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CNN Live At Daybreak

America's New War: Government May Spend to Stimulate Economy

Aired September 18, 2001 - 07:20   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.
PAULA ZAHN, CNN ANCHOR: Right now, though, we go to John King, who's standing by in Washington.

John, I was struck by the president for the first time saying yesterday of using government spending to stimulate the economy.

What was the reaction there to that?

JOHN KING, CNN SENIOR WHITE HOUSE CORRESP.: That's right, Paula.

Well, the first time the president has said he is open to new government spending to stimulate the economy, the first time, as well, the president has said he is open to another round of tax cuts to try to stimulate the economy. The prospect of a recession one of the problems facing the president in the wake of these attacks just a week ago.

Mr. Bush also getting more urgently about the business of planning a military response, we are told, and as he does so more and more in the public statements of the administration, the president himself said yesterday there will be costs.

General Joseph Ralston, the supreme Allied commander in Europe, a U.S. general, being much more blunt today, telling the American people if there is a military campaign "there will be casualties."

(BEGIN VIDEOTAPE)

KING (voice-over): Rallying the troops at the Pentagon and talking tough the at mention of Osama bin Laden.

QUESTION: Do you want bin Laden dead?

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I want him, I want justice. And there's an old poster out west, as I recall, that said, "Wanted: Dead Or Alive."

KING: More tough talk at the White House. Current U.S. law forbids assassinations, but the president's spokesman pointedly noted there are exceptions.

ARI FLEISCHER, WHITE HOUSE PRESS SECRETARY: The executive order does not limit the United States' ability to act in self-defense. QUESTION: Is going after bin Laden an act of self-defense?

FLEISCHER: I'm not going to define all the steps that may or may not be taken.

KING: This Pentagon meeting dealt with the coming call up of National Guard and reserve forces and key advisers were at the White House earlier in the day to discuss a menu of military options that includes sending elite infantry troops into Afghanistan.

U.S. officials reported progress on the diplomatic front. Sources tell CNN Pakistan, Russia and India are among the nation's sharing their intelligence on the bin Laden organization. Saudi Arabia and the United Arab Emirates promised to scale back ties with Afghanistan's ruling Taliban. And French President Jacques Chirac and the British Prime Minister Tony Blair agreed to come to Washington this week to plot strategy.

The White House said the rocky first day back on Wall Street was to be expected. But there was a sense of urgency as the president huddled with top economic advisers to discuss a multi-billion dollar emergency aid package to the airline industry and an emergency mix of new spending and a capital gains tax cut to help Wall Street and the broader economy.

BUSH: I'm confident we can work with Congress to come up with an economic stimulus package, if need be, that will send a clear signal to the risk takers and capital formulators of our country that the government's going to act, too.

(END VIDEOTAPE)

KING: Now, CEOs from the airline industry in Washington today meeting first with the transportation secretary, then over to the White House for a meeting with the president's economic team.

We are joined now by a key member of that team, the commerce secretary, Don Evans. He joins us from the White House lawn this morning. Good morning to you, sir.

Let's get right to the airline package. The original package in Congress was about $15 billion total, $2.5 billion in direct aid to the airlines then some loan guarantees. The airlines say they need more, that they need $24 billion or so. Will the administration support that, sir?

DON EVANS, COMMERCE SECRETARY: John, I don't know what the number is going to be. The president, though, is focused on this immediately. I mean he understands what's happened to this sector of our economy. He understands that the rules have changed for them this last week and it is appropriate that the federal government step in and give them some support. I mean I don't -- exactly what the number is going to be, I don't know the answer to that at this point.

KING: A remarkable change in the past week, obviously remarkable circumstances in the past week. But a week plus one day ago this president was saying he believed his tax cut would ultimately prime the economy, urging everyone, including the Congress and Republicans, to be patient, the president saying government spending was a risk to the surplus, not something that Congress should be considering.

Now the president open to more spending and more tax cuts. Is this economy about to slide into a recession, Mr. Secretary?

EVANS: The president's taking leadership here, John, and listen, this country is looking to him to lead us back to the economic growth rates that are acceptable. He's said before that these growth rates of plus or minus one percent are unacceptable. Obviously, things have changed this last week. He's looking at additional measures to stimulate this economy. I called business leaders all across America this last, yesterday, this past week. They're all showing tremendous confidence in this president's leadership through here and I think it's justified. I mean I think that the president is going to bring some certain leadership to the issue of strengthening this economy.

KING: What are the tools at your disposal at the Commerce Department and throughout the government as the president tries to build this international coalition? We are told it's a very much you're with us or against us attitude and the president is saying if you help us, we can help you. If you don't come to our side, we can impose sanctions and end cooperation with you. What tools do you have to enforce that discipline, if you will?

EVANS: Well, I think trade, John, is probably the key area. I mean, you know, we trade with countries all around the world and, you know, we want to continue to keep our markets open to them and want their markets to stay open to us. But we want them to cooperate with us and if they don't want to cooperate or don't want to be on our side, then there are things and measures we can take, sanctions or other kind of barriers to our markets here.

KING: On a closer, more on a personal note, you are the secretary of commerce, a key member of the president's economic team. But you are also a childhood friend of George W. Bush. The president eight, nine months in office now, being tested in a way no one could have imagined. Have you had any private time with your friend and what are your reflections on how he is handling this crisis and the toll it is taking on him?

EVANS: You know, John, what I would say to you is that I've talked to people all across America and they're expressing tremendous confidence in this president. I would say to you that I've never been prouder of this president and my friend. I would say to you that no, I'm not surprised at his extraordinary leadership through this period. I've witnessed it throughout the years in other kind of situations, never the crisis of this magnitude, but other crises and other times when you needed to have a steady hand, good judgment.

I mean I've always said that this president is an individual with a big heart, a big mind, a great mind, an extraordinary leader, and the country is seeing that at this moment. KING: All right, Secretary of Commerce Don Evans, we thank you very much, sir, for your time this morning. We'll touch base with you later as these economic deliberations continue -- now back to Paula Zahn in New York.

ZAHN: Thank you so much, John.

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