Jeffrey Birnbaum
May 10, 2005

Jeff Birnbaum is an award-winning author, television commentator, and a columnist for The Washington Post. He joined the Post in March 2004. Prior to that he spent seven years as the chief of Fortune magazine's Washington bureau and two years as a senior political correspondent for Fortune’s sister publication, Time. (Read Jeffrey Birnbaum's bio)

Q:274,000 jobs were created last month, yet the GDP went down and consumer confidence also took a dip. What is the overall status of the economy and how do economists interpret the mixed messages?

The economy is doing okay but not great. The gross domestic product, which is the measure of the nation's production, experienced a slowdown in this year's first quarter compared to the growth last year. That has compelled a lot of economists to revise their expectations for growth in the current quarter. They generally are looking for growth in the 3% plus annual range, roughly the same as in the first quarter. At least that's what they have been saying. My guess is the strong job-creation numbers over the past few months might encourage economists to nudge those forecasts up a little.

In general, though, economists aren't quite sure whether things will get better or stay pretty much the same. None of them, you'll be glad to hear (or almost none of them) think the economy is in danger of falling into a recession. Growth is still in the forecast, though how robust is under heavy debate.

Q: What industries significantly contributed to last month's job creation? Are these generally low-wage jobs or do they offer the kind of paycheck sometimes called a "living wage"?

One of the harsh realities about the current state of the economy is that inflation led by rising oil-related prices has been outpacing the growth in wages, especially for lower-income Americans. That's a tragedy.

In April, payroll gains were widespread with advances in finance, real estate, trucking, telecommunications, construction, and the movie and recording industries. State and local governments also added workers. That's the good news. The not-so-good news was that job losses were posted among manufacturers, airlines, publishers, gas stations and the federal government. Unemployment among African Americans and Hispanics rose in April.

Q: What are the main reasons for the rising gas prices this year? What is President Bush's plan to lower the cost of fuel? Does the administration advocate conservation?

Oil prices are rising largely because of short supply. Oil producing regions are pumping more than usual, but China and other developing nations are drinking up most of the extra. In addition, the U.S. can't refine too much more oil than it is already, which keeps supplies of gasoline low, for instance, and prices high.

The president says that his long-delayed energy bill eventually will bring gasoline and heating oil prices down in this country because we would be less dependent on foreign oil. The bill would increase drilling in the U.S., for instance in Alaska, and also encourage more nuclear energy, which of course isn't dependent on oil.

The versions of the energy bill that are floating around on Capitol Hill include some conservation but emphasize extra drilling, nuclear power and incentives for alternative energy sources. At the same time, the administration does encourage conservation through several programs at the Department of Energy, which, among other things, instructs people how to use energy saving appliances at home and in their cars.

Q: How concerned are the administration and the Congress about the federal deficit? What impact is the deficit having on the economy?

President Bush says that he is very concerned about the federal budget deficit and Congress has adopted a budget blueprint that lays out a plan to reduce the deficit gradually over the next few years. The problem is that these good intentions often aren't followed with legislation that does anything other than create more federal spending and tax cuts. The president has yet to veto a single piece of legislation, which has inspired lawmakers to spend whatever they want. The result was a more than $400 billion deficit last fiscal year.

The only good news here is that a surprising surge in revenue last month is reducing economists' predictions about the size of the deficit this year. I would wait and see on that one, however. Tax cuts and more spending have been such a staple of the Bush administration that I bet those habits will be hard to break.

The impact of the deficit on the economy is this: the higher the deficits, the higher are interest rates, the harder it is for companies to invest and the slower the economy grows. That's not good for anyone, businesses or the people who are employed by them.

Q: You have written extensively on lobbying groups in your column "K Street Confidential." Have you observed any changes of lobbying techniques after the Tom DeLay controversy?

The techniques of lobbying are age old. But in the wake of the DeLay scandals, fewer of those techniques are being used. In particular, the number of privately funded trips have fallen to about zero. Interests that have business before Congress regularly sponsor "educational" trips for lawmakers and their staffs--usually to warm places. But they aren't doing that much anymore, thanks to the latest dustup over those kinds of junkets.

House Majority Leader DeLay took three trips (to South Korea, Russia and Great Britain) and has been credibly accused of taking inappropriate benefits on each of them from registered lobbyists in violation of ethics rules in the House. DeLay's basic defense is that he didn't know that lobbyists were paying for his travel.

In any case, lawmakers are reviewing and in many cases revising their financial disclosures to reflect better how many goodies they got from lobbyists. That kind of publicity is the last thing members of Congress want. It angers constituents, and for good reason.