tv Nightly Business Report PBS July 19, 2010 6:00pm-6:30pm PST
>> susie: extending unemployment benefits. it's a hot topic on capitol hill, but this man says there's nothing political about needing a job. >> you're going to have a lot of people out there who won't have jobs. they won't have anywhere to turn. >> tom: from compassion to the cost, we look at the pros and cons of extending jobless benefits for millions of americans. you're watching "nightly business report" for monday, july 19. >> this is "nightly busines this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:
this program is made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt everyone. a plea today from president obama for congress to pass the unemployment bill. the president urged lawmakers, tom, to put aside politics and to approve an extension of benefits to millions of americans out of work. >> tom: susie, this unemployment insurance bill is expected back on the senate floor tomorrow. republicans say they'll only support an extension if the bill does not add to the national debt. >> susie: still the president said lawmakers need to help americans who have been laid off during this recession. >> we've got a responsibility to help them make ends meet and support their families,
even as they're looking for another job. that's why it's so essential to pass the unemployment insurance extension that comes up for a vote tomorrow. >> susie: millions of americans will be watching that vote tomorrow to find out what's ahead for their weekly unemployment insurance check. one of them will be bill boteler. we first introduced you to bill almost a year ago when he had already been unemployed for several months. today he still is looking for work. now as we revisit him, bill tells us how he's keeping his spirits up and planning for an uncertain future s. darren gersh reports. >> it's the top one. open it up. they gave me $290. >> reporter: for almost two years bill boteler has relied on a weekly unemployment insurance check. not to make ends meet but to get them a little closer. >> this to me is like a cushion.
to try to live off this is challenging. >> reporter: when we first met boteler almost a year ago he hadn't had a perm nant job for 10 months. since then he's tried to keep his credit up which he says is important when you're searching for work. he's now looking for a cheaper apartment and boteler says his weekly benefit check helps him focus on finding a job. >> if you put the two together-- that you don't have enough money to pay for anything and you are having to face a lot of rejection and a lot of disappointment in trying to find a job-- then i think that's a little bit too much of a burden to put on people. >> reporter: in the last year boteler figures he's applied for hundreds of jobs. he even set a daily production quota. his day begins with a trip to the new office of the great recession. >> hi, my name is bill boteler. i have experience as a writer and an editor. >> reporter: the local cafe. >> i mean, i'm here. i'm doing this. i dress up. i have a goal. i'm not sitting in my room thinking about whether i should do the dishes or whether i should look for a job or something like that.
i'm not aimless. >> reporter: boteler has taken temperature jobs including a stint as a census worker. now he's focused on the quality of his networking not the quantity of resumes he sends out. >> it's unbelievable how much time it takes for people to find jobs. people have not had to do that who have been fortunate who have let's say a job that's been secure for many years will be shocked when they discover just how difficult it is. >> reporter: we've talked to many people who are looking for work, and they say there's an unstated bias against the unemployed. bill boteler worries about that too. he wants people to know he's a hard worker and he can't understand why congress is having such a tough time extending benefits. >> if they cut the budget back, then... you're going to have a lot of people out there who won't have jobs. they won't have anywhere to turn. and it's... it will have an economic impact on people who consider themselves more fortunate. >> reporter: he has just nine
weeks of unemployment insurance left. but the last few days, he says, have been good ones. >> i'm not feeling really down right now because i've been doing a lot. i think something will pan out this time. >> reporter: darren gersh, nightly business report, washington. >> tom: we'll have more on the debate over extending jobless benefits a little bit later on in this program. first let's get you updated in tonight's nbr news wheel. stocks shook off new worries about the housing sector. the dow rosing 56 points. the nasdaq adding 19. the s&p 500 up six. nyse exchange volume fell below a billion down from friday's pace. nasdaq fell below two billion also down from friday. stocks moved higher despite home builders singing the blues. this month the national association of home builders confidence index fell to its lowest level in 15 months on a slump in economic growth and persistent high unemployment. b.p. is can keep testing the cap fitted over its broken well head. now the tests have shown a
methane gas leak is not related thad allen has okayed b.p. to continue testing for another 24 hours. meanwhile costed tied to the spill are nearing $4 billion including over $200 million to settle individual claims. and ken feinberg, the man overseeing b.p.'s huge compensation fund, says fishermen and others with claims would be, in his words, crazy to by-pass the fund and sue. feinberg says he'll be more generous than any court, and claimants won't face court delays. >> susie: coming up on the program, stocks too volatile? treasury yields got you down? how about lending money to your favorite company instead? we look at why corporate debt offerings are jumping. >> tom: more now on the debate over extending unemployment benefits. if kwong congress he kays this this week, it would be the sixth time since the recession began that unemployment payments have been extended. over the past two years, looking at everyone without a job, the percent of people who have been jobless for six
months or more has jumped from under 20% to almost half. jeff miron is a senior fellow at the cato institute. christian weller is a senior fellow at the center for american progress. welcome. >> thank you. >> tom: let's begin what the department of labor says about the purpose of these unemployment checks. the benefits, quote, are intended to provide temporary financial assistance to unemployed workers. jeff, let's begin with you. should there be a limit to unemployment benefits? >> i think there should be a limit. we need to have a balance between compassion which is the temporary word in the department of labor's language and productivity in giving people an incentive to go out and find jobs and particular to be willing to lower their wage demands, to accept jobs that are not exactly what they had before. they're not necessarily as good as they had before. but have to take some responsibility themselves for the fact that economic conditions are worse and therefore take a broader set of jobs and have some limit to
how long people can collect unemployment insurance. >> tom: that presumes there's jobs out there and there are job demands not being fulfilled. christian, how do you define temporary in that definition from department of labor. >> we have to be mindful of the fact that this is the worst recession since the great depression. we have over 14 million people looking for jobs who cannot find jobs. we have about five people looking for each opening. we have millions of people who have given up looking for a job. and as you already mentioned, those who are looking are looking longer than at any point since world war ii. clearly temporary now means something else given the severity of the labor market recession. and i think extending unemployment benefits is compassion tsate but it also makes economic sense. >> tom: talk to us about that idea. we saw earlier in darren's piece from bill boteler, $290 a week. that doesn't go very far. what do we know about the economic impact of these
checks? >> we know they make a real difference obviously if people's lives. those who are hurt the most by the current crisis but in the aggregate we're talking about $30 billion. money will be spent very quickly because these are people who have been struggling for quite some time. you're extending the unemployment benefits. the money won't be saved. it will go very quickly to consumption. it will boost retail sales which is the big worry of businesses at this point. 40% of businesses worry about sales not being high enough. that's the biggest worry for them. it will help the private sector and will protect the private sector momentum. we've seen that since the end of 2009. it's strength in recovery to help us continue building jobs in the private sector. >> in order to stimulate job growth you need spending money. at least this gets people to have some dollars in their pocket to spend. >> i think it's a very unpersuasive position. first of all, the check that we're sending the unemployed came from somewhere. they came from the tacks of other people who are for the most part employed.
so if transferring money to these people who are unemployed helps stimulate the economy then taking it away from the people who pay the taxes destimulate the economy. overall it's hard the see how that is on net a beneficial thing. more broadly, the fact that we're consistently trying to promote sort of redistribution in helping people rather than trying to create rules and a system which is productive gives the private sector pause. it makes the private secretaryor think we're not getting the deficit and the debt under control. it makes them think we're not worry about productivity. that's in the long term much worse for people having jobs and being employed than the temporary aspect related to recession. >> tom: jeff, it's estimated that since the extension of unemployment benefits expired back in early june about $3 billion has not been spent. over that same month interest on the u.s. debt in june was $107 billion. we seem to be, you know, talking about spending pennies or saving pennies when we're spending dollars. >> i totally agree. it's a very small amount of
money. the fact that it's a very small amount of money also means that any possible effect in stimulating the economy is also very trivial because we're talking about a very small amount of money. the broader thing is it creates the wrong incentive. there's clear evidence that people who are unemployed tend to leave unemployment just before their unemployment benefits run out. it's not just a question... it's not the right way to think about is it are their jobs the right way is are there jobs at low wagers? there would be a lot more jobs out there. that's the adjustment that needs to happen in many cases. but ununemployment insurance and especially very, very long- term unemployment insurance impedes that kind of adjustment. >> tom: christian, i want to.... >> that's.... >> tom: aaddress that job demand issue. >> if we lower our wages to create more jobs ultimately the overall consumption won't change and sales won't chak p change. the important important point is unemployment benefits are
very good. benefits for the economy, every dollar spent on unemployment increases economic activity. so it makes economic sense. it helps the most vulnerable in ultimately boost economic growth. i think this is the time is right at this point to extend the unemployment benefit. it will be in front of the senate tomorrow, christian. does it get approved? >> it will get approved but probably with a very slim margin. >> tom: jeff, how about it? >> unfortunately i think it will get approved too. >> reporter: our guests on extending unemployment benefits. christian weller, senior fellow at the american... the center for american progress. we've also got jeff meyer with the cato institute. >> thank you very much. >> susie: and moving along now to financial regulatory reform. on wednesday president obama will fine the biggest overhaul of financial rules since the great depression depression. the head of the securities and exchange commission says she'll need helps enforcing those rules a lot of help. mary sha peery says her agency will need 800 new workers for
what she calls a logistical and labor intensive challenge. her comments came in prepared testimony expected before a house committee tomorrow. the dodd frank reform act gives sweeping new powers to the s.e.c., including supervising hedge funds and the huge derivatives market. >> susie: a big step forward in the break-up of motorola. it is selling most of its wireless network equipment
business to nokia-seemens. the price tag is $1.2 billion. the all-cash sale boosts the standing of nokia a joint venture in the u.s. and japan. those companys say it brings lay-offs. by the first quarter of next year, moat ol a will have two business units, one selling equipment for the business market and another making mobile phones and other consumer products. speaking of technology, tom, i.b.m. came out with those earnings and disappointing revenues after the bell. looks like that could set the tone for the markets tomorrow. >> tom: a similar refrain we're hearing from i.b.m. which was a pretty good bottom line but some concerns on the top line. we talked about he late last week. it is back in tonight's market focus. >> tom: before we get there throughout the day investors bought both the defense tiff- minded utility sector as well as the growth-focused technology stocks. utilities stocks as measured
by this exchange traded fund xlu clearly was a pretty good winner today. traded up throughout the day almost making up what they lost during last friday's sell- off. a move over $31 would take this fund up to a six-month high. as we mentioned the focus after the close settled on two tech giants including i.b.m.. bottom line at big blue came in better than expected but the top line revenues were lighter than anticipated. also despite rising its full- year guidance, it still remains below street estimates. shares of i.b.m. were up in advance of these earnings as you can see but after the report the stock was down as much as 4%. chip maker texas instruments was the other tech reporting after the close. profits coming as expected. operating profits did set a record. gross margins also on the increase. positive news for shareholders. stock jumped 3% during the regular session. but after hours the stock gave up that and then some, falling by better than 6%.
apple is the big tech firm tomorrow with earnings as questions continue swirling about its i-phone-4. for a moment today, apple stock fell below $240 per share. closing at $245 and change. that is the lowest price since mid may. research in motion, motorola and others arguing today that apple's claim that all smart phones have reception problem s is is wrong. apple's earnings tomorrow by the way will be the first full quarter to include i-pad sales. we'll have a report tomorrow evening. energy stocks got a boost with strong results from services company halliburton. growth across its markets helped halliburton easily beat estimates. it's the first major oil services firm to report earnings for the quarter that includes the b.p. disaster and deep water drilling moratorium. baker hughes is due out in two weeks. more seats in the air may be good news for air travelers but it could put pressure on
airline profits. delta plans to increase capacity at the tail end of this year and into next year. that announcement came after earnings in the second quarter were much better than estimates. echoing what we've seen from several others, revenues were less than anticipated. delta stock dropped on three times its usual volume. also caught up in the sell-off and concerns about more capacity leading to lower ticket prices: u.s. airways and budget carrier southwest, each falling on heavier volume. we saw some biotech buying in gilead sciences. the wall street journal reports that a gel containing an h.i.v. treatment made by gilead cuts the chance of getting aids if used by women before and after sex. this study was led by south african researchers. shares bounced off a 52-week low which was hit on friday. the drug is used to treat the aids virus but this experiment looked at using it to help prevent h.i.v. catching you up on one of those biotechs working on an sperm experimental weight loss drug, vivus ctinued falling
adding to friday's losses after an fda advisory panel decided against recommending its treatment for approval. finally merger talk. today that centered around h&r bloch. since january the stock down by a third. today shares bouncing on word that another tax giant wants to talk. john hugh it put together jackson hugh it and liberty tax services. he's interested in h&r bloch. and that is tonight's market focus.
heating up, investors have been seeking the safety of bonds. for many that means treasurerys despite the puny returns. but if you can storm a a ak more risk as some investment advisors believe corporate bonds are a better yet. we look at why you may want to consider jumping on the corporate bond boat. >> reporter: when sailing in choppy waters boaters have life vests for safety. when it comes to market volatility, investors have their own form of protection: bonds. so far this year investors have yanked nearly $11 trillion out of domestic stock funds. they've poured more than ten times that amount into u.s. bond funds. the money is not just going into treasury. stop quality corporate bonds are also benefiting from the flight to safety. but credit strategist believes high yield corporates, otherwise known as junk bopdz are a much better option. >> high yield bonds are paying on average, you know, 9-plus percent right now. fundamentals are still improving for a lot of these
companies. we're seeing that come flew as we get into earnings season right now. >> reporter: an easy way to get broad exposure to the corporate bond sector is to buy an exchange traded fund. the bond index is currently yielding 9%. the investment grade version is yielding 5%. both are paying out a lot more than ten-year treasurys which yield less than 3%. one of the biggest risks to corporate bonds is the possibility the fed might start raising interest rates. even if that happens, he thinks junk bonds will hold up fairly well. >> from a price standpoint, you will not see much of a move with respect to high yield bonds. obviously with a sizable coupon that they have on them that makes for an attractive investment in the current environment. investment grade bonds will be much more sensitive to rates. >> reporter: still financial planner cliff michaels believes investment grade bonds are the better bet these days because they have less likelihood of default. >> if in fact we are double dipping-- i'm not in that camp necessarily-- but if we are
slowing down that would affect the corporate high yield bond market. the young bond market. we are going much more for investment grade corporate bonds now. >> reporter: so you might think of investment grade as more of a tanker than a sailboat. not terribly exciting but the safer option if seas get rough. >> susie: here's what we're watching for you tomorrow. housing starts for june come out. analysts are expecting a second straight monthly fall. that's due to the end of the home buyer tax credit. a big day for earnings. results for apple, goldman sachs, johnson and johnson and pepsico. also gold our word on the street segment looks at lifelong strategies when it comes to investing in the precious metals. a setback today for ireland's recovery. moody's downgraded the country's credit rating. moody's lowered ireland one notch. it still remains above junk level though. the ratings agency cited a weak banking system and rising debt. but moody's still boosted its
outlook from ireland from negative to stable, saying another downgrade is unlikely. ireland was the first euro zone nation to enter recession. it was out in the first quarter of this year. >> tom: major banks in greece are expected to pass a series of stress tests. the country's finance minister said today he's certain they will. six greek banks are among the 91 undergoing stress tests by the european union. the results are due friday. the greek government is considering a $911 million offer by a private bank to take control of two state lenders. greece is said to be closely examining that proposal.
>> susie: from tax cuts to curbing spending, tonight's commentator is thinking about controlling our budget deficit. he's glen hubbard, dean of columbia university's graduate school of business and former chairman of the council of economic advisors under president george w. bush. >> many congressional leaders have suggested that tax revenues are too low and will remain low without a tax increase. this year's federal revenues will be about 15% of g.d.p., less than the 40-year average of about 18%, but revenues are already on track to exceed 23% of g.d.p. in just 25 years, greater than in world war ii.
how would this happen? first a recovery will roost boost revenues. over time rising incomes will lift tax payers into higher brackets, real bracket creep. and tax cuts from 2001 and 2003 and the 2009 stimulus will expire. new taxes are helping to pay for health care reform while the amt not indexed for inflation will hike taxes for millions. about a third of the revenue growth comes from expiring tax provisions, a third from real bracket creep, and a third from remaining tax increases. now the congress is unlikely to let all tax cuts expire. so won't we have a revenue gap? exactly as congressional leaders argue? not necessarily. we can extend the twup and 2003 tax cuts and limit the growth of the a.m.t., and still have tax revenues more than 19% of g.d.p. by the end of this decade, well over the 40-year average. the real question is whether we can keep federal spending in check.
if not, we will need to raise taxes, and to levels well beyond the heights of world war ii. i'm glen hubbard. >> tom: that is nightly business report on this monday evening july 19. that's for joining us. i'm tom hudson. have a great night. >> susie: take care, tom. i hope to see all of you again tomorrow night. nightly business report is made possible by.... >> there's a world of investment opportunities out there. spotting them takes ex-pers on the ground. assessing potential firsthand. templeton. a pioneer in global investing for over 50 years. gain from our perspective. >> and by exxon mobile. this program is is made possible by contributions to your pbs station from viewers like you. thank you. ,.