Tavis: Neil Irwin is a staff writer for “The Washington Post” who covers economic and financial issues. His piece in tomorrow’s edition will focus, we’re told, on the one-year anniversary of the Obama stimulus plan. He joins us tonight from, where else, “The Washington Post” newsroom. Neil, good to have you on the program, sir.
Neil Irwin: Thanks for having me.
Tavis: So what do we think about the stimulus plan one year later?
Irwin: Well, what’s unquestionable is that the economy has turned around a good bit since then. You remember last February we were in a deep decline, we were losing hundreds of thousands of jobs a month. It was not clear where the bottom was going to be. It was very bad.
That changed. Over the summer, the economy started to grow again. I think most people would argue that stimulus was part of the reason. We spent around $800 billion, a lot of that was in tax cuts as well, and that’s a major factor in this improvement we’re seeing.
Now that’s not the same as saying that happy days are here again and everything’s fixed, but it was one contributor to this improvement in the economy that we’re starting to see.
Tavis: Because it is the one-year anniversary, the Obama administration, of course, out front taking credit for this turnaround, to the extent that it is, and they’re arguing that they have saved – because of the stimulus they’ve saved about two million jobs. How do you track – how do you know that you’ve saved two million jobs?
Irwin: Well, it’s really hard, and what it comes down to is these really complex economic models where people say all right, what would the economy have looked like if the government had not done this, and try and peel away the impact.
It’s really tricky, though, and people can legitimately argue about these numbers and you’ll see a lot of persons doing exactly that. Also, it’s hard to separate stimulus from a lot else that’s going on in terms of policy.
So the Federal Reserve cut interest rates to 0 percent and did a lot of other stuff, there were all these programs to help the financial sector heal, so separating example what’s due to stimulus and what’s due to other stuff, and what’s due to just the natural healing of the economy. That’ll keep a lot of economics Ph.D.s busy for a very long time.
What’s unquestionable, though, is that we have had some steady improvement in the economy since the summer and just how large the component stimulus was in that, that’s what people can legitimately argue about.
Tavis: You’ve written recently about the fact that even though we’re adding some jobs now, that we are not adding jobs at a pace fast enough to make a real dent in unemployment. Tell me more.
Irwin: Yeah, what – it’s a big country, and people are always added to the work force. We constantly have people graduating from high school, graduating from college, looking for a job.
So it’s not enough in this country just to have a little bit of job growth. You really need to create around 100,000, 130,000 jobs a month just to keep up with that growing population.
Well right now, in January, we actually lost 20,000 jobs. So that’s better than it was a year ago, but that’s not enough to really keep things growing and get us where we need to be. It’s certainly not enough to make up for this deep hole we’re in in terms of unemployment.
So the Obama administration’s forecasting that the country will add about 95,000 jobs a month this year. Even that wouldn’t be enough to drive the jobless rate down that much, and it’ll take some real exceptional job growth to get a real, sustained recovery going.
Tavis: So what do we think, then, that we’re going to do – that is to say, the White House and Congress are going to do on this jobs front? Everybody seems at least a year later to be talking about it. I think the sense I’m getting at least is that it’s on the radar now, like it wasn’t a year ago – jobs, jobs, jobs. What does that really mean in Washington though, vis-à-vis public policy?
Irwin: Yeah, what people are trying to stay away from is something that seems like another giant stimulus package. That’s the naughty S-word right now in Washington, is stimulus. Everybody wants to call it a jobs bill.
That said, a lot of the components are the same kind of thing. What you do is you find ways to do targeted – you might create a tax incentive for businesses to hire, you might do some new infrastructure spending, build more roads, bridges, that put people to work, there’s some other ideas floating around.
The challenge is figuring out what exactly might get passed, and the House has already passed a $154 billion bill that includes a lot of this stuff that we’re talking about. The Senate is – it’s kind of a mess right now, and they’re considering this and that and there seems to be a bipartisan agreement on an $88-something-billion package.
A lot of liberals didn’t like that; they thought there were too many tax cuts and things built into that. So it’s a bit of a mess right now, what happens. That said, there is pretty wide consensus that there needs to be some kind of legislation this year to try and create some jobs and get us out of this deep hole.
Tavis: I was reading earlier today a piece that Vice President Joe Biden wrote for “USA Today,” and it made me think about the fact that a year ago, when the Obama administration was pushing this stimulus plan, we kept hearing that there were all kinds of shovel-ready projects around the country that would put many Americans back to work immediately.
We kept hearing that term, “shovel-ready projects.” I’m reading Vice President Biden’s piece today, and he’s arguing that the best of this stimulus plan is yet to come. I’m trying to square those two things, and I can’t in my own mind. Maybe you can help me.
Irwin: Well, maybe it’s shovel-ready, but it takes a few months to buy the shovels or something. (Laughter) But no, you’re exactly right. The things that really, out of this bill, this $800 billion or so bill that had the most immediate impact in 2009 were things like payroll tax cuts, there’s things like aid to states so it helped state governments not have to cut back on teachers and other employees as much as they might have otherwise. Those were the things that really had the most immediate impact in 2009.
Now in 2010 we’re getting to the point where some of those allegedly shovel-ready projects are actually starting to happen, especially, as the vice president pointed out in his op-ed, as the weather gets a little better, you might see more road construction, bridge construction, superfund, environmental cleanups, all kinds of stuff around the country.
So that’s the impact in 2010. Even that, though, is going to fade as this year progresses, so maybe the summer, maybe the fall we’ll start to see the peak and then a decline, and the impact of that. So that’s why people in Washington are looking to do something new to try and keep the economy growing, even as the original stimulus fades.
Tavis: There was a lot of hype just the other day coming out of the Obama administration about the fact that the unemployment number fell from around 10 percent to about 9.7 percent. What nobody talked about – I watched every – I was channel-surfing television, listening on the radio, trying to find somebody who said not just that the number dropped from 10 to 9.7, but for somebody to say that the numbers for Black Americans, though, in that same release, went up. Why is nobody talking about that?
Irwin: Well, it’s a big report, and I think we should focus on that and all the other elements. This has been a particularly hard recession for lots of different groups. African American men, especially with all the job losses in construction and manufacturing, unemployment among men is up a lot. Younger people just out of college, just out of high school, it’s astronomical.
Figuring out how to fix this, we’re in a really deep hole, and finding ways to put a lot of Americans back to work is kind of the fundamental challenge the U.S. government faces in the years ahead.
Tavis: I guess the question is how much pressure you think the president is going to bear in the coming months as particular parts of his constituency, talking now specifically and most primarily about African Americans, who’ve been hardest hit by this economy, their numbers are three times the national average in some places; broken down by demographic, five times the national average.
Now much pressure do you expect to be coming at him from a loyal part of his constituency as their numbers apparently seem to grow where unemployment is concerned?
Irwin: I think quite a lot. I think you’re nailing something that’s really important and we look at these things in terms of overall statistics – 9.7 percent unemployment overall. But for any individual, it’s either 100 percent or zero percent – you’re either unemployed or not. So for the millions and millions of Americans, about eight million American – eight million jobs we’ve lost, that’s a core part of, as you say, the president’s constituency and figuring a way out of that is I think why their sense of urgency – trying to hold on to congressional seats in 2010, get reelected in 2012, that’s going to be really hard to do if you have continuing high unemployment, especially among some of your core groups. So I think you’re exactly right.
Tavis: If 2009 was all about Wall Street and putting Bernanke on the cover of “Time” magazine as the Man of the Year, if 2009 was about that, is there any way that 2010, now that the focus is on jobs, can be the year of talking about making poverty history in America?
Irwin: I think you are hearing more of that. It is true that in the midst of the crisis everything was about crisis response, so this time last year Tim Geithner was proposing his stress tests and his different things for the financial system, the Federal Reserve was doing its stuff to try and deal with financial institutions.
But now we’re out of the crisis phase. We’re not in the deep, dark financial crisis; the stock market’s up a good bit; we’re not in that phase of this thing. Now we’re just in the situation where there’s a grinding issue of poverty all over this country, and finding ways to deal with that is certainly the phase we’re in.
The question is can Washington find the answers, and can Washington act in ways that are actually productive, given the kind of logjam we’ve seen in the Senate on virtually every major policy area.
Tavis: As you well know, covering this every day, that remains an open question. Neil Irwin, economics reporter –
Irwin: That’s true.
Tavis: – for “The Washington Post.” Neil, good to have you on the program, thanks for your insights.
Irwin: Thanks a lot, Tavis.