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American Morning

America's New War: Alan Greenspan Addresses Economic Impact of Terrorist Strikes on Capitol Hill Today

Aired September 20, 2001 - 10:13   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JOHN KING, CNN ANCHOR: Alan Greenspan addresses the economic impact of the terrorist strikes today on Capitol Hill.

CNN's Tim O'Brien is there as well.

Tim, what do we expect from the chairman?

TIM O'BRIEN, CNN CORRESPONDENT: Hi, John.

We have received an advanced copy of the chairman's statement. He says the terrorism of September 11 will have significant short-term effects on the economy, but the longer run prospects have not been significantly diminished. That's a quote. He said the shock of what's happened raised on the uncertainty of the future, and that has the potential to result in a pronounced disengagement of future commitments.

He points out that last week, all commercial activity seems to grind to a halt. You didn't have to go further than your local shopping mall to see your economy slowing down. The malls were empty, not because of an inherent problem in the economy, but because potential buyers were home watching television.

He points out that the markets were surely disrupted, they were closed but they are functioning and functioning well now, although not perhaps normally.

He points out that over the past couple of decades, the American economy has become increasingly resilient to shock. Deregulated financial markets, more flexible labor markets, and more recently, the major advances in information technology have enhanced our ability to absorb disruptions and recover.

He, of course, distinguishes what happened last week from previous natural disasters. What happened last week he characterizes as a strike at our free society. The foundations of our free society remain strong, however, and our market-driven economy also remains strong.

He says as a conference of overwhelming and universal support that the U.S. received from around the world, the prospects now for multilateral trade negotiations may be better than ever. The first opinions up this morning will be Paul O'Neill, the treasury secretary, who spoke in a similar vein about the strength of our economy and how it will recover, and he also made a statement the IRS has postponed until September 24th the due date for all federal tax returns, including the filing of returns and the payments of estimated taxes -- John.

KING: Tim, as listen to you, we see the chairman there, Senator Paul Sarbanes of the state Maryland. One debate is, what should the government do in the short-term? Should there be an emergency stimulus package? I am told that Mr. Greenspan yesterday told members of Congress, slow down, let's take a couple of weeks, we will get some data in from the economy, and then let's have a sense of how the Congress and the president should respond.

Any sense, either from Mr. Greenspan or Mr. O'Neill? Will we get any details today on what they believe should be done.

O'BRIEN: I rather doubt it. There is nothing in Greenspan's statement about that. I have no doubts they'll be asked about it. I think we're going to get remarks in a similar vein, that we should move slowly. I suspect that he'll be asked about some of the specific proposals on the table. Should there be a capitol gains cut? What about Social Security payroll taxes? What about some capital expenditure stimulus? They're all out there, and I think they'll be asked, but I doubt we're going to get any clear answers, nor do I think we're going to get any suggestion from Greenspan at this time about possible rate cuts down the road, although those are widely expected.

KING: All right, Tim O'Brien standing by at the Senate Banking Committee Hearing.

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