JIM LEHRER: Now, economic stimulus part two, the new debate
here. Gwen Ifill has that story.
GWEN IFILL: Nearly five months after President Obama signed
the $787 billion stimulus bill, some of the money has begun making its way to
states and to construction projects. And according to the White House, 150,000
jobs have been saved or created.
But the economy has shed more than 6 million jobs since
December 2007, including 433,000 lost just in June.
Vice President Biden defended the jump-start package this
week, saying the recession was deeper than anticipated.
JOSEPH BIDEN, vice president of the United States:
And so the truth is, there was a misreading of just how bad an economy we
inherited. Now, that doesn’t — I’m not laying this — it’s now our
So the second question becomes, did the economic package we
put in place, including the Recovery Act, is it the right package, given the
circumstances we’re in? And we believe it is the right package, given the
circumstances we’re in.
GWEN IFILL: But Republicans don’t buy that argument. House Minority
Leader John Boehner weighed in today.
REP. JOHN BOEHNER, R-Ohio: And I found it also interesting
over the last couple of days to hear the vice president, Vice President Biden,
and the president mention the fact they didn’t realize how difficult an economic
circumstance we were in.
Now, this is the greatest fabrication I’ve seen since I’ve
been in Congress. I sat through those meetings at the White House with the
president and the vice president. Trust me: There’s not one person that sat in
those rooms that didn’t know how serious our economic crisis was.
GWEN IFILL: With the nation’s unemployment rate now at 9.5
percent, lawmakers are now discussing whether a second stimulus may be needed.
For a closer look at the stimulus package, how it is or is
not fulfilling expectations, we turn to Mark Zandi, chief economist at Moody’s
Economy.com. He has consulted with Congress and the White House during the
And House Minority Whip Eric Cantor of Virginia.
We have invited and also hope to be joined by Chris Van
Hollen of Maryland,
head of the Democratic Congressional Campaign Committee.
Mark Zandi, I’ll start with you, because you were at ground
zero in all of this when people were talking about the need for a stimulus
plan. Is it working?
State of the stimulus
MARK ZANDI, chief economist, Moody's Economy.com: Yes, it'sworking pretty close to what I would have expected at this point in time. It'sstill early days. You know, we're only four or five months into the package.
But state governments are getting checks. Unemployed workersare getting more benefits. Social Security recipients got a check in the mailin May. People who are working have lower withholding. Business tax cuts arefiltering through, and we're even getting some infrastructure spending.
So everything is going according to script, at least so far.
GWEN IFILL: Well, let me ask Eric Cantor about that. You'vehad some disagreements on this point with other members of your body, but alsowith the White House. What do you think abut how the package has been going?And you didn't support it, it should be said.
REP. ERIC CANTOR, R-Va.: Right, Gwen. I think that ifthere's one thing we can all agree upon, as we heard the majority leader in theHouse, Steny Hoyer, say, as well as the vice president, that we're alldisappointed where things have turned out as we had hoped a lot differently.
And, you know, clearly, the stimulus or so-called stimulusplan that spent almost $800 billion has not worked. We were promised -- thepresident said we would keep unemployment under 8.5 percent. We're now over 9.5percent on our way to 10 percent. We have had a massive hemorrhaging of jobs inthis economy.
And, you know, the president said that we had to act and actquickly. And I guess that's why Speaker Pelosi felt it very necessary to jamthis bill through the House, and now we're seeing that it didn't work.
So the question really is, what is the president going to doabout it? As the vice president indicated, it is his economy now. And so let'sstart to do things in a smart way rather than rush to judgment and then flushout the money without any result.
GWEN IFILL: Let me ask Chris Van Hollen about this, becauseit was Vice President Biden who said there had been a misreading of theeconomy, something the president backed away from a little bit, but maybe youcan explain to us what it is the vice president meant by that?
REP. CHRIS VAN HOLLEN, D-Md.: Sure. I think what he meant tosay was that the economy that President Obama inherited from George Bush, theeconomic downturn and the recession inherited from George Bush, turned out tobe deeper and the decline steeper than people, including many economists,anticipated.
But that's a very separate question as to whether or notwe'd be better off today if we did not do the economic recovery plan, which iswhat Eric is proposing, that we have done -- not have passed that plan.
The fact of the matter is, as Mark Zandi said, we're a wholelot better off today than we would have been if that had not been passed. Thefact that we're not in an even better place is a reflection of the fact thatthe economy is in very deep trouble.
Now, the fact is also that this is a two-year economicrecovery plan. About $200-plus billion dollars has already been committed orspent and that, over the next quarter, we anticipate more outlays.
Because one of the things the president was very clear aboutand the Congress was very clear about is that we want to make sure that thesemonies are spent wisely, that they're not wasted, and that requires greateroversight and transparency. So we're trying to accomplish both goals, and weare on track.
Tracking the spending
GWEN IFILL: If I could ask you that, because you sit on anoversight committee which was talking abut this today. And there was some concernamong other lawmakers and even some of the folks who testified, governors whotestified before you, that maybe the money wasn't being allocated correctly?
REP. CHRIS VAN HOLLEN: Well, the testimony in front of ourcommittee -- as you said, we had three governors, and all three governorstalked about the fact that there had been job creation and jobs saved in theirstates as a result of this economic recovery package. They were unanimous on thatpoint, that their states were better off as result of this and that the peoplewho lived in the state were better off as a result of this.
Now, they did -- what they said was that, because of theaccountability provisions, some of the money hasn't gotten out of the door asfast as it might have.
But, again, we want to make sure -- and in order to maintainthe credibility of this program -- that those monies are not misspent. And thatrequires more oversight and more accountability. And we've asked the governorsto participate in making sure that they're the taxpayers' watchdogs with thefederal government to make sure those monies are well spent.
GWEN IFILL: Mark Zandi, has that money been spent the way itwas supposed to have the accountability provisions, as Mr. Van Hollen describedthem? Have they slowed the process that it was -- this was supposed to be aspeedy injection, and has that slowed it?
MARK ZANDI: Yes, I think to some degree, sure. I mean, Ithink everyone wants to make sure that the money gets out in a proper way, andthat requires a lot more information to be provided, and that slows thingsdown.
But let me say, you know, I do think things are getting outpretty close to what I would have expected. Now, the infrastructure spending,the money for roads and bridges and other things, that's going to take time.And under the best of circumstances, I don't think that we would expect reallyto see that towards the second half of this year into 2010.
All the other parts of the stimulus -- the tax cuts, the taxcredit for a first-time home-buyer, the benefits to businesses, the aid tostate government -- that is already flowing to the economy. And I think it ishaving impact.
And here's the most important point: The biggest economicimpact from the stimulus isn't now. It's really going to be in the thirdquarter, the Q3, and, more importantly, in Q4 of this year. So we really won'tknow with any degree of certainty until very late this year whether thisstimulus plan is working and working well enough.
Too soon to judge?
GWEN IFILL: Mr. Cantor, how about that? Is it just too soonto say?
REP. ERIC CANTOR: Well, Gwen, I am just sitting here alittle bit in disbelief about, you know, making the excuses for the failure ofthis bill. The president promised that we would do something to stave off thejob loss.
And if you are talking about what a stimulus bill should do,it was about preserving, protecting and creating jobs. This bill has failedmiserably towards that end.
Chris indicates that maybe we as Republicans wanted to donothing. Now, he knows that's not true. We presented a plan to the president.It was a plan focused on the job-generators, which were small-business people.
We've got to go about getting investment started again inthis economy. That's the only way that recovery will take place. Any kind of lastingrebound has to come from investor confidence, from working families, from smallbusinesses putting their money back to work again.
This bill has failed in terms of that end. What we've seennow is, as you indicated, Gwen, tremendous job loss. People are losing jobs atabout eight jobs a minute. That's eight households no longer seeing theirpaycheck, wondering how they're going to get through the end of the month.
If you're a factory worker in the Midwest,if you haven't lost your job already, you're worried you're going to lose it.If you are a retail sales clerk, you know what? You are worried about your job,because what do we have coming next is we've got a wage hike that will beimposed on employers.
Now what we see in Congress is a massive attempt to impose anational energy tax on families. We've got too many things going in theopposite direction when we should be about creating jobs here.
GWEN IFILL: Let me ask you about this, Mr. Cantor. They saythey have created or saved 150,000 jobs so far. Is there any argument to bemade that Larry Summers and others have made, the economic adviser, that thereshould have been more money spent on this?
REP. ERIC CANTOR: How can you say that? How can you say thatwhen unemployment now is approaching 10 percent? The president has promisedthat we were going to save unemployment from going past 8.5 percent. That's whywe needed to act with such urgency.
As Chris indicates, now, all of a sudden, we're realizingthat there's a lot of waste involved when you flush out $800 billion from Washington. Never doesthe federal government perform the way that we could see small businessesperform.
We've got to go put in confidence back in to our economy. Wedo that by helping small businesses. We need an investment-led recovery, not Washington spending ourway out. All we're doing is piling up the debt right now. And I think it'sreflected in the lack of confidence in the economy and the markets andcertainly in the polling over the last few days.
Prospects for a second stimulus
GWEN IFILL: Chris Van Hollen, listening to what Eric Cantorjust had to say, it's clear that you're not going to get support for a secondstimulus from his side of the aisle, but is there even going to be support foranother infusion from your side of the aisle?
REP. CHRIS VAN HOLLEN: Well, let me first say, Gwen, I thinkthe American people are smarter than to think that you can turn over an economyor turn it around on a dime when you've got an economy that is sinking quickly.I think I give the American people more credit than that.
Number two, President Obama's recovery plan had a bigcomponent of tax relief for middle-income and lower-income Americans, unlikethe Republican plan, which was essentially all tax relief, when, in fact -- andadding more to the deficit.
Finally, if there's any criticism that could be levied, asyou suggest, there are some people who are saying that we should have done moreby way of investments. If you had the way of my Republican colleagues, we wouldhave done a whole lot less and we would have been in much deeper trouble. Thisis like running up a down escalator.
GWEN IFILL: What about the second -- what about the secondstimulus? Is that possible?
REP. CHRIS VAN HOLLEN: Well, I think it would be prematureto talk about that now. As Mark Zandi has said, we expect more of the money tobe expended in the third quarter. I think we're going to have to wait and seewhat impact that has on the economy.
But, again, if you're running up an escalator that's goingdown, if you stand still, you're going down fast. And the reason we'recontinuing to make some progress is that we continue to take some stepsforward. But because we've inherited an economy going down fast, it obviouslyis difficult to feel.
And, of course, people are suffering out there. We would alllike to see things turn around more quickly. We inherited quite a mess, andwe're trying to fix it.
GWEN IFILL: Mark Zandi, you're the non-politician here. Giveme the pros and cons quickly of whether a second stimulus is desired or evennecessary or politically feasible?
MARK ZANDI: Yes, well, I think it's premature to concludeone way or the other. We'll have to wait until the end of the year, see howthis stimulus is working, and then, at that point, make a determination.
But, here, I'll give you a benchmark. We lost 2.1 millionjobs in the first quarter. We lost 1.3 million jobs in the second quarter. Inthe current quarter if we lose 750,000, and in the fourth quarter 400,000, andby this time next year we're not losing any jobs, then, by my definition, thisstimulus had worked reasonably well and we won't need another stimulus.
GWEN IFILL: Mark Zandi of Moody's Economy.com, Eric Cantor,House minority whip, and Chris Van Hollen with the Democratic Congressional CampaignCommittee, thank you all three very much.
REP. CHRIS VAN HOLLEN: Thank you.
REP. ERIC CANTOR: Thank you.