Economic Roundtable Pt. 1

" And hello again from Fox News in Washington. As our economy is slowly recovers the shortage of jobs continues just look at these numbers. Unemployment is down nine point 8%. The number of job openings in August was the lowest since the Labor Department started tracking that figure back in 2000. And six point three unemployed people now compete for each available job not the most ever so what can be done. For answers since two governors whose states have been hit hard by the recession. A business later was one of America's richest men and a top economist. Governor Jennifer Granholm let me start with you and your state of Michigan. You have fifteen point 2% unemployment that's the highest in the nation. You've received three point seven billion dollars of foreign federal stimulus funds do you see any signs of recovery and how much has the stimulus help you."

" Well clearly the stimulus has held to although of course unemployment is a ridiculously high level and in Michigan that the unique circumstance because. We're in the middle of both an auto recession and we've been. Sort of a one industry state for a hundred years so we're really focused on diversifying and then layer upon that. The financial recession and it's really doubly hit us we've lost about 72% of our -- jobs since the beginning of the decades so it's really been a very very tough time. -- auto suppliers are completely in contraction in addition to the bankruptcies of our major employers so. We have circumstance where we're really focused on diversifying and I can tell you this stimulus has been helpful in terms of creating or retaining about 36000. Jobs and of course only 40% of the stimulus has been spent yet. But in addition of that Chris I think the most important thing for us. Has been the stimulus is efforts to really can help us invest in diversifying our economy to one of their greatest examples is the battery. That will power the electric vehicle Michigan got more than half of all of the battery grants twelve projects businesses that will come to electrify. The vehicle which for us is a great way for us to build on our strengths but move into new sectors that."

" The you've received two point three billion dollars in stimulus same question. Where is Indiana in terms of recovery and how's the stimulus made a difference."

" coming very slowly if at all Chris and the stimulus I didn't oppose the idea of it but I don't think you can point to much effect so far. We've used that as aggressively and more quickly than almost any state -- the fastest state to use the highway money fastest in clean water. And you know here and there are supposed to have made a difference but you know government spending doesn't create jobs doesn't create wealth. We've got maintain and I think improve the conditions. And the environment America in which people will invest and take risks so they can create wealth for each other."

" States where unemployment in Nevada is thirteen point 2% that's the second highest in the nation. Your company Wynn Resorts has more than 20000. Employees do you see any turnaround yet."

" No. In the sense that. I think that the priorities. Of the administration. Should have been more directly. Focused on job creation from the day of inauguration forward. That's the thing that changes America people will buy cars -- in governor Granholm state the buy homes they can afford. They'll shop and they'll they'll have a positive attitude towards tomorrow when they've got a job. Health care and all of then it all that other stimulus. Should have been held back. And the priorities should have been job creation. And the most powerful weapon and the tool that the government has for that. Is its tax policy they -- going exactly the opposite direction. And it. If the government used its power to restrain its tax collection. They would have given everybody who run small businesses large businesses. A chance to hire more people. And that that could become an entirely different way with eight or 900 billion dollars we could could created for 500. Four -- five million jobs which are made a big difference all right."

" I -- mr. went -- to pick up -- let me bring in Mark -- if -- you -- John McCain. During the campaign but who helped the democratic leaders in congress with the stimulus package I wanna put up some projections by your fellow economists. And get your reaction to done. They're now saying that unemployment is -- peak at around ten point 5% next June. It could be -- nine point 1% at 31 and still over 8%. In 33 with just four years from now is it really gonna take the US economy. Not long to bounce back."

" Yes I think so ten point 5% is a very reasonable expectation for the peak in unemployment. But I think it would be measurably higher if not for the stimulus package the stimulus in my view is working. If he's gotten overwhelmed by the magnitude of the economic crisis that we've been in. But it has been very helpful help to unemployed workers. Extended benefits for those workers that -- kept than spending they'd be cutting back much more significantly they've not gotten them money. Almost every state governor would say that that they've been -- by the stimulus quite significantly they'd be cutting. Even more aggressively if not for that the tax cuts there's. Of the senator Bernice and going dollar stimulus package 300 billion of that was tax cuts to individuals and to businesses. Cash for clunkers that tax credits for for home purchases I think all these things had been very helpful now they've gotten overwhelmed. Indeed the problems we face are very serious and continue to be very serious the stimulus has been very help."

" And I wanna talk about getting overwhelmed a governor Granholm I wanna put up some video of the scene in Detroit this last week. 35000. People lined up for federal stimulus money to help pay for. Mortgage and utility bills the tires only enough money for 3500. People and as a result there were fights and almost a stampede and then people arrested. Has the Obama administration. Misjudge. The size is of the problem and the best way to solve."

" Well clearly you have to be able to provide people the means to be able to survive during this very tough time. Especially in states that are hardest hit in Michigan is clearly a state that's been hardest hit what you saw there in that video. It's our people who are very desperate to put food on the table to stay in their homes and it's one of the reasons why Chris. That's stimulus a third of it went to protecting people whether it was foreclosure unemployment rate is the third of it went to tax cuts -- third of it went to the job creation. It was a broad based effort. But clearly in some states there needs to be additional help and -- what I think it's so important that congress passed another extension to the unemployment benefits. For an infected I hope the deal has been continent we see that this week. Because there isn't there are jobs on the backside right now we know that employers are acting very cautiously. We know that there isn't a huge uptick in employment. That's certainly true here when employers especially our auto employers have just shut down and so we need. In states like Michigan to be able to extend unemployment benefits and those other things that will help people get through this very difficult period."

" And well that the governor Daniels you express some some skepticism about the effectiveness of government spending to solve this problem they answer here in Washington seems to me. More government spending."

" I'm not against that in selected ways yes of course we want to help people who are out of work. Did you know before Washington could spell stimulus we had a pretty. Robust program almost accidentally here in Indiana where in the middle of the biggest road building infrastructure building project in state history we did it without -- by the way without a penny of taxes or borrowing. You really couldn't spend a whole lot more than we are in that respect we cut property taxes big time last year the average. Hoosier homeowners got 500 -- dollars plus mourn their pocket this year. You know but they're just limits to what can be done other. Band two as mr. -- said try to create more favorable conditions for. Natural growth in net in the private sector. And you know I very much concerned as as he expressed that meanwhile awful lot of energy an awful lot of policy in Washington headed just the wrong direction you know this the business of this cap and trade bill would. BA. Incredibly unfair burden to no good environmental effect I can find on the midwest on states like governor grand homes and mine and I was a -- interview is going in have a now I just wish that energy was going into creating a pro growth policies that we can afford things like."

" That but I think that that may yet bring in that descended on -- bring in this to win on this. It -- with mr. Zandi is somebody who helped write the first stimulus do we need it. If not another stimulus at least -- stimulant of things. And how do you went to you talked about castle -- as some people are saying look what we end up doing is borrowing money we don't. To move demand from the future to the present but we don't actually."

" Increased demand. Well. Well there's your first question I do you think the economy could any more help I think that recoveries going to be very halting very fragile. I think the risks are to the downside I think we need to guard against that so I would abdicate. Extending -- things in the current stimulus into 30. -- a -- mentioned more benefits to unemployed workers absolutely you've got ten. Percent plus unemployment. People are going to be out of work they're gonna need more help. More help the state government because if they don't get more help their budget problems that this clear 31 and could be very severe going to be cutting in raising taxes exactly what nobody else wants. I think the housing market could also use some more help us through -- extension of the first time home buyer tax credit in the next year. To try to keep this recent stability in housing values permanent. So yes I think we should extend more of these things going port and you know the idea behind students stay staples is a magic isn't canoe is it couldn't solve -- problems the the idea behind stimulus. Was to bring an end to the recession to provide a catalyst for future growth and then to let the private sector take over and it's done exactly that the recession is over it's no accident. The recession has ended when the students is providing its."

" Act on that the benefit Steve Lentz Chris Chris the economists have had their moment. Really everybody who has absolutely no experience. In insuring people. Creating jobs have had their moment. It is the policy went -- witnesses that a lot but mr. Wednesday got a housing market the housing market will prove. When people have a job that so that they can buy a home that they can afford. Or car that they can afford. The stimulus package. Which is antithetical. And counter intuitive to Washington. Is to restrain. -- restrained government power. You can that the most powerful tools tax policy. Had the president stood up the day after it got inaugurated. Its ever gonna pass a bill that says if you can prove to the IRS. That you increase your permanent employees. With health insurance. We will subsidize. Thirty or 40000 dollars of that in the form of tax credit. There would have been jobs created in this economy within sixty days and every corner of the economy not just in civil construction. No no no not at all there would have been jobs created everywhere because businesses you pointed out. I have cut back. Out of fear. They're suffering from a lack of consumer confidence that day that that unemployment figure goes from nine point six and climbing. 28 point nine is the day that consumer confidence will return in this country will be on its way out of the recession up."

" Let me -- the governors and -- into this at this point -- because one of the things that Mark -- mentioned governor Daniels is the idea. Of more aid to states and that is gaining a lot of currency here in Washington because obviously. The states would have to balance their budgets that next year they don't have that money are gonna have to lay off people. But but the question is why should a state like heroes of Indiana which has been very responsible and in fact has a billion. Dollar surplus why should taxpayers in your state to their federal taxes bailout other states like for instance California that have been less responsible."

" What a great question I completely agree with you you know we've. We've been practicing economy we head to -- dollar bills. And put some money in the bank. And for the moment we have a triple -- credit rating and we're and we're solvent but you know this economy doesn't recover sometime over the next year or so even our. Savings account you'll eventually be depleted and in that context really it would be incredibly inequitable. To arrange it if -- if the next bailout is the bailout California or other states to spend themselves into trouble even before the recession got here. I think almost anybody find that unfair we sure would."