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American Morning

Minding Your Business: Tax Cut to the Rescue?

Aired July 03, 2003 - 07:45   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.


MILES O'BRIEN, CNN ANCHOR: Tax cuts are going to put money back into the pockets of millions of Americans. But will it help the economy?
The man with the answers, Andy Serwer. He is "Minding Your Business," the Serwer-O'Brien rally we saw yesterday.

ANDY SERWER, "FORTUNE" MAGAZINE: Yes.

O'BRIEN: We can talk about that in a minute, but...

SERWER: On and on and on, the cut, $36 billion dollars, you guys, going back into the pockets of taxpayers this year...

HEIDI COLLINS, CNN ANCHOR: Right.

SERWER: ... from the treasury, and that begins now. Isn't that the way you start this program? The tax cut begins now.

O'BRIEN: Now.

COLLINS: Yes.

SERWER: It does, because paychecks you're getting paid today or tomorrow and you're going to see a bump-up in your pay, because withholding is down.

The question is: Are Americans going to spend it, save it or pay off bills? A new study out this morning, a new poll shows that most Americans actually -- this is a -- get this. A "USA Today/CNN/Gallup Poll, they pay the bill -- now, when they do this, do they send one guy from each news organization to your door? I'd say one of those, three -- OK. They pay the...

O'BRIEN: (UNINTELLIGIBLE).

SERWER: Most people, as it turns out here, are going to use the money to pay bills, which may not be what President Bush and other lawmakers intended. Saving it also, will that help the economy? Don't know.

The 22 percent who spend it, that's really supposed to spur the economy. You know, you go down to Wal-Mart and you go to your hardware store, you buy stuff. The companies need to produce more. They can build another factory. They hire more people back and on and on. That's how it's supposed to work. And, you know, economists are much less certain whether spending -- whether saving is a good thing for the economy so stimulate it. Obviously, paying bills, though, is very important, because we have a very high level of indebtedness by consumers, so that's important, too.

O'BRIEN: Actually, I think they send Larry, Mo and Curly out. But anyway, do you really believe that, though? You know, people say they're going to pay their bills and they go out and buy stuff, right?

SERWER: Well, you know, that's really true, Miles.

O'BRIEN: Yes.

SERWER: There's a big gap between what people tell pollsters and what they do. They often tell pollsters what they think they want to hear.

COLLINS: Their intentions.

SERWER: Yes, oh, I really am going to save it.

O'BRIEN: Yes.

COLLINS: Yes.

SERWER: Right, yes.

COLLINS: So, hey, speaking of the economy, we know we have a big economic report due out today.

(CROSSTALK)

SERWER: Yes. Yes, this is big jobs report coming out, Heidi, at 8:30 this morning. And this is a biggie, because it's for the month of June. The unemployment rate is 6.1 percent. Economists thinking it's probably going to tick up to 6.2 percent, and we may lose as many as 30,000 jobs or we may gain as many as 30,000. That's sort of the range. Anything wide of those two marks will be a surprise and send the market careening in either direction.

A shortened trading day today at 1:00, so we'll see a lot of activity in the open...

COLLINS: (UNINTELLIGIBLE).

SERWER: Yes, that's right, and then people leave after they've settled down and figured out this jobs report.

O'BRIEN: Do you know, the unemployment rate of Liberia?

SERWER: No, Miles.

O'BRIEN: Seventy percent, seven zero.

SERWER: That will be higher than... O'BRIEN: So, it puts it into perspective.

SERWER: Yes.

O'BRIEN: That would put it in perspective.

SERWER: Yes.

O'BRIEN: All right?

SERWER: OK, see you.

COLLINS: Thanks so much, Andy.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.







Aired July 3, 2003 - 07:45   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MILES O'BRIEN, CNN ANCHOR: Tax cuts are going to put money back into the pockets of millions of Americans. But will it help the economy?
The man with the answers, Andy Serwer. He is "Minding Your Business," the Serwer-O'Brien rally we saw yesterday.

ANDY SERWER, "FORTUNE" MAGAZINE: Yes.

O'BRIEN: We can talk about that in a minute, but...

SERWER: On and on and on, the cut, $36 billion dollars, you guys, going back into the pockets of taxpayers this year...

HEIDI COLLINS, CNN ANCHOR: Right.

SERWER: ... from the treasury, and that begins now. Isn't that the way you start this program? The tax cut begins now.

O'BRIEN: Now.

COLLINS: Yes.

SERWER: It does, because paychecks you're getting paid today or tomorrow and you're going to see a bump-up in your pay, because withholding is down.

The question is: Are Americans going to spend it, save it or pay off bills? A new study out this morning, a new poll shows that most Americans actually -- this is a -- get this. A "USA Today/CNN/Gallup Poll, they pay the bill -- now, when they do this, do they send one guy from each news organization to your door? I'd say one of those, three -- OK. They pay the...

O'BRIEN: (UNINTELLIGIBLE).

SERWER: Most people, as it turns out here, are going to use the money to pay bills, which may not be what President Bush and other lawmakers intended. Saving it also, will that help the economy? Don't know.

The 22 percent who spend it, that's really supposed to spur the economy. You know, you go down to Wal-Mart and you go to your hardware store, you buy stuff. The companies need to produce more. They can build another factory. They hire more people back and on and on. That's how it's supposed to work. And, you know, economists are much less certain whether spending -- whether saving is a good thing for the economy so stimulate it. Obviously, paying bills, though, is very important, because we have a very high level of indebtedness by consumers, so that's important, too.

O'BRIEN: Actually, I think they send Larry, Mo and Curly out. But anyway, do you really believe that, though? You know, people say they're going to pay their bills and they go out and buy stuff, right?

SERWER: Well, you know, that's really true, Miles.

O'BRIEN: Yes.

SERWER: There's a big gap between what people tell pollsters and what they do. They often tell pollsters what they think they want to hear.

COLLINS: Their intentions.

SERWER: Yes, oh, I really am going to save it.

O'BRIEN: Yes.

COLLINS: Yes.

SERWER: Right, yes.

COLLINS: So, hey, speaking of the economy, we know we have a big economic report due out today.

(CROSSTALK)

SERWER: Yes. Yes, this is big jobs report coming out, Heidi, at 8:30 this morning. And this is a biggie, because it's for the month of June. The unemployment rate is 6.1 percent. Economists thinking it's probably going to tick up to 6.2 percent, and we may lose as many as 30,000 jobs or we may gain as many as 30,000. That's sort of the range. Anything wide of those two marks will be a surprise and send the market careening in either direction.

A shortened trading day today at 1:00, so we'll see a lot of activity in the open...

COLLINS: (UNINTELLIGIBLE).

SERWER: Yes, that's right, and then people leave after they've settled down and figured out this jobs report.

O'BRIEN: Do you know, the unemployment rate of Liberia?

SERWER: No, Miles.

O'BRIEN: Seventy percent, seven zero.

SERWER: That will be higher than... O'BRIEN: So, it puts it into perspective.

SERWER: Yes.

O'BRIEN: That would put it in perspective.

SERWER: Yes.

O'BRIEN: All right?

SERWER: OK, see you.

COLLINS: Thanks so much, Andy.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.