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ROBERT MacNEIL: Good evening. Jimmy Carter formally opened the 1976 Presidential Campaign today, implying that Gerald Ford was a Herbert Hoover reincarnate, unwilling to take action putting people back to work, Carter began his Labor Day kick-off on the steps of Roosevelt`s vacation home at Warm Springs, Georgia. In a speech heavily spiced with references to F.D.R. and John Kennedy, Carter said he hoped to restore confidence to the economic system as Roosevelt did, and to get the country moving again, as Kennedy promised. He zeroed in on the latest unemployment figures issued on Friday. The rate had been less, he said, than four percent when President Johnson left office, less than three percent when Truman left, and was now seven point nine percent. Under this Republican administration, the unemployment rate has been the highest since the Hoover Depression. It is obvious that good leadership makes the difference, Carter said, and headed off for a campaign swing through eleven states in five days.
President Ford`s Labor Day was quite different. Jim?
JIM LEHRER: Yes, Robin. The President spent the day at the White House, relaxing, conferring with various governmental officials, and issuing a Labor Day message. He will not officially launch his campaign until next week, with a speech at his alma mater, the University of Michigan at Ann Arbor. Friday`s unemployment figures were clearly not good news for the President. Alan Greenspan, the President`s chief economic advisor, had predicted just two months ago that the unemployment rate would be down to seven percent by the first of the year, but after Friday, Mr. Greenspan and others are conceding that`s probably not going to happen.
The trend had been downward during the first five months of the year though, from 7.8 percent in January, it was down to 7.3 percent in May. But since then, it`s gone back up to its current 7.9 percent which represents seven and a half million people out of work. The President`s people emphasized that there was some good news to come out of the August report: 74 thousand previously unemployed people did find jobs during the month. The President himself, in his Labor Day message, also stressed the positive, noting that a record 88 million Americans are now gainfully employed, adding however, that ``We can`t be satisfied until every American who wants to work has a meaningful and productive job.`` He made no reference to Friday`s new unemployment figure. Robin?
MacNEIL: So tonight we take a closer look at what these figures will mean in the election campaign which opened today: how the Carter and Ford camps will attempt to use them tactically, and what each side is planning to do about unemployment. Jim?
LEHRER: With us are two men who are intimately involved in shaping the differing economic policies of candidates Ford and Carter: Jerry Jasinowski for Carter, and Sid Jones for.-Ford. First, Mr. Jones. He is the Assistant Secretary of the Treasury for Economic Policy. He formerly served as Assistant Secretary of Commerce for Economic Affairs and as a staff economist and special assistant with the President`s Council of Economic Advisors. Mr. Jones, do you read these new figures as bad news for the administration and the President?
SIDNEY JONES: Compared with what I hoped for yesterday, I think they`re disappointing; compared with what I thought a year ago, I think they`re far ahead of what we expected. We anticipated 7.7 as an average figure for the year. We realized early in the year that for statistical, seasonal adjustment reasons, we were ahead of the game, but we recognized that there would be a summer gulch, and we`re in that period.
LEHRER: Do you think the rise is going to continue at this point; is this an indication of a continuing rise?
JONES: It`s very hard to tell because you`ve got two parts in that rate: you`ve got how many people are coming into the labor force; you`ve got the number of people who are literally unemployed. People coming in are being employed very rapidly - up 4,000,000 people in the last year and a half; but the people are coming in so rapidly you can`t absorb them, and the unemployment rate is sticking. To answer your question, yes, I think the unemployment will go down; but I thought it would go down this morning, also.
LEHRER: In terms of it becoming an issue in this Presidential election, it has been said, up till this point, that economic matters and unemployment, et cetera, could become a positive thing for President Ford, rather than a negative thing. Do you think that`s still true, if this trend continues?
JONES: What trend? The unemployment trend? If that were to continue that would be very negative factor for the President. if you look at the total economy, you`ve got four or five variables: you`ve got output; you`ve got inflation; you`ve got the foreign situation; you`ve got unemployment. I would assume most people, and certainly most economists, would look at the mix. Unemployment`s our sore thumb. Employment is good; output is excellent` inflation is 40 percent of what it was a year ago; we have a firm and stable international situation. if you want to pick out a sore thumb and say that`s an issue, fine. It`s a very negative factor:6
LEHRER: What is the administration`s basic position on these figures, then, to go back to the first? For instance, Ron Nessen, when they were announced Friday - the President`s press secretary - said these was a feeling of disappointment, but they expected things to get better. Is that basically what you`re saying, too?
JONES: I think you have to take some time frame, and as I say, if you`d asked me a year ago what I expected, we`re ahead of that; and if you`d asked me yesterday what l expected, it was a disappointment.
LEHRER: What did you expect a year ago?
JONES: We thought it would be about 8.2, something in that zone. See, we got up at nine, and what you have to do is you accumulate problems for about a decade, then you`ve got to solve them; that takes some time. You start with output; you start with inflation. The unemployment figure comes down slowly. What we`re looking for, we thought, 7.7 for the year; maybe 7.4 by year-end. Then we got euphoric and said maybe down to seven; maybe under seven by year-end. Greenspan mentioned that on Friday when he commented on it. My own view is that the total mix, if the administration does not use economic platform they are making a great mistake, because it`s better than we thought. I think it`s a very solid recovery; we`ve got the best chance we have had in a decade to have a sustained economic growth. If you look at it five years from now, I think my colleague here and I will arrive at about the same place. If you ask me what my goal is in compassion, I`m going straight.
LEHRER: Thank you. Robin?
MacNEIL: Jerry Jasinowski is one of the inner circle of experts shaping Jimmy Carter`s thinking on the economy. His title is Economic Issues Coordinator, and before this,, he was Senior Economist with the Joint Economic Committee of Congress. Mr. Jasinowski, how do you read the figures?
JERRY JASINOWSKI: I think they represent bad news for the economy, because they show an increase in unemployment three straight months in a row, and they show unemployment up 600,000, so the trend is a bad trend in addition to that, it`s bad news because the level that this bad trend started from was an historically high level of unemployment. We now have had, under President Ford, the highest levels of unemployment between the Great Depression and the inauguration of Gerald Ford. So the level is extremely high, and I believe that people who say this level is not too serious just have set their sights much too low. Finally, I think it`s bad news because of the people that are affected. We`re not just talking about statistics, we`re talking about human beings; we`re talking about the loss of their income. People are going on welfare, increasing alcoholism, increasing crime, and a whole host of other problems that are associated with high unemployment. It`s my view that high unemployment is a form of social cancer to the extent that we tolerate it the way we do in this country and the way we have in the last several years is a serious problem.
MacNEIL: Would you say, in the Carter camp, the feeling is that these figures have played into your hands tactically?
JASINOWSKI: The figures have been consistently bad for three months in a row now, so I think the view is that in a political sense they`re favorable, although in a national sense they`re a tragedy.
MacNEIL: Okay. Do you agree with Mr. Jones that this new increase over the last three months is a temporary phenomenon caused by the large numbers of people coming into the work force, and is going to taper off again?
JASINOWSKI: I do think that it`s hard to imagine the unemployment rate continuing to rise, month in and month out. I think most economists have expected the unemployment rate to decline today. I certainly did. And the fact that it continues to rise, I think, surprises most forecasters.
MacNEIL: So your reading is not dissimilar from the administration`s economist reading that this is not a serious interruption of recovery from the recession?
JASINOWSKI: No, I wasn`t saying that. I was saying that I`m surprised at the numbers, but if you look-below the numbers - although the increasing labor force has some bearing on the un employment rate - the employment increases in the last several months have been very weak. In the month previous to this, employment went down. It went up only by 70,000 people this month which is a very small amount for an economy the size that we have. And if you look at the other economic indicators that have been coining out, with low retail sales and housing starts and persistent indicators that the recovery is sputtering and faltering, it`s not clear at all that the recovery is solid and assured. We have grave doubts about it.
MacNEIL: But there are other indicators, surely - I`m not an economist, so I defer to you - that could be read the other way; for instance, the W- Street Journal`s report that industry has finally begun the spurt in purchases of new equipment and plants that has been so long awaited as a major sign of recovery.
JASINOWSKI: I think that`s right. It`s a mixed picture, and the economists who are saying they know exactly what`s. going to happen are probably kidding people. But the summer has been a very slow summer. We`ve gone from increase in real output of 9.6 percent in the first quarter, which was rather high, to something like 9.2, to something slightly above 4 percent in the second quarter; and people were saying we`d go back up to. 6 percent in the third quarter. It looks doubtful now that we will. And I think that on balance, there are more unfavorable indicators for the future of the recovery than there are solid ones.
MaCNEIL: Okay. Jim?
LEHRER: Let`s get back to specifics now on unemployment and talk about goals. What unemployment rate are each of you shooting for, and in what time frame? Mr. Jones?
JONES: The case book example is you want no unemployment. If you want to talk realistically, over the last 21 years we`ve had an unemployment rate of 5.2 percent, on an average. We can do better than that if the present demographic trends continue. In the 80`s we`re going to have a very dramatic turn around in the employment situation, but for right now, given the next two, three, four years, our five-year forecast is for a gradual, steady and continuous decline in unemployment.
LEHRER: Down to where?
JONES: Down to about the five percent zone by 1980, let`s say. Some say that`s lacking in compassion. The response to that is that there is absolutely no difference in the unemployment goal or the degree of compassion, and those who say otherwise are raising rhetoric. The reality is, there is a difference between how you choose those goals, the risks that you run in achieving those goals. Some would say that there are more bad indicators in the future than are good.
LEHRER: We just heard a man say that.
JONES: I find that hard to believe when you look at retail sales which are up far ahead of the schedule we had anticipated - personal consumption up 11 percent in the last 12 months. When you look at business investment, which is coming, several months behind when we thought it would, but coming very rapidly now; when you look at the inventory swing; when you look at the pattern of international affairs, and then to say that there are more economic indicators that are bad - what you`re doing is picking out specific months. You`re also picking out specific months on the unemployment rate.
LEHRER: Mr. Jasinowski?
JASINOWSKI: I think that the record of the Republican admininstrations that we`ve had on predicting good times is fairly well known, and I think they have said for a long time that we`re going to have a balanced budget; we`re going to have lower unemployment, lower inflation, and very consistently we have not. Now, I think that the record speaks for itself. We have had some improvement this year - no one would deny that - but it`s been improvement from the worst recession since the Depression, and we still have the worst combination of unemployment and inflation in the 20th century. That`s a serious problem.
LEHRER: What are your goals?
JASINOWSKI: With respect to unemployment, the goal is to attempt to achieve four percent unemployment by 1980. And we are firmly committed to that, so that it`s not a case of just saying that we`re for that, but it`s a firm, strong commitment. We believe it can be done by wide-scale, government reform of employment programs, of inflation programs, and by using carefully targeted employment programs to get at the pockets of unemployment that we are not getting to in this country.
LEHRER: So, in summary, you would say, Mr. Jones, five percent by 1980 would be, in a slow, gradual way, where we`re going to be; you would say, by 1980, four percent is it. Any thing over four percent would be unacceptable, and your man, Jimmy Carter, is saying if he`s elected President that`s what he will do?
JASINOWSKI: That`s right.
LEHRER: Robin?
MacNEIL: Yes. Let`s look at how the two camps would go about achieving this. I wonder whether there is that much confidence in being able to do it. I saw both sides quoted, starting with you, Mr. Jasinowski, in the New York Times last month, and you were quoted as saying, ``The economics procession just doesn`t know as much about this issue as it should.`` And, Mr. Jones, Alan Greenspan whom you quoted a moment ago, the chief advisor to the President, was quoted in the same issue as saying, ``The administration studied dozens of plans to alleviate hard-core unemployment without finding one it feels would be effective.`` Now, do you experts really know with any confidence how to go about reducing the unemployment figure to this percentage that you`ve just been talking about? Mr. Jones?
JONES: If you look at the last decade, the hard-core unemployment you refer to has averaged nine-tenths of one percent. That`s what we`re talking about, getting at these tragic individuals, and I would emphasize that tragedy.
MacNEIL: Where do they come in that four to five range?
JONES: They are the hard-core part, and the other two thirds are basically going somewhere: they`re moving to a new job; they`re re-entering the labor force; they`re searching a new job for the first time. It`s taking them an average of four to six weeks to find that job. But the group I think you are talking about are those tragic, 15 weeks or more, nine tenths of one percent of the labor force. Last year, the government spent nine billion dollars on specific manpower training programs. They spent another 18 or 19 billion dollars on unemployment compensation benefits. We have tried on- the-job training; we have tried institutional programs, and some of them are excellent. But on balance, we are having great difficulty in linking up a government program with a real job. You ask what the Ford administration proposes? It is a stable elimination of this stop-and-go, economic program that we`ve had for a decade, which created the inflation, which created the unemployment and recession which is properly called the worst recession since the Great `30 Depression. Now, the key to this thing in my mind is to create some real jobs. That means capital investment. Capital investment, in every study we have had, ranging from universities, research institutes, within the government, banks, industries, every one of those studies says that you must have an increase in capital formation. You`ve got to have, in every one of those studies, a balanced federal budget. In fact, most of them show as small circles. Put that in juxtaposition with a deficit in 16 of the last 17 years, or 39 or the last 47 years. Put that in juxtaposition with a federal program. It was referred to as the Republican inflation, the Republican recession. That`s absurd. It is a joint Congressional setting of the budget which led to those deficits, along with executive action programs. We had a deficit which has resulted in a half a trillion dollars being ripped out of the capital market. That`s our problem; that`s the risk that we`re unwilling to run for short-term expediency.
MacNEIL: Mr. Jones, could you sort of summarize your thing in a sentence or two, so I could then ask Mr. Jasinowski?
JONES: Specific programs, the manpower training programs for the hard-core, for the major creation of jobs, capital formation. That requires a balanced, federal budget over time.
MacNEIL: Thank you. Mr. Janowski, what`s Jimmy Carter going to do to tackle this problem, and how does it differ?
JASINOWSKI: Let me say that, first, I don`t think the problem today is just the hard-core unemployed. We have 7.9 percent unemployment. That`s the same level of unemployment we had 20 months ago, so there`s been no improvement with respect to total unemployment, and that`s because we haven`t had a coordinated monetary and fiscal policy, a stable set of economic policies, plus these targeted unemployment policies that I`ve talked about. Now, I think the first thing that has to be done to deal with this problem is we really have to re-commit ourselves to putting people back to work. A strange thing has happened in the last ten years; it used to be the Democrats were strong supporters of welfare and income-transfer programs, and the Republicans were strong supporters of work. We`ve had a switch in that, and we`ve had a situation where the Republicans have simply lost some of the force behind the work ethic that they have had. And the Democrats have now picked that up, and that`s terribly important. You cannot marshal the national policies which have to cover a whole range of programs unless you are really committed to putting people to work. And then, what you do to do that is you follow up with a whole set of programs that cover everything from housing to improved training programs, for those people who are unskilled and cannot maintain permanent jobs. You consolidate the youth employment programs that you have now and maybe go back and develop some of the kinds of programs that we had for youth; you provide incentives for the private sector so that they have sufficient capital and can participate in this process; and you inform existing employment programs that you have now. We`re spending a lot of money on employment programs, and they aren`t working. But the challenge is to make them work.
MacKEIL: How would you summarize in a sentence, the difference between the Carter approach and the Ford approach, because Mr. Jones was also emphasizing capital formation and aid to industry in creating jobs.
JASINOWSKI: I think the key difference is that Mr. Jones is right, that we`ve got very high deficits today, and they`re a major problem The cause of those deficits is economic stagnation and high unemployment. You`ve got to re-commit yourself to the work ethic, and then you`ve got to develop a comprehensive, across-the-board set of national policies. To do that, begin by reforming existing employment programs and by doing all the things that we need to do on a priority basis.
MacNEIL: Jim?
LEHRER: Mr. Jasinowski, eveybody`s committed to the idea of putting people back to work. I mean, that`s not an issue. I`d just ask you both: where`s the money going to come from, specifically? You just outlined all kinds of programs; you outlined some. You mentioned the administration spent nine billion on one program, 18 or 19 on another. But you`re coming from the outside. In other words, your man wants to come in and do better. He says he can do better. You`ve just outlined a lot of things. Now, where`s all this money going to come from to do the things that you think the federal government should do? And balance the budget at the same time?
JASINOWSKI: Let me say that I don`t agree with you that everybody wants to put people back to work, because we really have had a scandalous increase in unemployment compensation and welfare. We have had, in the last couple of years, a 23 billion dollar increase in those two programs alone. And I`ve talked to a lot of economists who say it`s better to give people extended unemployment compensation rather than try to devise a program that puts them to work. So, when you look at that whole range of programs and their costs, it`s enormous. And the way you can do these other things is to reform government and stop paying people not to work.
LEHRER: What does that mean, Mr. Jasinowski, ``reform government?``
JASINOWSKI: It means that you take extended unemployment compensation - we`ve been extending unemployment compensation so that it`s now over 60 weeks - and instead of extending unem ployment compensation you find jobs for people to do.
LEHRER: What do you think of that idea?
JONES: Does Mr. Carter really believe you should not have extended unemployment compensations?
JASINOWSKI: He believes that we`ve extended it beyond levels that it ought to be in; that we ought to fifd ways to put people to work instead of continuing to do that.
JONES: And he would cut it sharply down from 65 weeks?
JASINOWSKI: He`s interested in. cutting it back from what it is. We`re not going to say that we`re going to cut back from some arbitrary number at this point. It`s a very serious problem, be cause a lot of people are now on unemployment, and they have nothing. But the challenge of the federal government is to find a substitute for those high levels of unemployment compensation and welfare.
LEHRER: What kind of a substitute?
JONES: This is the problem: what we get is rhetoric. We say we`re going to reform this; we`re going to be more creative; we`re going to do more things. What we have is a program which we`ve had for two years. It came in during a debacle, accumulated pressures of more than a decade that created this pressure. A stable set of policies was put in place; it was coordinated. We meet every morning at 8:30.
LEHRER: Who is ``we?``
JONES: The Economic Policy Board which is the Secretary of the Treasury, the Director of Office Management and Budget, and all the economic leadership of the administration. Now, we have a specific program; we have laid it out. We have laid out a specific budget which would have balanced the budget by 1979 fiscal year. That was not accepted by the Congress because it came in with higher spending figures. But you just can`t, as a candidate, say, ``I`m going to do better. I`m going to reform things,`` because the records suggest it doesn`t happen. President Ford, in January, 1975, submitted 18 billion dollars in specific revisions and deferrals; two billion dollars of those were accepted. Instead of having a deficit of much lower proportions, we went up to spending significantly - 16 billion dollars higher. We had a deficit of record proportions. What we have to do is look at what`s happened; look at what people have said. Did it actually happen? In the case of Ford`s program. That`s what you look for. The inflation was 12 percent; it`s now 5.4 over the last 12 months on the consumer prices, or 5.5 on the GNP deflater. If you say that you`re going to knock out extended unemployment compensation and don`t come out with a specific program to replace that, that`s merely rhetoric.
LEHRER: Is that just rhetoric?
JASINOWSKI: No, I don`t think it`s rhetoric. I think that it`s not just unemployment compensation. It`s welfare; it`s the whole bundle of money we`re now spending to keep people on unemployment. It`s a lot of money. As I`ve indicated, it`s over 20 billion dollars. That money can be invested in people, in skilled training, in housing, and programs can be developed so that people can be put to work rather than kept on that. And it`s terribly crucial for us to do that.
LEHRER: And it can be done without increasing the budget to incredible proportions and all of that?
JASINOWSKI: Let me just take Mr. Jone`s example of the `75 budget. I took a look at that budget the other day. It came in from the President as a budget that proposed a nine billion dollar deficit because we were already in some trouble. That deficit went up to over 40 billion dollars. I analyzed what caused that increase in the deficit. It was all lost revenues because of a deepening recession and increased unemployment compensation and welfare.
JONES: That`s absolutely not right. The erosion of revenues did not result from that. It was the increase in spending from 349 to 365, plus a partial erosion of revenues. I happen to be in charge of revenue forecasting at the Treasury.
LEHRER: Let me see if I can get you all to agree on one thing in the final 30 seconds that we have. Can you predict for me what you think the unemployment rate is going to be on election day, Mr. Jones?
JONES: I always make very bad short-term predictions; 7.5 percent.
LEHRER: Mr. Jasinowski?
JASINOWSRI: I think, and I hope that it will go down. It`s hard to predict the exact number, but I think something in the range of 7.5 to 7.9, today`s present figure.
LEHRER: Okay, you`re not too far apart on that. Gentlemen, thank you very much. Robin?
MacNEIL: That discussion was recorded on Friday. If you are a regular viewer, you will notice that starting tonight, our program has a new name, The MacNeil/Lehrer Report. There are two reasons: it gives formal recognition to the co-equal role Jim has been playing, but it also marks the start of a new phase for the program. We`ll now be able to reach out more often, beyond Washington and New York to connect other parts of the country and reflect more, diverse views on the issues of the day, but still concentrating on one significant story a night. We`ll be back tomorrow night. I`m Robert MacNeil. Good night.
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Unemployment & Election
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The main topic of this episode is Unemployment & Election. The guests are Sidney Jones, Jerry Jasinowski. Byline: Robert MacNeil, Jim Lehrer
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