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CNN Live At Daybreak

Federal Reserve Sends Key Interest Rate to Lowest Level in 40 Years

Aired November 07, 2001 - 11:18   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: The Federal Reserve has sent a key interest rate to its lowest level in 40 years. The Fed hopes its tenth rate cut this year will boost the ailing economy. Unemployment is up, consumer confidence is down and Americans are anxious. Some morning after perspective now from Commerce Secretary Don Evans.

Good morning, Mr. Secretary. Thanks for joining us this morning.

DON EVANS, COMMERCE SECRETARY: Sure, Paula. Nice to see you.

ZAHN: Thank you.

So yesterday we now -- or we just mentioned that Alan Greenspan announced the Fed funds rate was cut by about a half percentage point to two percent. What makes you think that this interest rate cut is going to have any more effect than previous ones this year?

EVANS: Well, Paula, it will help. It's not the entire answer. I mean we've had 10 interest rate cuts over the course of the last 10 months or so and that's part of getting this economy moving again. But another big part of getting this economy moving is for Congress to pass a stimulus package, for Congress to give the president trade promotion authority so we can open up markets around the world for American workers and American businesses.

So by itself, it's not the answer to get this economy moving again. It will be helpful, though.

ZAHN: In Japan the central bank there has kept interest rates at almost close to zero for 10 years now. How low will Alan Greenspan let interest rates go here?

EVANS: Well, I'm going to let Alan Greenspan decide how low interest rates should go. He's done a terrific job. He's a fabulous chairman of the Fed. They're doing a great job of bringing the rates down in a very controlled kind of way. But, you know, you mentioned Japan and zero interest rates and you look at Japan and what they've tried to do in order to get their economy moving again, spend their way out of a downturn. And federal governments can't do that. And that's why the president is so focused on providing tax relief for the American consumer, the American business community. Put the money back in the hands of the consumers so they can play a major role in getting this economy moving again. ZAHN: How concerned are you, though, this morning about those consumer confidence numbers?

EVANS: Well, I'm concerned that...

ZAHN: It doesn't seem that Americans are heeding the, you know, the advice of the president right now.

EVANS: Well, listen, I'm concerned about them and we need to show the American people that we're going to lead this economy recovery, that we're going to do the things that it takes to put people back to work again, like pass a stimulus package, like open up markets around the world for our products and our services, for the American workers.

So listen, I'm concerned about it. But I think one of the ways we can boost consumer confidence and America's confidence is lead and show that we're going to take the necessary steps to get this economy on the road to recovery.

ZAHN: But you've got some 7.7 million Americans sitting out there this morning with no jobs and they're scratching their heads and they're saying what can our government do for us now.

EVANS: Well, what they can do is pass a stimulus package. What they can do is put hands back in the -- put money back in the hands of the American consumer so they'll spend again, they'll go buy the car they were thinking about buying prior to September 11 or own the home or go to the malls and spend money. They've been driving this economy for the last couple of years or so. They can continue to drive it.

And so getting money back into the hands of the American people is a way, certainly, to get the economy going again, which will create the jobs to put those seven million people back to work.

ZAHN: But given the political reality now of what you face in trying to get this package passed, what are the chances that it will go through?

EVANS: I think it will go through. Listen, the president has laid out a very balanced kind of plan that says that, you know, we ought to balance tax relief with spending and we ought to, we think an additional $60 billion to $75 billion is the appropriate amount of money to include in a stimulus package, which is in addition to the $55 billion that has already been passed.

So, you know, I think if Congress takes the necessary steps, if Congress sends to the president a stimulus package by the end of this month or some time in the next couple of weeks, I think that will be a big shot in the arm in the confidence of the American people and they'll go back to the malls and begin to spend money again.

ZAHN: How long have you believed we've been in a recession?

EVANS: Well, I, you know, I'm not saying were in a recession. I mean I'm saying the economy is certainly growing below its potential. It's not growing at an acceptable rate. In fact, in the last quarter it didn't grow. It declined by .4 percent. But that .4 percent decline was actually somewhat, the decline was not as great as many people thought it might be. And I think there's still reason to believe that the fourth quarter could be a positive quarter.

So I don't, you know, I don't know if, all I know is that the economy is growing at an unacceptable kind of rate and we need to take the steps and measures to get this economy moving again so we can put American workers back to work.

ZAHN: I know that traditionally there has been this definition that your economy had to have two economic downturns quarter to quarter, but in spite of that, you've had world renowned economists for many, many months now saying that we are in a recession. Your reaction to what they are telling us?

EVANS: Well, I'm not -- yes, I'm not going there. Let me, I'll let the economists decide and the others decide whether or not we're in a recession. What I'm focused on is getting this economy moving again. What I'm focused on is taking the necessary steps to restore confidence in this economy all across America, put workers back to work, encourage Congress to deliver to the president not only a stimulus package, but trade promotion authority, which will give him the ability to open up markets around the world for our businesses and our workers, encouraging Congress to give the president an energy bill, which is very important to a growing economy.

I'm going to continue to focus on the things that we can control to get this economy growing again.

ZAHN: Commerce Secretary Don Evans, good of you to join us this morning.

EVANS: Thank you, Paula.

ZAHN: We appreciate your coming. Thank you -- Miles.

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