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CNN Sunday Morning

Interview With Kathryn Carlson, John Breed, Bruce Larrabee, Donna Larrabee

Aired August 11, 2002 - 11:15   ET

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

KRIS OSBORN, CNN ANCHOR: A lot of political attention, of course, is being focused on President Bush's upcoming economic summit planned for this Tuesday at Baylor University in Texas.
The president says he will use the event as a way to hear from experts, businesses and workers on problems with the economy. We've heard so much about them and, of course, ways to tackle them.

And joining us now to talk about this -- what they want to hear at the summit -- is Kathryn Carlson in Boston -- and she's a recently unemployed college graduate, John Breed here in Atlanta, he owns a small business and a couple who's considering retirement -- Bruce and Donna Larrabee. They join us from Chicago.

So a whole lot on the table here, of course. These are turbulent economic times.

Kathryn, let's start with you. You got out of college, you came out of Wellesley, you had a good job, things went south. Tell us your story.

KATHRYN CARLSON, YOUNG PROFESSIONAL: Well, I came out -- I graduated from Wellesley in 2000. And at that point when I was recruiting in the fall of 1999 it was all investment banks and consulting firms. And it was great. It was relatively easy to get a job if you had a good resume and a good transcript. And you were guaranteed two years of great experience and a quick start to your career.

And then unfortunately this new economy -- new, new economy -- hit us and things have changed. And my company unfortunately was shut down about a month ago.

OSBORN: So, Kathryn, who do you hold responsible for this or how are you feeling about it in terms of your prospects for looking for work again?

CARLSON: I don't think that I actually hold any certain person responsible for this. It's unfortunate times. And it was a rather unfortunate time to come out of college when you saw the highs and your friends who graduated just right before you and the way their careers started out, of course, versus yours. I think it's just unfortunate timing for us.

OSBORN: Well, certainly the numbers of those currently looking for work are pretty high -- something like 13 million currently unemployed looking for work.

Let's talk to John Breed. He and his wife run a stationary business here in Atlanta. John, talk about your experience in terms of how the economy has effected you.

JOHN BREED, SMALL-BUSINESS OWNER: Well, we've been pretty lucky. The -- as a small business we've had the opportunity to grow in this economy in this year 2002.

We had a struggle obviously in the third quarter, the fourth quarter with some of the events of September 11. It impacted our sales. But we've come back pretty strong this year and made some investments in our company and our Web site and hired some employees as well.

So, again, we've just gone back to basics doing what we have to do to manage our business.

OSBORN: Well, John, have you felt any kind of an impact from the current climate on Wall Street, the corporate scandals, et cetera -- of course, the executives getting in trouble? Has that impacted you as a small businessman?

BREED: Yeah -- I think it makes us nervous. The biggest impact is in the back of your mind when you go to spend money, reinvest in your company or evaluate an employee you're very worried about will the economy go south again? Will there be some kind of a hiccup that you're going to be cash-strapped as a company.

But you also have to go forward. And that's basically been our premise of go forward and be smart about what you're doing and service your clients. But that's our approach.

OSBORN: Well, Bruce and Donna Larrabee, now I understand the two of you were contemplating retirement but now might be rethinking that very question as a result of the current economic climate?

BRUCE LARRABEE, NEARING RETIREMENT: I'm not sure we're rethinking it so much as probably using a cautionary note with ourselves as far as what it might be like when we're actually able to retire.

I think pensions and Social Security will probably do us pretty good as far as basic expenses but the gravy -- the extra comfort level -- will be determined by what our investments do.

And hopefully over the next three to five years, which is what our retirement timeframe is, then we'll see some sort of recovery there.

OSBORN: I wanted to ask you about that. How much has your 401(k)s -- your various retirement accounts -- have they taken a very big hit in the market? A lot of people have been talking about losses.

BRUCE LARRABEE: You might say that. Yeah -- we got hit pretty hard the last couple years. We're both in the telecom industry as far as job goes and pretty heavily as far as 401(k) plans go. So the last couple of years have been pretty stressful for us. So we don't really check the monthly statements anymore.

OSBORN: You know what they say -- a lot of people just say, "Hang in there for the long-term and sure enough over the course of time the market may ultimately be friendly to you."

BRUCE LARRABEE: I think -- I think that's the way to look at it. You have peaks and valleys and obviously right now we're in a valley. I don't think that we'll see recovery to the point where we were a couple of years ago because that was a pretty nice bubble. But I'm hoping we'll see at least some recovery to some of the investments that we have.

We've done some diversification so that we're not quite so concentrated in the telco sector anymore but hopefully we'll see some recovery.

OSBORN: Well, Kathryn, let's go back to you and talk about the prospects moving forward. What's your sense of this upcoming economic summit in terms of the feeling about the economy? What is your sense of some of the proposed reforms that are going into effect? As soon as August 14 CEOs will have to be signing off on their accounting.

CARLSON: Well, I think it's a great start. And I think for people my age who are unemployed -- I have a lot of friends along with myself who are right now -- and we're trying to get back in and trying to get excited about working again.

And we would just -- we just want to feel confident that our hard work and intelligent savings for the next 30 -- 40 years will pay off and we don't have to worry about this again.

OSBORN: And, John, things haven't been as bad for you in terms of the financial aspect of this but as a businessman, where do you think you are moving forward?

BREED: I think, again, it's a conservative approach going forward as a company and making sure that we don't spend money for the sake of spending money. And hopefully government will act as something that helps guide our economy along and we get back to the consumer being confident again.

OSBORN: Well, certainly. And the decrease in consumer spending is something that received a lot of attention. As early as early last week some of the numbers for that had decreased.

I wanted to ask the Larrabees what their sense of this was in terms of moving forward?

BRUCE LARRABEE: I don't know. I think we're just going to keep an eye on things. To be honest, I've been sitting on the sidelines a little bit recently. I've been wanting to do some more diversification. To be honest, I don't know where in the heck to put the stuff. So I think we'll probably be on the sidelines for a little bit while but hopefully picking up some bargains.

I see it recovering and probably doing well in the next three to five years.

OSBORN: Well, certainly there's a lot of hesitation when it comes to the question of blame game. But many are raising the question of the issue they've criticized -- perhaps the administration -- its members being too much in the inside world of a group of business elites. There's that issue and there's, secondly, the concern that perhaps the economy itself needed to step up and have its internal mechanisms regulate the difficulties more effectively.

BRUCE LARRABEE: I'm not sure you can play the blame game. As far as the administration or as far as being in bed with some of the companies -- I think it's probably pretty widespread. At least the media paints it that way.

I think it's probably a much smaller issue as far as the number company goes then it has probably played out to be.

OSBORN: Kathryn, what's your sense of that?

CARLSON: I agree. I think it's hard to lay specific blame unless, of course, he works for certain companies that saw that happen a bit more. But I think in general we'd just like to have more transparency so that we all know -- we all feel more confident in what's going on behind the scenes.

OSBORN: Well -- and, Kathryn -- all of you -- the Larrabees, Mr. Breed, Kathryn, yourself -- working Americans out there. There is a sense among some that perhaps the every man -- that the everyday worker is losing out when a group of business elites -- a group of executives -- cash out millions in stock options just prior to announcing bankruptcy. That was the case in Enron, that was the case in WorldCom as well.

Is there a sense of a populous feeling of unrest about that?

BRUCE LARRABEE: I don't know that there's a feeling of unrest so much as -- I think we're entitled as shareholders, as workers, as investors to honest information. I think that you basically have to take your own risk and make the investments based on knowledge. But I think you basically have a right to trust that knowledge.

Having been the case of Enron and a lot of other companies we obviously couldn't. The analysts are wrong, the executives were telling us bad information. In the case of WorldCom they were probably flat out lying.

So I think we are entitled to accurate information and once we get that then we need to assume the risk.

OSBORN: And, John, are you optimistic that the proposed reforms -- the corporate accountability bill, which will go into law August 14 -- as well as other measures that are included in the various efforts to reform the corporate situation -- are you optimistic?

BREED: I'm optimistic in the economy. I'm not so optimistic to think that we're going to hold the right people accountable and echo the last guest's sentiments. It's about all of us should be privy to fair, correct, accurate information.

And if we have that as investors -- and probably all of us are investors in the stock market to some degree -- then I think we can make wise decisions as a consumer and an investor.

But I'm not totally convinced that the government or any certain summit is going to provide that, frankly.

OSBORN: John Breed. Well, the Larrabees -- I wanted to end by asking you -- optimistic?

DONNA LARRABEE, NEARING RETIREMENT: Absolutely.

OSBORN: Kathryn Carlson, are you optimistic?

CARLSON: Definitely.

OSBORN: And, John Breed, let's round it out here. Are you optimistic?

BREED: Yeah -- I'll agree with everyone else. I'm very optimistic.

OSBORN: All right -- well, thank you very much.

One of the things that has been in the mix with all of these efforts to change things is that companies are going to list stock options as expenses. That was something from '95 to 2000 they were -- they were not doing that as a way to inflate their numbers.

So now for more insight on the president's economic forum and these very issues we are joined by CNN political analyst Ron Brownstein. He's in our Washington bureau. Ron, hello to you.

RON BROWNSTEIN, CNN POLITICAL ANALYST: Good morning.

OSBORN: So what do you make of it? There are certainly some Democrats that have been very critical of this proposed economic forum essentially saying that it's a PR stunt -- that they're all people friendly to the president -- no members of Congress. There won't really be any critical perspectives there.

BROWNSTEIN: Well -- yeah -- first of all, that was a fascinating cross-section of the sort of things that the president is likely to hear at the summit. Well, look -- the backdrop for this is that the president's position on the economy is much weaker than it is on foreign affairs.

Polls out in the last couple of weeks have found that the majority of Americans think the economy is in recession, think the country is on the wrong track and his approval rating for handling the economy is only in the mid 40s compared to astronomical numbers on issues of national security.

So, first of all, what this is about is about shoring up his position. And I think he's trying to do that in two ways. One is by arguing that he has a plan.

Democrats have a critique of Bush's economic management. As you said, the Chairman of the Democratic National Committee, Terry McAuliffe, yesterday in Las Vegas gave a very sharply-worded speech. But they don't really have an alternative plan on how to grow the economy yet because they're still divided on whether we'll see any kind of roll back on his tax cuts.

So on the one hand he wants to show he has a plan and on the second goal would be to show empathy.

They're bringing a lot of ordinary people, small business owners, working people in and that really is to show that he is in touch with what is going on out there.

Polls show that Americans are easily divided when asked if Bush is in touch with the concerns of ordinary people in this economy.

And after what happened to his father in '91 and '92 when he seemed to be out of touch with the recession, that is something the White House is very keen to.

OSBORN: Well, you mentioned that the polls being in touch with the proximity of the Bush administration -- two, the world of business. Of course, the SEC cleared the president on the issue of Harken Energy. But there was -- as a board member there was a $317,000 amount of stock, which turned into a half a million dollar loan. Then, of course, became a stake in the Texas Rangers.

Some have suggested that perhaps his mere involvement -- the only president with an MBA -- has contributed to some of those concerns.

BROWNSTEIN: Well, the polls show that people trust Bush personally. I think it's going to be hard for Democrats to make a case or at least to convince the voters that he is not personally trustworthy. I think that is a -- that is a pretty ingrained image of him.

On the other hand, as you suggest, the image that he is too close to business is something that is out there. People have concerns about whether he favors the interests of large corporations too much -- not only in the accounting and securities area but on other issues like the environment, occupational safety and health.

He's appointed a lot of people to his administration -- to regulatory jobs -- who are alumni of the industries they regulate. This has been an administration that is quite close to business.

And obviously the backdrop to that has changed significantly post Enron with the scandals of the last year.

OSBORN: Thank you -- Ron Brownstein from the L.A. Appreciate it very much.

BROWNSTEIN: Thank you.

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