On This Week with Christiane Amanour, she brings together a panel of economic interests to dicuss the economy -- with each of them, of course, pushing their own agenda. As Laura Tyson points out, the U.S. used to lead the world in education; now we lead in high-school dropouts:
AMANPOUR: Good morning. This was supposed to be the summer of recovery, but the effects of the so-called Great Recession continue to cloud this nation and much of the world. The number of U.S. workers seeking unemployment benefits rose unexpectedly to 484,000. It's the worst in almost six months. And in the housing sector, banks foreclosed on more than 90,000 properties in July, the second-highest total since the crisis began.
And these pictures speak to the desperation this week in Atlanta. Thirty thousand people waited for hours in sweltering heat to apply for 655 available spots of government-subsidized housing.
And I'm joined by four top voices on the economy. From Berkeley, California, member of the president's Economic Recovery Advisory Board Laura Tyson. From Chattanooga, Tennessee, Republican Senator Bob Corker of the Banking Committee. In New York, the former New Jersey governor and CEO of MF Global, Jon Corzine. And joining us here in Washington, chief economist for the U.S. Chamber of Commerce, Martin Regalia.
Thank you all for joining me. You've heard the figures. You've read about the figures. You can also probably palpably feel the concern and worry amongst the American people. And I want to read you something that was written about this joblessness, about the younger generation in the Atlantic recently. Look at what was written about unemployment.
"There is unemployment -- a brief and relatively routine transitional state that results from the rise and fall of companies in any economy, and there is unemployment -- chronic, all-consuming. The former is a necessary lubricant in any engine of economic growth. The latter is a pestilence that slowly eats away at people, families, and, if it spreads widely enough, the fabric of society. Indeed, history suggests that this is perhaps society's most noxious ill."
Let me turn to you right now, Martin Regalia. Do you agree with that? And do you think that that's what this country is in right now?
REGALIA: Well, I agree with it, and I think that is what we're seeing right now. We're seeing an economy that is growing, but growing in a very lackluster way. It's not generating enough demand, and therefore it's not generating enough jobs.
And on top of that, the last three or four recessions have given rise to longer terms of unemployment. More retooling is necessary to bring the displaced workers back into the workforce, and that retooling is taking a lot longer.
AMANPOUR: Let me turn to you, Laura Tyson. You're an adviser to the president right now. A recent Wall Street Journal poll of some 53 economists say they don't see the employment rate coming down below 9 percent, you know, at least until June 2011. What can be done about this?
TYSON: Well, I think that we have to do a number of things. I think we have to worry, first of all, about taking care of the people who are unemployed. And that's why I really have supported the extension of unemployment benefits and the extension of benefits to help people maintain their health insurance if they lose their job, very, very important. You have to deal with the reality that people are long-term unemployed, 7 million people long-term unemployed.
Secondly, we have to continue to do everything we can to stimulate demand in the economy. Let me give you two examples. We do have a payroll tax credit that has been offered to companies that bring on new unemployed workers into the workforce. I think we should continue that.
I think we should continue to look at major spending on infrastructure projects. You know, the good news here about the stimulus, it's said, well, the infrastructure projects haven't come on board yet. They're coming on board now, and they have high job-per-dollar-spent outcomes.
AMANPOUR: All right.
TYSON: And then, finally, we have to worry about the longer-run problem of this structural employment, because I'm going to point out one thing for this discussion. The unemployment problem is primarily a problem for people who have a high school -- who don't have a high school education or just have a high school education.
Unemployment for those with college educations is now 4.5 percent. Unemployment for those with more than a college education, below 4 percent. We have a problem of education in this country, and we have to educate more of our young people fully through college education. Let's take this as an opportunity to do that.
AMANPOUR: Let me ask Senator Corker on the Banking Committee -- and you've spoken quite a lot about this -- you are in Chattanooga right now, and you told me that you have been out in the rural areas, where there's really nothing for people out there.
You know, beyond -- beyond the current unemployment rate, there's also underemployment, and it's standing at about 16.5 percent, the total problem of people who either don't have a job or who don't have enough of a job to make ends meet. How is it -- is it impacting the people in the rural areas? And do you think that this really goes to the heart of the American dream that is being deferred?
CORKER: Well, you know, as we speak, the city that I'm sitting in has been named one of the -- is named the top economic producer over the next decade, and it's because of investment in the workforce. It's a vision. It's the fact that we really have held on to trying to produce things.
As you go to the rural areas, with the lack of infrastructure that exists in most rural areas around our country, there's lesser opportunity for that. And so it does create challenges that don't exist in some of the major metropolitan areas, and I think we're seeing that more and more across our country.
At the same time, I think much of what we've done over this last year is create an air of unpredictability. And what's happening is businesses are sitting on the sideline. They don't know exactly what the lay of the land is. And I think the best thing we can do in Washington at this time is really just to calm down and quit changing sweeping -- making sweeping changes.
I sat down with a business this week -- I'll give you an example -- and they're looking at the health care bill, and they're trying to decide, should they keep people under 30 hours? Smaller businesses are saying, should we stay under 25?
So I think that much of what we've done over this last year has actually been counterproductive. And, again, the best thing we can do is just calm down, to really let people's balance sheets sort of get back where they need to be. That will stimulate demand over time, as families and people -- households across our country get their balance sheets in order.
AMANPOUR: Well, we'll come back to that. You know, the Financial Times has basically said that Congress needs to, quote, "get a grip." I'm going to ask you about that right after I go to Governor Corzine and ask him about what is going to stimulate the kind of consumer confidence that you were just talking about, Senator -- Senator Corker.
Look, there are figures, Governor Corzine, that suggest that non-financial companies have socked away something like $1.84 trillion in cash and other assets, but they're not spending them, they're not hiring, they're not building plants and other infrastructure. Why not? And wouldn't -- don't they have a responsibility to do so in this situation?
CORZINE: Well, there is a gap of confidence in the economy that comes from the shock that we had of 2008 and 2009; $17 trillion worth of lost economic value in that timeframe makes companies and people very, very concerned. Even though we've had a major recovery in some of that valuation loss, it makes people nervous.
We also -- and I think your quote that you started with actually frames what is the real problem. We have both a recession problem that was the result of the great financial crisis, but we also have this great transformation that's taking place across the globe. A lot of other countries are very competitive with the United States today, and we need to invest in our education system, in our infrastructure system, in our efforts to expand our exports, if we're going to be competitive as we go forward.
AMANPOUR: OK, well, let me ask -- let me ask about that, because when it comes to exports in manufacturing, we read quite a lot that America has been losing its competitive edge to places like China and -- and -- and other such. Laura, what do you think the United States can do to regenerate a competitive export in manufacturing?
TYSON: Well, I think the key word Jon raised is investment. And I think it is absolutely essential. You know, we get caught up in discussions of deficit reduction or stimulus. Let's forget those issues for a minute and just think about investment.
And here it is investment in a number of things. I've heard Senator Corker talk about the importance of infrastructure. For years going into the Great Recession, it has been noted that the U.S. has been investing inadequately in its infrastructure, maybe to the tune of $200 billion a year of economically justifiable investment infrastructures we're not doing.
Let me turn to investment in education. It is the case -- we used to be number one in the world in college graduation rates. We are now number 14, number 15. We're leading the world in high school dropout rates. And as I said, the unemployment problem is most severe in dropouts.
So invest in people. Invest in infrastructure. Invest in knowledge. You know, we basically are trying to get the research and development spending in this country up to 3 percent so we can again be leaders in the world in that. Invest, invest, invest is really what we must do.
Public-private partnerships, you know, with that, $100 billion of the stimulus package is levered to private spending. A dollar spent by the public sector on infrastructure can bring three dollars of private spending.
AMANPOUR: So, Martin Regalia, why isn't the private sector investing, investing, investing?
REGALIA: Well, I think, you know, our tax laws and our other regulatory structure in Washington don't foster that. We tax savings multiple times. We don't allow full cost recovery. We don't allow expensing on investment. We can't even pass an R&D credit extension that's been delayed for over a year through a Congress that's fighting with each other.