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Interview With Gene Sperling, Steve Forbes

Aired August 13, 2003 - 20:19   ET


UNIDENTIFIED FEMALE: I've never, ever felt as discouraged as I do today.

UNIDENTIFIED MALE: I absolutely am optimistic. It's getting better.

UNIDENTIFIED MALE: Well, the economy could be much improved at this point.


WOLF BLITZER, CNN ANCHOR: After a mini summit with his top economic advisers today, President Bush told reporters his tax cuts have helped save the country from a deep recession, a recession he says he inherited from the previous administration. The president also predicted better times ahead.


BUSH: This administration is optimistic about job creation. We believe strongly that the tax relief plan that was approved by Congress in '01 and most recently in '03 is going to have a very positive effect on economic growth and vitality.

We believe it is more likely in the upcoming year that people are going to be able to find a job and that's exactly where we focused our policy but we also know there's more that can be done.


BLITZER: In Washington to discuss the president's handling of the economy is Gene Sperling. He was the president's chief economic adviser, of course, during the Clinton administration and in New York Steve Forbes, the President, CEO and Editor-in-Chief of Forbes, Inc. Thanks to both of you for joining us.

STEVE FORBES, FORBES, INC.: Good to be with you.

BLITZER: Mr. Forbes, let me begin by putting up on the screen some numbers, disturbing numbers over the past two years, unemployment for example. Take a look at this. It's gone from 4.1 percent to 6.2 percent. Number of people who have lost their jobs, look at this, since January, 2001, 3.1 million jobs have been lost. And, as far as the budget surplus turning into a budget deficit it's gone from $127 million budget surplus in January, 2001, to $455 billion in a deficit with deficits as far as the eye can see. It does not look very encouraging does it?

FORBES: Actually, it's quite the opposite. The president is right. The economy is turning around. You see it in business investment which is starting to pick up again. You see it in durable orders. You see it in retail sales. Job creation always lags a recovery. Next year that should start to improve as well as businesses realize this recovery is for real. He's right, the president. The tax cuts work.

As for employment, those numbers don't include the self employed and others. It's not a good picture but it's not quite as bad a that and job creation will come as this recovery begins to get real traction.

BLITZER: Gene Sperling, listen to what the president said today in explaining why the economy has taken this downward turn.


BUSH: And, as the economy was beginning to recover the enemy hit us on September the 11th and that affected our economy.


BLITZER: What do you say about that Gene?

GENE SPERLING, FMR. CHIEF ECONOMIC ADVISER TO PRES. CLINTON: Well, I think in fairness you got to acknowledge that President Bush did face some serious obstacles that were not all his fault but also to be fair you have to acknowledge that he's been here for nearly three years.

He's had three bites at the apple with three tax cuts and results have been three million less jobs and probably close to $3 trillion more in added debt. And the reason, Wolf, is because he has never focused as much from the very beginning on actually stimulating demand, doing the things that would help jump-start job growth.

There's been too little stimulus too late and, on the other hand, there's been too much of the kind of deficit exploding tax cuts that I think are going to make it very difficult for us to deal with Social Security and are going to put pressure on interest rates to go up as the economy starts to pick up.

BLITZER: A recent Pew poll showed precisely that. If we want to show our viewers, nearly six out of ten Americans, Steve Forbes, say that the economy, not terrorism, is the more important problem facing the country right now.

FORBES: Well, that may change after the events of yesterday with those rockets being discovered and the fact that our airlines are still in jeopardy. One reason spending has gone up is because of security, especially after September 11 and in terms of people's confidence, oftentimes confidence follows a recovery. It doesn't lead a recovery.

What has been remarkable in this downturn is that consumer spending has actually held up very, very well. It has actually increased. Housing held up very well. This has been a business investment recession and all the signs there are that recession finally is coming to a close.

BLITZER: And, Gene Sperling, the stock market seems to be coming back somewhat over these past several months. If that's an indicator that the overall economy could improve by next year that would put President Bush in pretty good standing as far as getting reelected.

SPERLING: Look, Wolf, politics aside we'd all like to see the economy improve. There are a lot of people suffering beyond the unemployed. There's people who are too discouraged to look for work. There's over four million people working part time and want to be working full time.

But, nonetheless, you still have to look at what's happened over these three years. Why was there so little bipartisan focus on jump- starting the economy? And, the other issue that I hope will be part of this presidential election is our future. Does it make sense for us to be running up these large deficits?

And, Wolf, let's just look at what you were just covering, we don't know what the full costs of terrorism are going to be. We do know what the full cost of Social Security and Medicare would be.

We know that we were better able to deal with these problems because President Clinton left a projected surplus that could be drawn on. We know that leaving large deficits make our country less able to deal with both the unknown and known crisis that will face us.

BLITZER: We'll continue this debate. Thanks, Steve Forbes and Gene Sperling for joining us.


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