ED GORDON, host:
From NPR News, this is NEWS & NOTES. I'm Ed Gordon.
President Bush has put overhauling Social Security at the top of his priority list, and Congress has been busy itself--busying itself with a number of hot-button issues from filibusters to bankruptcy, Terri Schiavo to Tom DeLay. But according to a recent Washington Post/ABC News poll, it's the economy that's worrying the average American. With gas prices high, consumer confidence low and wages sluggish, 57 percent of Americans disapprove of the president's handling of the economy. That's the highest spike in more than a year.
Joining us for a closer look at the numbers in our Washington, DC, studios: Julianne Malveaux, economist and author of "Unfinished Business: A Democrat and Republican Take on the Most Important Issues Women Face," and Tim Kane, Bradley Fellow in Labor Policy at The Heritage Foundation. He's also a former senior economist with the Joint Economic Committee of the US Congress, and he joins us from the nation's capital as well.
Thank you both for joining us. Julianne, let me start with you. We saw the president and his news conference just days ago, mentioning some of the issues in the economy. Tell me a thumbnail sketch of you see the economy right now.
Ms. JULIANNE MALVEAUX (Economist; Author, "Unfinished Business"): I think the economy is sluggish. We don't have the growth rates that we thought we would; our first quarter was 3.1 percent. We haven't been generating jobs in the way that we think we should. Last month 110,000 jobs with--against a projection of about 300,000. The gas prices being up I think is a real negative, especially as we go into the summer season. A lot of families will be cutting back on what they're going to be doing this summer. And, of course, our travel and tourism industry is likely to be cut because of that.
This is a sluggish economy, and, Ed, you're absolutely on point when you talk about the fact that people are paying attention to it. The fact that while this is happening the Congress would spend this time on Terri Schiavo--this man has not left Crawford, Texas, for real--rain nor snow nor, you know, sleet, hail, you know, or Iraq. But he comes back in his PJs to keep a woman alive for another day or so. It's really kind of disgraceful.
What--this is an interesting week, though, and this is a good week to be having this conversation because tomorrow, of course, the Fed will meet, make a decision about interest rates, will be looking at inflation, and at the end of the week we'll have the new employment numbers. So a perfect week to be focusing on the economy.
GORDON: Tim Kane, I'm curious. It seems to me that you don't hear a huge cry, though, from the public about the economy right now. We hear about the gas prices and individual items and issues, but not the economy as a whole. Why is that?
Mr. TIM KANE (The Heritage Foundation; Former Senior Economist, Joint Economic Committee): Well, I think Americans are very attuned to the strength of their economy, both in historical terms--I mean, even though we've only grown at 3.1 percent at an annualized pace, that's still growth. And we also look across at the Atlantic and we Germany's growing at 0.7 percent. Germany and France both have unemployment rates that are double ours. So, you know, America--I think a good metaphor is we're like the Shaquille O'Neal of economies. We're the biggest and we're still growing. So there's just not too much to complain about on the macro level. But you hit it. It's things like gas prices. It's those day-to-day pocketbook issues that are really nagging to Americans. But the overall economy's absolutely healthy.
GORDON: Julianne, what would...
Ms. MALVEAUX: Tim, you know, it depends on who you are. I mean, why are you talking about the overall economy being healthy? The fact is that African-American people experience those same unemployment rates that they're experiencing in Germany. Our unemployment rate is 10.4 percent. In addition, if you look at the bottom--if you look at the very bottom, Ed, what you're going to find is that people at the bottom have not seen their wages grow at all. So some people are doing very well in the United States, and many are doing very poorly. And these are the people who've been sidelined by the Bush administration.
GORDON: Tim, you wanna take up on that?
Mr. KANE: Well, that's the--yeah, sure. It's just--it's really an unfortunate notion that wages are stagnant. They may have been stagnant for the last year, but take a look at the last five years or 10 years. They've been growing at every level: for African-Americans, for Asian-Americans. One thing we need to look at, though, is what are the right policies for the future? And this is where the president has said, `Let's stimulate investment. Let's lower taxes.' Everybody can appreciate a tax cut, and that's really given the economy a great boost. As far as wage growth, absolutely not. Everybody benefits when we have an economy that's free of regulation. France, Germany have way too much regulation, way too many taxes. It's a failed policy.
GORDON: Let me ask this. When you...
Ms. MALVEAUX: Tim, I was waiting for you to start beating on that. It...
GORDON: Let me ask this, Julianne, before you pick up on that.
Ms. MALVEAUX: I just have to answer that, though. OK.
GORDON: Wait just one second and you can follow up on that. But I'm curious--for the layperson who hears the idea that wages are up, personal income up--but how does that fare with things that impact that, like consumer spending or consumer pricing?
Ms. MALVEAUX: Well, we have not had a lot of inflation. It's been up a little bit lately. But people actually are--this tax-cut nonsense that Tim is putting out there has translated into tax increases at the state level. So while the federal government may be taking less out of your paycheck, states are taking more and they're providing fewer services. Again, people on the bottom are really getting hit.
I knew that Tim, coming from The Heritage Foundation, wasn't going to give us three minutes before he started pulling out that right-wing claptrap about the president's policies. The fact is that these policies have not at all stimulated investment, and even had they, they have not stimulated employment growth at the numbers that we see. With 3.1 percent increase in growth, why are we only generating 110,000 jobs in a month? That's ridiculous, Tim. You can't reconcile those numbers.
Mr. KANE: Well, I can reconcile the fact that we have an unemployment rate of 5.2 percent. That's what economists call a natural rate. It's lower than the average of the '80s. It's lower than the average of the '90s, the Clinton years. This is a really solid unemployment rate. And I think, again, come back to the policies. We don't have a perfect society, but how do we make it better? We make it better by giving people more choices: choices in education, for example. But I'd really point out the wealth of America--one place you can see it is--anybody that visits a toy store and sees the kind of toys that kids can get--or anybody that visits a mall or a Wal-Mart and sees how far a dollar goes. Americans are buying things that didn't exist 20 years ago--the computing power, the iPods--and that's all levels of people. We see dollars in the hands of the lower...
GORDON: Tim, let me...
Mr. KANE: ...classes, the middle class. It's stronger than ever before.
GORDON: Tim, let me ask you this, as relates to that kind of spending. We're also seeing, at a record pace, Americans going into debt, and much of these--many of these purchases happen by means of plastic. We are seeing Americans not being able, or choosing not to--perhaps this is our ignorance--to save. What does this mean in the long run?
Mr. KANE: Yeah, good point. There's always a concern about Americans, you know, using their credit cards a little bit too heavily. But the--again, another fact. Not only are there more Americans working than ever before, there's a higher percentage of home ownership than ever before. So--now Americans have real wealth out there. Unfortunately, they're tapping some of that home ownership wealth probably a little bit too much.
Ms. MALVEAUX: In fact, I think--I'd say...
GORDON: Julianne, let me take that to you.
Ms. MALVEAUX: Yes, I'd say it's even more than that. The fact is that economic growth has partially been a function of people borrowing against their home equity. And when Tim, you know, rails off this list of products--oh, how wonderful, oh, how wonderful--the fact is that the American consumer is being barraged with credit card applications at the same time the president wants to do bankruptcy--barraged with this notion of buy, buy, buy, buy, buy. And unless the housing market remains strong, unless we continue to see the same kind of growth and property values, we're cruising for a bruising, I think.
GORDON: Tim, do you believe that that is a possibility? And ofttimes we hear from people who suggest that the White House and Washington does not look that far down the line.
Mr. KANE: You know, I think actually it's just human nature. There are basically two politically correct ways to look at the economy. One is we're in a recession and two is we're heading for a recession. So I actually take that politically incorrect view that we need to appreciate how strong our economy is and recognize the things we're doing right. There are always risk factors, absolutely. But the Federal Reserve, Alan Greenspan, they have studied that issue of are--is there a housing bubble? And they've come up with the conclusion that there's not. Now prices, again, may stagnate for a year or two. We don't know what's going to happen. But I don't look for any sort of a collapse. I don't really believe there's a bubble out there. In fact, I think we're poised for even more strength in the future.
GORDON: Julianne, take that notion of the idea that every boat will not rise with the tide, and, you know, you gotta get with what you have to get with--and that is reducing your personal debt, saving more, if you wanna grow with the economy.
Ms. MALVEAUX: Well, certainly people have to be personally responsible for their own finances, and there's no argument there at all. But I think this notion of sugarcoating, you know, some of the economic weaknesses that exist are--it's ridiculous. I think that's what Tim's done here when he's talked about the strength. Certainly our economy is larger, and certainly it has more strength than some of our Western European counterparts, but at the same time there are major unevenness in our economy. Alan Greenspan is not the wizard. He doesn't have all the answers, and he's admitted that himself. He's raised questions about some of the things that he hadn't questioned before--raised questions even about the so-called Social Security reform. And this notion of `choice,' I mean, in the--under the guise of talking about the economy, Tim has tried to sneak in here school choice and other kind of choice. The fact is that our social service structure is one that deserves to be repaired, not torn down by this nonsensical notion of doing tax cuts.
GORDON: Tim, let me ask you. Let me put you on the other side, and I'll do the same to Julianne. If you were to point to one issue that you have that you take issue with, with the economy--you see as the biggest concern and/or problem, what would it be?
Mr. KANE: Well, I think long-term I think we're gonna face a more and more competitive world. And we all see the growth of China. I think part of that is good news: We see a very poor country getting wealthier. But they've definitely put the pressure on our US education system. Are we going to educate the engineers of the future? Are we going to include all Americans and make sure everyone has basic literacy? And that's where I see the real danger--that we're leaving behind inner-city kids. Our schools just aren't strong enough there, and I don't see the willpower at the state level to really empower parents with choice there.
GORDON: All right, Julianne Malveaux, take the other side. What's the most positive thing you see about this economy?
Ms. MALVEAUX: This is gonna take a while. Actually, Ed, I think that, you know, the fact that we have been able to contain inflation for such a long time is a great positive. I think that it's made investors feel more confident, and I think that consumers are more confident. But in the past six months we've seen more inflation than we've seen before, and in seeing that increasing inflation it's made a lot of people feel insecure. You can talk about gas prices. Gas prices are a much smaller part of the index, of what's inflationary--or the CPI--than it was 10 years ago. But those gas prices, when you're going to fill up your tank or going to make a decision about how far out you're gonna drive on vacation, those are gonna have an influence. And so this does affect the economy. We've seen a little more inflation than I think is healthy in the last six months.
GORDON: And, Julianne, you mentioned African-Americans and the unemployment rate being above 10 percent. With about a minute left, do you believe that the whole of the African-American community in the immediate future is going to be able to sustain itself and perhaps relish some of what is seen in this--if you are to believe it--booming economy?
Ms. MALVEAUX: I think just a slice of the African-American population will be able to sustain itself. Tim made a point when he talked about weaknesses that I'd like to piggyback on, and that's the whole issue of the quality of education in inner cities. If we talk--and the notion of who's gonna educate the engineers--if we...
Mr. KANE: Look for them.
Ms. MALVEAUX: ...look to the next generation of African-Americans, we've got to look to access to college, and the fact is that this president has not kept his promises about education--about higher education, especially. So a slice of the African-American community, I think, will continue to do well. We're looking at about a third that will not.
Mr. KANE: All right. Julianne Malveaux is an economist and author of "Unfinished Business: A Democrat and Republican Take on the most Important Issues Women Face." You can also hear her here from time to time on our Point-Counterpoint segment. And Tim Kane is Bradley Fellow in Labor Policy at The Heritage Foundation and former senior economist with the Joint Economic Committee of the United States Congress.
I thank you both for joining us. Appreciate it.
Ms. MALVEAUX: Thanks, Ed.
Mr. KANE: Thanks so much.
GORDON: Coming up, a bride on the run, and pregnant and crossing state lines. That's coming up next on our roundtable.
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