unemployment insurance claims. You — we have to be careful, because they jump around from week to week. But, certainly, seeing them go down again is a — is a step in the right direction.
In terms of what you can do to get employers hiring, you know, I do think we are at a really important step in the recovery. We’re seeing GDP grow again. We’re starting to see firms start to hire, for example, temporary workers again. We know productivity is off the charts. They’re producing more with the same or fewer workers.
So, we’re really trying to think of what policies will get them over that next step. And that’s why, you know, I have been a big proponent of the president’s small business jobs and wages tax credit, because I think that’s kind of the uniquely, you know, well-suited policy to say you’re probably going to be hiring a year from now, six months from now. If we give you a tax credit, might you bring it forward?
And I think it kind of builds in — it’s little bit like the cash for clunkers program or the first-time homebuyer’s credit, trying to bring forward what we know employers are going to do to right now, when we know people need the jobs.
JUDY WOODRUFF: Well, how much is the White House wed to that tax credit proposal, versus today, there was a bipartisan jobs bill that was introduced on the Hill? Republican Charles Grassley, Democrat Max Baucus, basically, they’re talking about tax breaks for companies that hire unemployed workers. Is that something that would make a difference in your forecast?
CHRISTINA ROMER: I mean, it’s certainly something that we could support. We’re anxious to work with both houses of Congress to get the best kind of a hiring credit.
You know, our forecast, the one that is reported both in the budget and here in the economic report of the president, was done way back in November, before sort of the specifics of any jobs package was — was talked about. So, I do — so, it has — it has built into it some kind of jobs initiatives, but perhaps not the specifics of things like a jobs credit that we think could be particularly effective.
JUDY WOODRUFF: You — so, you’re saying that something like what these two senators are proposing could work?
CHRISTINA ROMER: I think it absolutely could. Again, I think this is — we should think of this as a first step. I mean, we know that we’re going to need to be working with the House to get a bill.
We also know that there will probably be multiple steps in this, that, you know, the bill — the as it’s coming out of the Senate, you know, there are more things that we think could be very helpful, for example, in energy retrofit or more programs for small business lending. We think all of that is really important. And so we’re going to keep working with Congress, but we’re always happy to see movement, and especially bipartisan movement. That’s incredibly important.
JUDY WOODRUFF: Were you surprised at a report like what I saw today, Bloomberg News reporting that a majority of the Standard & Poor 500 stock index companies are holding onto almost $1.2 trillion in cash at the same time they’re cutting spending? In other words, they’re not letting that money out, hiring people.
CHRISTINA ROMER: Well, I think it does go to, you know, what’s unusual about this recession. I mean, we don’t have a lot of experience with recessions caused by financial crises. And we really haven’t seen that since the Great Depression.
And we do think that those have some different impacts. And one is that firms and financial institutions and even households have just been through a wrenching period, and it does tend to create caution. And that’s part of what you’re seeing with the holding big cash reserves.
I think, you know, part of that is, the natural healing is just going to happen. As the economy does better, I think people will start to get their sea legs again. But we’re always looking for what can we do to help the economy be stronger, to give them the incentives to — to put their caution aside a little bit and start hiring people. And I think that’s going to be an important step.
JUDY WOODRUFF: All right, we are going to leave it there.
Christina Romer, chair of the president’s Council of Economic Advisers, thanks.
CHRISTINA ROMER: Thank you.