Return to Transcripts main page
Is the Recovery Moving Fast Enough?; Austan Goolsbee Comments on Latest Jobs Report, Economy; Breaking Down the Debt Ceiling and What It All Means to You; The Flip Side of the Jobs Report
Aired January 8, 2011 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ALI VELSHI, CO-HOST: The economy is moving in the right direction, but are we getting to where we need to be fast enough?
I'm Ali Velshi. Welcome to YOUR MONEY.
One hundred and three thousand jobs added in December, 1.1 million jobs total added in 2010; 8.5 million jobs lost, however. Look at this picture, since the recession began, all of that red. Now, December, the private sector did add 113,000 jobs. That's where we want the jobs to come from, the private sector, not the government. The unemployment rate dropped, too, from 9.8 percent to 9.4 percent. And I'm going to tell you why I don't think that's as important.
Christine Romans joins me now. Christine and I are geeks, we love to look at trends. You average it out, Christine, 2010, 94,000 jobs created per month is that enough?
CHRISTINE ROMANS, CO-HOST: No, it's not enough to keep up in a modern labor market where you're putting people to work, or they are graduating from college and there's opportunities for them, where they are moving to a new part of the country and they are finding a new job where they are moving up in their career. No, that is not enough. But it's better than losing jobs every single month, Ali. I think the question here is what happens in the beginning of the year. Can you start to magnify that so you're having more than an average of 94,000? We need more than that is the bottom line.
VELSHI: Let's just talk about the magnification. When we are losing jobs it magnifies because more people are out of work so they are not spending, so demand goes down so other businesses fire people. When you're hiring, that's more people with jobs who are then creating demand as we've seen consumer demand increase during the holiday season for instance so it should magnify. But how do you get it to really ramp up to 200,000 jobs a month, 250,000, what did you tell me 300,000 is what we need to get back to where we were before this recession?
ROMANS: You need years of 300,000 jobs every month, two or three years of that to get back to where we were before this recession. And the question, my big concern here Ali, my big concern is you're seeing action in one part of the labor market, you are seeing people starting to get jobs again. Make no mistake about it and then you see 6 million people who have been out of work for six months or longer, 14, 15 million people who are out of work in general, and 17 percent underemployment rate. I'm worrying about two speeds, two gears, to classes in the labor market that's going to be a real profound economic and political story for 2011.
VELSHI: Which is why on your show, your bottom line, you are talking about jobs that are available that you can retrain into, really important. If you're in one of these jobs that have just been losing employees because of globalization or technology, you've got to just not worry about the world's politics. You've got to worry about your life.
Let's bring Stephen Moore in; he is an editorial writer for "The Wall Street Journal."
Stephen, in addition to the jobs gain, we're on a bit of a roll in the economy, holiday sales were up, and Fed chairman Ben Bernanke said that the recovery is finally getting stronger. Put aside jobs for just a second, because we know how important that is, but the other parts of the economy seem to be firing on a few cylinders. Is it time to stop talking about a double dip recession?
STEPHEN MOORE, EDITORIAL WRITER, "THE WALL STREET JOURNAL:" I think it is and let's keep our fingers crossed on that, Ali. But I'm with you, I think that 2011 is going to be a pretty bullish year for stocks and for the economy in general. I also agree with Christine on the problem is we're not creating enough jobs.
If you look at that jobs report that came out today. The good news for folks out there, who have jobs, is employers are not laying off workers. That's really good news. The bad news, as Christine said you know what they are still not hiring at the pace we needed. To just give you one statistics, if we only create 100,000 jobs a month it is going to take us six or seven years to get the unemployment rate just down to 8 percent which is still way too high.
VELSHI: Right. Ben Bernanke said in his testimony on Friday maybe four or five years.
Let's bring Roland in, Roland Martin a CNN contributor.
Roland, the private sector as we discussed hiring again. President Obama is starting to score some points with the business community that for so long we thought he was logger head with. Now he picked President Clinton's Commerce secretary somebody you know, William Daly to serve as his new chief of staff. Even some Republicans are getting behind this.
Listen to Mitch McConnell.
(BEGIN VIDEO CLIP)
SEN. MITCH MCCONNELL (R), MINORITY LEADER: I, frankly, think it's kind of a hopeful sign. He has a business background. We used to -- I used to say the last two years, I don't know whether it's technically true or not, but there is nobody down at the White House who had ever even run a lemonade stand. They are all college professors, former elected officials. This is a guy who has actually been out in private sector, been a part of business. Frankly, my first reaction is it sounds like a good idea.
(END VIDEO CLIP)
VELSHI: Roland, what do you think?
ROLAND MARTIN, CNN CONTRIBUTOR: It always cracks me up when you have folks like Mitch McConnell praising a banker, when we had the system when it came to the bankers screwing things up and praising Wall Street who screwed so many things up that we had to actually bail them out and the American people are ticked off about it.
Look, first of all, let's just be honest for the American people, Bill Daley will have no impact on your daily life as an American. This is a job inside of the White House. This is somebody who is going to be able to pick staff members, be able to get the president's agenda. The real question will be, how can he take the president's agenda and be able to usher it through Congress. But again, on the average person out there, this is not going to impact him.
VELSHI: Let me challenge you on this. Because the bottom line, I don't believe it's true. But for two years we've heard how anti- business this White House is.
VELSHI: If he can create the impression in the public that it's not, Christine, will that make somebody hire more people?
VELSHI: Will that make business less fearful to invest more money, all that money that is sitting on the sidelines.
ROMANS: I think this is over all reshuffle of his economic team, don't forget you're going to have Gene Sperling coming in at the White House as a key economic adviser as well. I mean it is sort of resetting the button as you head into the election. He's more centrist. That's a place that he's been criticized for moving away from the center, he's moved back to the center. I mean, I think that it doesn't inspire somebody to hire somebody because Bill Daley is in there but I do think that it shows that the president is serious about getting the economy going again and that's going to mean he's going to have to mend some bridges with the community.
MARTIN: But behind one person one person is not going to do that.
VELSHI: But as Christine said it's not just one person it's a few people who are coming into different jobs.
MARTIN: It's three. But again though this is the whole problem here, OK. When you talk about where businesses are they are not it sitting there saying oh, we're not going to hire 300,000 folks a month because we need one guy hired by the president who knows our particular plight? The issue and I think we have to understand this. When you're talking about consumer confidence, people buying things, the reality is we have a change in culture in mind-set in America.
That is people have realized based upon the last three years that you cannot continue to live the way we have been. I think what we need to do is stop. Stop this whole notion every month of, OK; a new job report is out. Is it taking off? It is not going to happen. I know it is painful. If you don't have a job, it is hard to hear that but we have to be able to have small, sustainable growth over the next two years so we can change the mind-set of America on spend, spend, spend, and a job will always be there. We don't want to hear that, but its reality.
VELSHI: Hold on right there.
Stephen, I know you have some views on this and we're going to get to you on the other side. Because I kind of know where you stand on this and I think our viewers need to as well. But let's get the White House their take on the jobs report. We'll talk one-on-one with a key member of the president's economic team who despite what Roland says might actually have some impact on your life. Stay with us.
VELSHI: Let's get the view from Washington on jobs. Austan Goolsbee chairs the president's Council of Economic Advisers. He joins us now from the White House.
Austan, good to see you.
Look the private sector has been adding jobs steadily for the last year, that's great; we want private sector jobs over government jobs. But as enthusiastic as I like to be, as optimistic as I like to be, 103,000 jobs created in December isn't enough to get us on that road to robust recovery. What's your take?
AUSTAN GOOLSBEE, CHAIRMAN, COUNCIL OF ECONOMIC ADVISERS: Well, I think you're being a little unfair. It was 103,000 both last month and the month before jobs numbers got revised up by another combined 60-plus thousand. For the year 2010, we added 1.3 million private sector jobs and that's the most in four years.
As you know and as we've talked about many times before, any one month is very volatile. What's better than using any one month is taking a short average. If you take the fourth quarter, the last three months of the year, that's the best quarter in almost four years. They show considerable progress. We're going the right way.
Now, I agree with you, the president is the first to say that we have a long way to go. But I think we're clearly headed in the right direction and the substantial drop in the unemployment rate was also a nice feature.
VELSHI: Wait a second, the unemployment rate that we're measuring, a smaller pool of people, we are measuring about 260,000 people who dropped off of that. So isn't that a bit of a red herring?
GOOLSBEE: No, I don't think so. The labor force shrank some, but there was also in the household survey very substantial job creation. So the unemployment rate fell in large measure because we were adding jobs.
VELSHI: Austan, we need small businesses to hire people the way they have done traditionally in America, we need large business to hire people. There's an argument out there, which I don't usually subscribe to, that it is the shifting policy sands for the last two years that have prevented people from hiring. My bigger take is that it's the access to credit and it's the lack of demand.
We are seeing demand pick up. We are seeing consumers going back to the stores. What else can you do and what else can Congress do in the first quarter of this year to encourage businesses that are thinking about hiring or have started hiring to continue hiring and to step it up?
GOOLSBEE: Well, look, I think it's a great question. I think we did a very substantial amount in the tax deal in the lame duck. So these jobs numbers are for December, so they predate the impact of policy in 2011.
VELSHI: Let me ask you about the debt ceiling. I just want you to listen to this, this written into the Senate record in 2006, then- Senator Obama's take on raising the debt ceiling. "America has a debt problem and a failure of leadership. Americans deserve better. I, therefore, intend to oppose the effort to increase America's debt limit," end quote, March 16, 2006.
Austan, that sounds like what a number of Republicans are saying. It sounds almost like Tea Party rhetoric, they will not vote to raise the debt ceiling today.
You recently said, if Congress doesn't raise the debt ceiling -- I loved your words -- you said it would lead to a worse financial economic crisis than anything we saw in 2008. Now has the president changed his position or have you two not been talking?
GOOLSBEE: Look, Ali, you know that's very misleading. All the Democrats made a statement vote, the outcome was never in doubt at that time. What I have said and what Secretary Geithner has said and I think every responsible party agrees with, is that you should not play games with the full faith and credit of the United States.
Everyone acknowledges and the president has said for a long time that we must confront the long run fiscal challenges facing the country. That is a discussion about the budget. Let us have a discussion about the budget and when the president releases his budget in a few weeks, I think you will see he's not afraid to have a tough minded discussion and make tough choices.
That's totally different than playing chicken with the debt ceiling and playing games potentially with the full faith and credit of the United States.
VELSHI: And you and the Treasury secretary both said that if this doesn't happen this spring we'll hit that debt ceiling. We appreciate you having this tough conversation with us.
Austan Goolsbee, good to see you.
GOOLSBEE: Good to see you.
VELSHI: OK, I'm playing with the full faith of my viewer ship right now by continuing a discussion on a debt ceiling Stephen Moore. I'm not sure it is the sexist topic, but it is an important one. If we run our credit card bills up to our credit limit you can't use the credit card anymore. The U.S. is up to its limit within the next two months. It will hit its $14.3 trillion credit limit.
What is Austan Goolsbee saying will happen if that debt ceiling is not extended and why are Republicans not getting on board with extending it?
MOORE: Well, I think look, I think there is going to be a showdown three months from now on this debt ceiling. I don't think there's any question about it. It's going to be a stair-off between the White House and the Republicans who now run the House about whether we have what is called a clean debt ceiling or we just give the federal government an extension on the credit card so we go from 14 to 15, to 16 trillion.
Or the position of many of the Republicans I talk to, and I happen to be in this camp, that if we are going to raise the debt ceiling, something American people aren't really excited about, that we should do it in a responsible way that has budget reductions, budget reforms to make sure that we're not borrowing a trillion dollars a year between now and kingdom come. And I think that's a very plausible and sensible position that is fiscally responsible.
VELSHI: Roland, he makes it sounds so plausible and sensible.
MARTIN: First of all, it's called delusional. Look, Ali, first of all I love it when Stephen says the American people really don't want this to happen. They don't know anything about the debt ceiling. Let's just be honest about that, OK, that's truly an economic inside the beltway conversation.
MOORE: They do know about the debt, though.
MARTIN: Stephen, one second. I got this. Let me talk to the American people. Folks, this is very simple. You have a credit card, you call the company and they say, sorry, we're not raising your limit. I know you want to go on vacation but we're not raising your limit. Unfortunately for our system we easily raise the limit. I do agree that what has to happen, the White House as well as Democrats are going to have to be able to confront the reality.
And that is OK. What is going to be the tradeoff in terms of raising the debt ceiling? That has to be the question. Again, this week I saw Congressman Allan West on "JOHN KING USA," He talked about Medicare cuts, Social Security cuts, and he wouldn't outer defense. The reality is Democrats and Republicans are going to have to stop with their nice sacred cows. We cannot continue on the current path with the spending. If you're home right now, you tell your kids, sorry, you can't go to a fast-food restaurant every week, you can't go to the movies, you can't buy a new pair of shoes, just like the American people at home make sacrifices, and politicians must do it as well.
VELSHI: Hold the phone. Christine, these two guys in the bottom here, are they agreeing on something?
MOORE: I'm agreeing with what you're saying. My point is, look, when Austan Goolsbee says there's going to be a crisis if they don't pass the debt ceiling, you know what I think a lot of American people think if we do pass the debt ceiling, if we keep borrowing a trillion dollars a year there's going to be at some point a financial crisis in this country.
MARTIN: We have to accept the reality though that we still have according to the Republicans and Democrats a fragile economy. You do not want to damage that by trying to make a partisan ideological point.
VELSHI: I'm going to take your lead on this, guys. I want to thank you both. You did say something, Roland, that's true; most of us don't understand the debt ceiling. So I'm going to say good-bye to you guys. Thank you again. It's very weird that you agreed on something. But thanks for being here. Christine, you stick around.
MARTIN: We agree on liking you, Ali.
ROMANS: I have some more thoughts on the debt ceiling though. Hold that thought. Because I have a couple of things to say about the debt ceiling after the break.
VELSHI: We will talk more about this. We'll explain this. We'll give due credit to these guys and explain the debt ceiling. What really happens if we hit it? Roland just told you what happens if you hit your credit limit, what does hitting the debt ceiling matter to you? Christine and I will explain that.
Stay with us.
VELSHI: Roland Martin just said that Americans don't really understand the debt ceiling. So let's break it down for you.
The debt ceiling is like a credit limit for the government. It can only be raised by Congress. Let me give you a look at this. Right now our debt ceiling is about 14.3 trillion, 14.294 trillion dollars, think of that as the nations credit limit. The debt just to the right of that has topped 13.9 trillion. It ticks up every minute. If our debt reaches the ceiling, the Treasury would not be able to borrow any more money, the same way you can't charge on your credit card when it's maxed out.
Jeanne Sahadi, senior writer at CNNMoney, she follows this very closely. Jeanne, this is hardly new, the debt ceiling has been raised 74 times since 1962. In the simplest terms, tell us what happens if the debt ceiling is not raised this time and if we hit the limit, because Austan Goolsbee told me, a little while ago and he had said a week ago that it's going to be catastrophic.
JEANNE SAHADI, SENIOR WRITER, CNNMONEY.COM: Basically no one can actually say definitively what will happen, but everybody you talk to, every budget expert, left leaning, right leaning, and middle leaning, nothing good is going to happen. You're going to basically be in default. Which means we are not going to have enough money to pay what we owe in full, that goes to our creditors, to fund government programs, to pay government benefits, our borrowing cost may go up for everybody across the board. Because the markets would then start to worry that our credibility is not as good as it used to be.
So consumers would pay more, businesses would pay more and the government would pay more. State and local government would pay more. It would actually make our debt situation worse because if our interest rates go up, we would then owe that much more on the debt we already have outstanding.
VELSHI: So there is a lot of ifs and could bes there. But I want to take everybody back to another discussion about ifs and could bes that took place on September 13 and 14, 2008 which resulted in the government letting Lehman Brothers fail. Because some people say it's not going to be as bad as others warn. But Christine I guess people want to know, are buildings going to fall, are lights not going to go on, is snow not going to be plowed, although with you guys snow doesn't get plowed sometimes anyway in New York. We don't really know what happens?
ROMANS: No but we know that, you heard Austan Goolsbee say the full faith and credit of the United States government, the full faith and credit, I mean and Jeanne and I, I think really agree on this. You don't mess around with the full faith and credit of the United States government and the ability to pay its bills and to pay its creditors. This is sacrosanct. This is the gold standard.
I mean I think you've got to resolve all this stuff before it gets to this level. Jeanne, back me up on this. This is about Congress committing money, spending money and then arguing about how they are all high and mighty about not raising the debt ceiling, will Congress pass all this stuff?
VELSHI: So this is separate and apart from another topic that Jeanne covers very well for us and that is the debt, the decision on what to spend, which is the budget. That is different. So Christine makes an interesting discussion. This issue of raising the debt ceiling is not really the decision about whether to spend or not, it's the decision about whether to pay what you've committed to spend.
SAHADI: Right. It's a very self-righteous position to say we're not going to pay our bills going forward when we've already committed these policies which cost a lot of money. The truth is lawmakers have a lot of opportunity to talk about fiscal responsibility. And the people who are saying we don't want to vote for debt ceiling increase, their points are well taken. We are on an unsustainable course; it does need to be changed. And there are many forms in which they can do that.
One of which is the president's debt commission put out a proposal, there are Senators who want to introduce it as legislation, that's a good starting point for the conversation. But if you just suddenly cold turkey stop whenever we hit the debt ceiling which could happen between March and May, that is just very unstable draconian way to adjust our fiscal --
VELSHI: All right. Great, thanks for explaining that to us. Jeanne Sahadi, senior writer at CNN Money and of course my good friend Christine Romans.
103,000 jobs were added in December, last month. One economist claims it's just another disappointing jobs report. We'll find out why next.
MARTIN SAVIDGE, CNN CORRESPONDENT: Hello, I'm Martin Savidge at CNN World Headquarters in Atlanta.
We have breaking news for you; it is coming out of Tucson, Arizona. Several people have been shot this according to the sheriff's office there. The shooting occurred at a grocery store, a Safe Way. According to the spokesperson from the Northwest Medical Center in Tucson, they have received a number of shooting victims.
Now to the other news here, the Tucson "Citizens Newspaper" is reporting that among those shooting victims is Congresswoman Gabrielle Giffords, she is a Democrat with the House of Representatives, and she was there for a Congressperson on the corner gathering. Again, several people shot in Tucson including a congresswoman.
We'll follow this story and have more for you. Now back to YOUR MONEY.
VELSHI: Peter Morici is a professor at the University of Maryland School of Business, he is also an economist.
Peter, you think this jobs report is very disappointing. First I want to just talk about that unemployment rate, the drop from 9.8 to 9.4. Why do you and I share an opinion that we shouldn't be too excited about that?
PROF. PETER MORICI, UNIVERSITY OF MARYLAND SCHOOL OF BUSINESS: Well, we had over 200,000 people leave the labor force; essentially quit looking so they don't get counted if they were in there the unemployment rate would be higher.
In addition, they count people who work at home in the unemployment statistics. We know they are really not fully employed. So they did a little pick up there. In terms of real payroll jobs creation they didn't even add enough jobs to keep up with the growth in the adult population.
VELSHI: All right. Christine, economist survey by CNN Money predict that an average of 2.5 million jobs will be added in 2011. That would be 200,000 jobs per month. That would be the best year since 1999 and double what we just got in December. Is that realistic?
ROMANS: Is it realistic? Even if it did happen can the White House harness that and convince people when you have 6 million people out of work for six months or longer who are not likely to be included as the market starts to improve for jobs this year. I think again you're going to see this two-speed, this two-tier recovery, people starting to get those jobs, other people not. 2.5 million jobs would be great. I hope they are right. I hope those economist surveys by CNN Money are right but you don't see that kind of action in the December number quite yet, Ali.
You're right about the unemployment rate at 9.4 percent. A lot being made about the drop in the unemployment rate, 9.4 percent is not good, not good under any kind of scenario. We can't go on like this. We have to get the unemployment rate lower, 9.4 percent means a lot of folks are very uncomfortable. It makes for uncomfortable politics and it makes for an unsettled situation as we head into an election year.
VELSHI: Let's try and give people a sense of the trends, Bill Rodgers is a former chief economist for the U.S. Department of Labor.
Bill, let's look at some of the sectors that added jobs this month and see if you can help us make any sense of it. It's less clear than it often is. One of the biggest gainers was leisure and hospitality gaining 47 thousand jobs, health care gained 36,000 jobs, retail up 12,000, and manufacturing up 10. Health care has been gaining forever. Retail trade, we had the holiday season. Manufacturing we've been losing for so long that we've started to see a little turnaround.
What does any of that tell you?
WILLIAM RODGERS, FORMER CHIEF ECONOMIST, U.S. DEPT. OF LABOR: Well this is very difficult. It's just one data point. The average over the last three months particularly because of the holiday season and if you do that the actual average private sector growth was about 128,000 and it was broad-based in those service-related sector jobs that you mentioned. So there are jobs out there. But if you want to stay in that industry, it's going to be very, very competitive. But again, each of these industries need occupations, such as managers. So you can expand their choice by moving outward.
VELSHI: Peter, at this point in this economic situation that we're in, is it not right for people who are watching us, who are looking for a job or know someone who is looking for a job to stop waiting for something to happen that's going to get them a job. If you're in one of these industries that has been affected in a systemic way by outsourcing or by technological advance isn't it time to say I've got to retrain into something that is growing?
MORICI: Oh absolutely. If you can afford to retain, if you have the resources to do it you certainly should be doing it. One of the things we do know, whether we get 200,000 jobs or 350,000 jobs like we need per month, the jobs are going to be in very different places and the old economy is gone. Even in manufacturing we're bringing jobs back, the nature of the jobs that we're going to have there will be profoundly different. So this is, indeed, if you haven't found work in the last three months, it's time to retrain.
RODGERS: If I can jump in here, I would say you really need to have been doing the retraining or going back to school over the last few years. But I want to go back to one of the earlier pieces, unemployment rate dropping from 9.8 to 9.4 percent. Yes, we saw some individuals leaving. But again, I think where we are in this recovery; we've had over a million jobs created since January. We've had 128,000 created over the last three months. I agree with Peter, it's not big enough to draw on the unemployment rate, but it is big enough and consistent over these months big enough to start to pull down or bring people who are at the top of their job ladder.
ROMANS: Temporary work, you guys, temporary work, half a million jobs created in temporary work last year, and I just spoke with Tim Gillian (ph), the CEO of Adecco. You know Ali; we have him on this program often. I mean he says there's a lot of action happening in temporary work, but it is not like you use to think of it. People are doing an IT job for nine months and then they are moving on to another IT job for nine months and this is their career.
RODGERS: The good news about the temporary numbers relative to the total private sector that's only down to about 26 percent of private sector jobs.
MORICI: Hold on a second, if you look at private sector jobs creation; a good deal of it is in three areas, health services, social assistance which is subsidized by the government and temporary jobs. We're not creating what I call core, permanent private sector jobs that create enduring paychecks for people that aren't subsidized by the government. At this point in the cycle, we should be doing that. We shouldn't be so reliant on temporary jobs at this point. That number has fallen.
RODGERS: But Peter, I do agree with you. I did a little analysis where I looked at the industries that are growing jobs and compared them to sort of the average hours that you can get in that industry. You know, a little more than half of those jobs are in above average hour industries. But the bigger problem is the growth where those jobs are, low wage industries.
ROMANS: Two quick points. You guys are labor economists. One word each. If you could tell your kid or grand kid what to be for the next 50 years, what would it be? Peter.
(INTERRUPTED BY LIVE COVERAGE OF A NEWS EVENT)